3 reasons why Starbucks buying Chipotle would make zero sense

On Thursday, markets buzzed with one of the silliest M&A rumors I have seen in the restaurant space in decades: Starbucks ( SBUX ) reportedly eyeing a deal to buy Chipotle ( CMG ).

The Financial Times reported that Starbucks has considered making an offer to buy Chipotle and all its 4,000-plus restaurants worldwide. No purchase price has been bandied about, and an official offer has not been made, per the report.

A Chipotle spokesperson didn't return Yahoo Finance's request for comment.

I want to acknowledge three things before wading into the discussion.

First, I am aware that Starbucks CEO Brian Niccol saved Chipotle during his tenure as the burrito chain's CEO. I covered Brian's entire tenure at Chipotle , and he flat-out rescued the chain after a massive E. coli scare hammered sales.

Second, I am aware that Niccol spent years inside the Yum! Brands ( YUM ) fast food empire and rose through levels of executive leadership. So, he knows how multibrand restaurants work from the inside out.

Third, I am aware that Niccol handpicked Chipotle's current CEO, Scott Boatwright, as his successor. The two remain very close; in fact, they sometimes still hit the gym together in the morning. Both are also watch aficionados.

With that out of the way, here's why this deal makes very little sense and is unlikely to happen.

Where are the synergies? Salt and pepper? Paper napkins?

It can't be for pots and pans. Starbucks sells prepackaged food made in tiny ovens. Knives? Chipotle hand-prepares its food, while Starbucks doesn't cut vegetables.

Cups? Chipotle uses paper cups, while Starbucks still mostly uses plastic. Chicken and steak? Good luck finding that on the Starbucks menu.

What about real estate? There are already so many Chipotle stores near a Starbucks, some even in the same shopping center. At least when Restaurant Brands ( QSR ) bought Popeyes for $1.8 billion in 2017, you could see how that brand and Burger King could team up to buy cheaper chicken. When Inspire Brands spent $2.9 billion to buy Buffalo Wild Wings in 2018, you saw potential economies of scale with its Arby's chain.

Yum! Brands just sold struggling Pizza Hut for $2.7 billion this year. Investors pushed for the sale because the brand was holding back the company's overall value.

Inspire Brands, which now owns Dunkin, Baskin-Robbins, Arby's, Sonic, and Jimmy John's, was aiming to finally go public with an IPO this fall, but that's not happening.

The financials of Restaurant Brands' Burger King, Popeyes, Tim Horton's, and Firehouse Subs mashup have been mixed, at best — and the same goes for the company's stock price.