Is a Starbucks-Chipotle Merger Actually Possible?

John, tell me I'm wrong here, man. >> How you doing, Brian? Um, >> I I won't say you're wrong. We think it's highly unlikely, but is there a chance? Yeah. In the words of Lloyd Christmas, yeah, there's a chance. So, I I wouldn't completely dismiss it. Even the press reports last night in terms of the response from the company at Starbucks to uh some some publications, they didn't outright dismiss it. So, I can't either. And Brian's got a history here, right? He knows both companies intimately. He understands the opportunities. He understands what needs to be improved. Um, and I just he grew up in a brand at Yum that was multibranded or a company that was multibranded. Uh, that was and is a successful company globally. Obviously, they've decided to make some changes recently with Pizza Hut, but I can't outright dismiss it. I don't think it's likely, but I I can't put it to a zero. >> Why, John? Why should this happen? Why does it make sense? >> I don't know if it makes sense. I mean, but if you put just the two P&Ls together, you would get one of the largest earning companies in the world. And if Brian wants to run one of the largest restaurant companies in the world, this would be a way to do it. Um, you know, I you could get some synergies in the back office, right? Corporate GNA spending, probably some supply chain savings, albeit they don't necessarily do the same things as you pointed out here, but you could probably see some synergies on technology, on purchasing, and certainly with respect to the corporate GNA side. Um, and ultimately when you think about the businesses too, you know, Starbucks has a global reach. Chipotle is very domestic. They've made uh some inroads internationally, but it's still very early days. The idea of growing that business internationally through Starbucks network of licensed partners, I mean, maybe that's an attractive piece of the puzzle here that Brian's looking at uh as a way to accelerate that brand's penetration globally. >> But John, you know, do investors want to see this? because you know Brian has won back a lot of investors since I don't know came in 2024 whatever it is on the notion that he's going to bring in more operationally focused. He got rid of that China business. He's going to try to improve Starbucks's store and you know the couches and the plants and this flies in the face of of all that and and frankly I've known Brian for like I don't know over 10 years like everything he stands for. >> Yeah. So you're correct. I don't think investors are really on board with this right now. However, they haven't heard a pitch from Brian um as to why something like this would make sense. Obviously, that's if something were to happen. Um so, I think it would be up to him in terms of convincing investors, but he has done some remarkable work at both brands, right? He >> was able to get Chipotle up and running after a big food scare and turning them into one of the best performing stocks out there in the market over his tenure. And now Starbucks, he's, you know, turned around the business and had a phenomenal 2026, uh, and has long-term, you know, path here to try and continue to win share globally, uh, and and domestically, uh, with with their stores and what they're doing with beverages. And it looks like Mau moving a little bit more towards food. So, I I wouldn't want to doubt Brian because he has done a phenomenal job of getting businesses turned around and going, and maybe he could make something like this work together. >> Yeah. after I get off you real quick. Uh John, um stick around though. We're going to I'm putting uh big news today. Brian Nickel on my new uh wall of titans. He will be joining Dr. [snorts] Lisa Sue at AMD. Um but you know, I look at restaurant brands. You know, that stock has never really I don't know, for for lack of better terms, sizzled. I mean, they own all these brands. Like why don't investors necessarily like these multibrand concepts? >> Um so, you know, there have been successful multibrand concepts. I'd point you directly to Darden, right? and they're in a different subcategory in full service. >> Longhorn. Yeah. Love Longhorn. >> Yes. Exactly. Um but within the, you know, limited service space, it's been harder to do, right? You've seen Yum has been successful uh globally in terms of building their business. One could argue, you know, restaurant brands has struggled, but they're slowly getting their strides. And look, they've had some very strong success certainly with expanding Burger King internationally. They're still early days with getting some of their other brands going uh across the globe, but yeah, the landscape has not been particularly good with M&A tie-ups between these major brands. Um so yeah, that's why I think many investors are sitting here on on pause uh looking at this skeptic. >> Isn't the other maybe perhaps bigger takeaway from this? Isn't this a reminder to investors that there might be opportunities for consolidation in the restaurant space? I look at a Shake Shack. I mean, Wendy's, I I can't get behind Wendy's. I mean, that that brand is like totally just falling off the map. But I'm looking down to Shake Shack. I'm like, "Wow, there's a great concept that perhaps might be undervalued." Yeah. Look, I I'm not going to comment on any specific names, but there are names across the landscape that have hit multi-year lows, uh, have faced some challenges with respect to their business and operating trends. you know that the question is for the industry are we overtored certainly within certain subsectors um you know with population growth in the US in particular potentially stalling out per CBO data uh over the next you know 5 10 years will the demand landscape look like it did over the past 5 to 15 years probably not so you're likely going to see more consolidation going forward across the industry and or you'll see the brands that are strong and have strong financial positions today, you know, lean into that and be able to grow into the future because they're able to reinvest back into their businesses. >> John, earlier this week, I put I added my second member to my wall of underperformers list. I have Titans, I have underperformers, and that's McDonald's CEO Chris Kamchinsky. Uh, frankly, uh, he's earned it. Stock price performance, operations. What is up with McDonald's? >> Yeah, so look, as I mentioned earlier about the population growth in the US, I think that's been a real headwind for the limited service industry. um has the you know McDonald's itself I believe the franchise system has taken a little bit too much pricing during the co window related to labor uh you know as a reminder franchiseors cannot dictate pricing for franchises so you know they can control they can make suggestions but they can't tell them exactly where they can price so that I think really turned a lot of consumers off to the category and meanwhile full service got much better uh in terms of everyday you know low prices entry-le price points. Um, so you've seen a nice little rebound in full service and limited service has been more challenged. I think specifically for McDonald's, I actually like what they're going to do and they're doing it from a position of strength. Now, their comps have not been as strong as I think everybody would like them to have been over the past year plus in the US and globally, but more the US. I think by them investing into the business, you know, they're talking about $1.2 $2 million or so per store in terms of remodel costs. They're going to set the business up for the future and the future of the consumer. Meanwhile, their competitive set won't be able to keep pace at all. Their franchises are much better positioned with respect to the finances and their balance sheets. McDonald's is better off with their balance sheet that many of their direct competitors. Uh and frankly, they can make a return on these investments that their peers cannot do. And I think as we're, you know, looking out the next 5 to 10 years, there will be further consolidation across the industry, meaning store closures, and McDonald's will be there still standing with their lights on, growing their sales, and frankly doing quite well in that environment. So, I I actually like what Chris is doing and his team at McDonald's. I think they're going to be winning share at an accelerating rate over the next 5 years. >> John, good to see you. Come in person soon. I got to show you my uh crazy fancy new set. I appreciate you, man. I like it. Thank you, bro. >> All right. Thanks Brian.