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Starbucks has explored a takeover of Chipotle Mexican Grill, the Financial Times reported on Thursday, in a move that would reunite Chief Executive Brian Niccol with the burrito chain he led before joining the \u200bcoffee giant two years ago.<\/strong><\/p>\n The potential deal comes as restaurant chains wrestle with uncertain demand from inflation-weary \u200cconsumers and rising operating costs, prompting companies to look for new avenues of growth while facing pressure to improve profitability.<\/p>\n Starbucks has worked with advisers in recent months on a takeover proposal for Chipotle, the FT reported, citing people familiar with the matter.<\/p>\n Starbucks and Chipotle did not immediately respond to Reuters requests \u200bfor comment.<\/p>\n Shares of Chipotle, which has a market capitalization of nearly $39 billion, were up about 6% on Thursday, while those \u200bof Starbucks were down about 3%. Starbucks is worth about $107 billion, according to LSEG data.<\/p>\n Analysts said \u2060any acquisition would likely be a costly undertaking for Starbucks, which is still investing heavily in its turnaround efforts.<\/p>\n \u201cA deal could \u200brequire heavy borrowing or issuing shares,\u201d said Lale Akoner, global market strategist at eToro. \u201cWithout a compelling financial case, investors may view the \u200bdeal as an expensive distraction.\u201d<\/p>\n Starbucks is in the midst of a turnaround under Niccol, who has prioritized customer satisfaction through investments in staffing and store improvements aimed at reducing wait times and restoring the coffeehouse atmosphere that helped make the chain a global brand.<\/p>\n Since joining the company in September 2024, Starbucks \u200bhas committed at least $500 million to labor investments as part of its reorganization, contributing to pressure on profitability. As of the fiscal third \u200bquarter, adjusted operating margin was 14.4%, down from 16.7% in the same quarter two years earlier, according to LSEG data.<\/p>\n Starbucks has reported four consecutive \u200cquarters of \u2060comparable sales growth under Niccol, but in July he said that \u201cWe have more work to do.\u201d<\/p>\n \u201cThe timing of this would be a little weird, given that Starbucks is in the middle of their transformation and hasn\u2019t yet shown the margin improvement investors are probably hoping for. Instead of jump-starting the transformation, at first blush, this seems more like jumping the shark instead,\u201d said Brian Jacobsen, Chief \u200bEconomic Strategist, Annex Wealth Management.<\/p>\n Chipotle, meanwhile, \u200bhas been contending with softer \u2060traffic as consumers pull back on discretionary spending, while higher food and labor costs have pressured margins across the restaurant industry. Its shares have nearly halved since Niccol left the company.<\/p>\n A potential deal \u200bcould accelerate Chipotle\u2019s international expansion, some analysts said.<\/p>\n \u201cWhat I like about this potential is the opportunity \u200bCEO Brian Niccol \u2060would have to leverage Starbucks\u2019 licensed partnerships in Europe to expand Chipotle more aggressively,\u201d said Jim Sanderson, an analyst at Northcoast Research.<\/p>\n As of the end of last year, Chipotle had nearly 4,000 restaurants in the United States and about 100 international locations. Starbucks, meanwhile, has roughly \u206040,000 stores \u200bglobally, including about 18,000 in North America.<\/p>\n Niccol joined Starbucks in 2024 after spending \u200bsix years at Chipotle, where he was credited with steering the company through the aftermath of its food-safety crises and building out its digital business, helping drive \u200byears of strong sales growth.<\/p>\n<\/div>\n