Takeover of burrito chain?: Starbucks boss puts out feelers to former company Chipotle

Coffee meets Mexican food: Starbucks CEO Brian Niccol knows the ailing burrito chain Chipotle very well: he ran it himself until two years ago. Now there could be a major merger in the US fast food sector.

According to a newspaper report, the coffee house chain Starbucks has examined a takeover of the US fast food chain Chipotle Mexican Grill. Starbucks has been working with consultants on a takeover offer in recent months, the Financial Times reported on Thursday, citing insiders. Statements from the two companies were initially not available.

For Starbucks boss Brian Niccol, this would be a return to the burrito chain he ran before joining the coffee giant two years ago. Since Niccol's departure, Chipotle's stock price has fallen 41 percent. The company has faced numerous challenges, including declining sales, higher procurement costs and recent public health concerns, including the outbreak of the intestinal parasite Cyclospora in the U.S., which led to an overall decline in foot traffic at fast-food chains this summer. Cyclospora was detected in a large shipment of iceberg lettuce from Mexico. However, Chipotle did not use any salad affected by the recall.

A merger would bring together two of the largest and best-known brands in the American casual dining scene. Chipotle has a market capitalization of almost $39 billion, Starbucks about $107 billion. At the end of last year, Chipotle had nearly 4,000 restaurants in the U.S. and about 100 international Chipotle locations. Starbucks operates around 40,000 stores worldwide, including around 18,000 in North America.

The news caused Chipotle shares to jump by around six percent on the stock market. Starbucks shares, on the other hand, fell by around three percent.