Starbucks says it’s focused on turnaround after report it explored Chipotle merger

Wall Street was buzzing Thursday about a possible merger that would amount to much more than a hill of beans.

Starbucks said it was focused on its turnaround plan, following a report in the Financial Times saying the coffee house chain explored a potential deal to take over Chipotle Mexican Grill.

“Our team is laser-focused on executing our Back to Starbucks strategy,” Starbucks said in a statement. “We have strong momentum and confidence in our long-term growth potential.”

The company added that it typically doesn’t comment on what it described as “rumors and speculation” and that it looks forward to sharing its next earnings results later in October.

Starbucks’ comment came after the FT reported that Starbucks had hired advisers in recent months to work on a takeover proposal for Chipotle. NBC News has not confirmed the report.

A tie-up between the two companies would mean a massive shakeup in the restaurant industry, which is grappling with consumers changing their spending and eating habits.

Before the report emerged, sending shares of Chipotle higher by 6.2%, the company had a total market value of about $39 billion. For comparison, Starbucks’ market value stands at more than $105 billion.

Chipotle did not return a request for comment on Thursday afternoon.

A deal between the two companies would also reunite CEO Brian Niccol with the company he led before he jumped to Starbucks in 2024.

Investors appeared worried that a deal could be a distraction for Niccol and his company, though. Starbucks shares fell as much as 6.6% Thursday, but closed the day only slightly lower.

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The company is in the midst of a wide-ranging turnaround plan engineered by Niccol, including a redesign of Starbucks stores, new service standards to speed up customers’ orders, a refreshed menu, and a reboot for its rewards program.

Just weeks ago, Niccol touted the plan’s results, saying “tremendous progress” has been made. Shareholders have seen promising returns too. For the year, Starbucks shares are up almost 11%.

That closely tracks with the S&P 500’s 13% return so far this year. The company has also far outperformed the negative 6.7% return that the S&P 500 Consumer Discretionary sector has seen this year.

Chipotle shares have sagged by more than 11% this year and more than 20% over the last 12 months.

In July, the company’s latest earnings results beat expectations but that followed a period of slow traffic and price hikes. Those results also came alongside soaring gas prices for consumers.

“We’re seeing encouraging progress because we’re focused on the right growth drivers,” Chipotle CEO Scott Boatwright said in a statement in July. Like Starbucks, Chipotle has also revamped its rewards program and has made tweaks to its menu to lure customers back.

Chipotle has also started expanding outside of the U.S., with plans to open stores in Mexico, South Korea and Saudi Arabia.