Coffee shop chain giant Starbucks was reportedly looking at a takeover of Chipotle Mexican Grill. This would have been the largest possible merger in the food and drink industry. CBS News reported on October 12 that Starbucks just denied the merger.
This comes only four days after the Financial Times reported on the possible purchase.
Starbucks is the second-largest U.S. chain by sales, with about $31 million in annual domestic sales. Chipotle has a market worth $47 billion. The alleged takeover had Starbucks working on proposals for months, but a Starbucks spokesperson told Inc. that they “don’t comment on rumors and speculation.”
Starbucks spokespersons officially shot down any chances of the purchase happening. Speaking with CBS News, Inc. and Forbes, they highlighted a new “Back to Starbucks” campaign to revitalize the company.
CBS News reported that Starbucks is focused on “executing our Back to Starbucks strategy. We have strong momentum and confidence in our long-term growth potential. We look forward to sharing our Q4 results, including FY27 guidance, later this month.”
This campaign is proving successful, with its second and third quarter results showing strong growth.
Both Starbucks and Chipotle are linked through Chipotle’s former CEO and Starbucks’ current CEO, Brian Niccol. Chipotle’s stock price has dropped about 50% since Niccol left in August 2024.
Chipotle’s stock jumped following the initial report but has since dropped again after Starbucks made its intentions clear.
Other Recent Mergers
This comes at a time when mergers are the new normal. Only days before the initial Financial Times report, Hollywood entered a new era for film and TV. New media conglomerate Paramount-Skydance is merging with Warner Bros. Discovery, totaling $110 billion. CEO and Chairman David Ellison said in a statement: “From the start, our ambition was to bring these two storied studios together and create a stronger competitor, with the talent, resources, and reach to tell great stories in every genre, on every platform, for audiences everywhere. Now that ambition is a reality.”
Ellison will control Paramount and Warner Bros., MTV, TLC, Comedy Central, the Food Network, CNN, CBS News, and streaming services Paramount+ and HBO Max.
Ellison told CNBC in March that this deal is “pro-competitive, pro-consumer; it’s good for the overall creative economy. We now have a library of 15,000 films, everything from Harry Potter, the DC Universe, Mission: Impossible, Top Gun, and The Godfather, under one roof.”
This merger received heavy pushback, with many critics decrying the monopoly forming in the entertainment industry. The deal also came with massive layoffs looming for employees of both companies until the merger is finalized. Lawsuits from 12 state attorneys general and the Writers Guild of America failed.
People Are Not Happy
Though the layman thought everyone would have a Frappuccino with burrito bowls, industry analysts were initially skeptical. TD Cowen analysts reported the chances of the merger advancing as a “low-probability outcome.” The collapse of this merger alone isn’t ending without other life-changing mergers taking the headlines.
Kelly Lawler for USA Today wrote: “Say goodbye to decades of Hollywood history and hello to the era of mega media corporations.” Though we don’t have to say hello to another mega food corporation, mergers are starting to flow into the news cycle far quicker than many would like.
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