Chipotle Stock Drops As Starbucks Says It Is ‘Not Buying’ The Restaurant Chain

• Starbucks reportedly said it is focused on its “Back to Starbucks” strategy and expects to share its latest financial results later in October.
• Analysts had differing views on the reported deal, with Stephens identifying potential operating efficiencies while RBC Capital Markets questioned the rationale.
• Morningstar estimated Chipotle’s valuation at $45 billion to $51 billion, based on 20 to 23 times EBITDA, and said a combination could complicate Starbucks’ turnaround.

Chipotle Mexican Grill (CMG) shares drew significant investor attention on Monday after Starbucks (SBUX) explicitly denied plans to acquire the burrito chain, following last week’s Financial Times report that the coffee giant had explored a potential takeover.

“As a matter of policy, we don’t comment on rumors and speculation, but we want to be clear we are not buying Chipotle,” a Starbucks spokesperson told NBC News.

“Our team is laser focused on executing our Back to Starbucks strategy,” they said, while adding that the company looked forward to sharing its latest financial results later in October.

CMG shares fell over 4.5%, while SBUX shares rose 1.6% at the time of writing on Monday.

On October 8, the Financial Times reported that Starbucks had worked with advisers in recent months on a potential proposal to acquire Chipotle, citing people familiar with the matter. The report said it was unclear whether Starbucks had submitted a formal offer and noted that a deal might never materialize.

A deal would have brought together two major U.S. restaurant chains and reunited Starbucks CEO Brian Niccol with Chipotle, where he served as CEO for about six years before joining Starbucks in 2024.

What Did Analysts Say?

Analysts subsequently differed on the rationale for the potential deal. Stephens highlighted potential real estate and operating efficiency benefits, while RBC Capital Markets questioned the strategic rationale of a transaction, according to The Fly.

On October 9, DA Davidson analyst Matt Curtis estimated a roughly 20% chance of the deal being completed, maintained a 'Neutral' rating on Starbucks, and kept a $110 price target. That assessment preceded Starbucks’ explicit denial on Monday.

Morningstar analyst Ari Felhandler said a combination could create a larger restaurant business but complicate Starbucks’ turnaround. Morningstar estimated that Chipotle could fetch $45 billion to $51 billion, based on 20 to 23 times earnings before interest, taxes, depreciation, and amortization (EBITDA). 

Retail Traders React To CMG, SBUX

Retail sentiment on Stocktwits for CMG turned ‘Bullish,’ with message volume at ‘Extremely High’ levels over the past 24 hours. SBUX sentiment also turned ‘Bullish,’ with ‘High’ message volume. Both tickers were trending on Stocktwits at the time of writing.

CMG shares are down more than 19% year to date, while SBUX shares have gained over 7% during the same period.

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