Starbucks (SBUX) has no plans to acquire Chipotle (CMG), the company confirmed Monday, quashing visions of a breakfast burrito accompanied by a cortado.
“As a matter of principle, we do not comment on rumors and speculation, but we want to be clear that we are not buying Chipotle,” a spokesperson told Yahoo Finance.
The company added in a statement that it was “focused on executing our Back to Starbucks strategy” and building momentum for its next quarterly results on October 29 after the closing bell.
Starbucks’ statement follows a Financial Times report last Thursday that the coffee giant was considering buying the burrito chain.
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The rumor mill has leaned into the story given Starbucks CEO Brian Niccol’s close ties to the burrito chain. Niccol was CEO of Chipotle for six years and worked for food conglomerate Yum! Marks (YUM) before that.
Since Niccol announced his departure from Chipotle, the stock has fallen more than 25%. During the most recent quarter, same-store sales increased 2.2%, but food safety concerns hit late in the quarter due to a possible salmonella outbreak in Chipotle’s supply chain.
If Starbucks had gone through with the buyout, it would still be the largest restaurant acquisition in history. Some analysts have attempted to understand how the two might mutually benefit each other.
“There are no obvious revenue synergies between the two brands, although there may be opportunities in shared loyalty ecosystems, cross-brand product placements (e.g., Starbucks Refreshers with your Barbacoa Burrito Bowl), or faster expansion of Chipotle’s licensed international business through Starbucks’ existing relationships,” William Blair analyst Sharon Zackfia wrote to clients.
Andrew Charles of TD Cowen called this event a “low probability” from the start.
“Our first reaction is skepticism,” he wrote in a note. “While this is plausible given CEO Brian Niccol’s history at Chipotle, a transaction of this size would likely distract from Starbucks’ ongoing turnaround. This adds to the cost and risk of integration.”
Last month, Starbucks announced plans to close 250 stores in the United States and Canada, reducing its store count by about 1%. This news follows a strong third quarter, indicating that Niccol’s turnaround plan was progressing.
Starbucks reported same-store sales growth of 7.9%, higher than the 5.7% growth Wall Street expected, according to Bloomberg data, and higher than the 6.2% jump seen in the second quarter. Last year, the company saw a 2% decline in overall same-store sales growth in the third quarter.
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email him at bdipalma@yahoofinance.com.
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