Starbucks has explored a takeover of Chipotle that would merge a $39 billion burrito chain running more than 4,200 locations with the world's largest coffee operator, the Financial Times reported.

Deal talks remain preliminary. The FT said Starbucks has "worked with advisors in recent months on a takeover proposal." Chipotle shares climbed on the news while Starbucks stock slipped, as investors weighed the operational load of absorbing a fast-casual chain while Starbucks' own turnaround runs unfinished.

How far along is the Starbucks turnaround?

Brian Niccol has spent two years leading the "Back to Starbucks" push to revive service and restore the 41,000-store chain to a 1990s-style "third place." He told employees earlier this year that "Starbucks is back." In an exclusive interview with ADWEEK this month, he conceded the work is incomplete.

"I probably underestimated the scale of the business that Starbucks is," Niccol said. "I wish we were going a little bit faster with digital. I wish we were going a little bit faster with the menu. But culturally, we are so much better because we're now focused on owning outcomes, not celebrating activity."

Why would Starbucks want a burrito chain?

Chipotle delivered a strong second quarter. Total revenues rose 9.3% to $3.3 billion and comparable sales increased 2.2%. The chain still fights a consumer perception that menu prices run too high, particularly as U.S. gas prices have crept north of $4 a gallon.

David Mayer, senior partner and director of marketing and customer strategy at Lippincott, sees logic in the pairing. He cited "cross-selling opportunities, and, longer term, the potential to add more brands to the portfolio" alongside potential operational efficiencies.

What could go wrong?

Mayer also flagged the downside of stacking another brand on top of an unfinished turnaround. "If that's the case," he said, "the diversion of management attention, combined with weakening brands, may risk creating a combined entity that continues to decline and is even harder to turn around."

The merger would also lack obvious operational overlap. Chipotle serves no coffee. Starbucks serves no burritos, although the chain's fall menu includes an avocado spread. The two concepts would sit side by side in a $50 billion entity with limited direct synergy in supply chain, real estate or menu.

What about regulatory approval?

Any deal would require regulatory clearance. President Trump's administration has signaled an M&A-friendly posture that could ease the antitrust path. The larger question for Starbucks shareholders is timing: Niccol has not finished righting the 41,000 stores already on his plate.

Why does the CEO matter here?

Niccol ran Chipotle as CEO from March 2018 until August 2024. He doubled the chain's size in that span, a track record Starbucks cited when it poached him. A completed deal would put him back in the executive suite of the company he left eight months ago.

For Starbucks, the calculus sits between a turnaround still short of its target and a $39 billion acquisition that would double its storefront count overnight without a clear operational bridge between burritos and lattes.