Chipotle shareholder sues over skimpy portion sizes
New York
CNN
—
A Chipotle shareholder is suing the fast-casual chain over viral social media complaints about skimpy portion sizes.
The proposed class-action lawsuit filed Monday claims Chipotle understated customer dissatisfaction regarding its "highly inconsistent" portion sizes in official disclosures. The lawsuit said that unhappiness wasn't clear until the spring and summer of 2024, when customers' true feelings spread on social media posts in a virtual pile-on.
The lawsuit said a turning point was when mega-famous food influencer Keith Lee, who had previously collaborated with Chipotle, slammed the chain's chicken portions in a May TikTok review. And, as the lawsuit cited, in June, a Wells Fargo analyst even ordered 75 burrito bowls to test portion sizes and found that the consistency of the portions varied widely.
"We don't comment on litigation and will vigorously defend our industry leading real food," Laurie Schalow, Chipotle's chief corporate affairs officer, said in a statement Wednesday.
It's the latest development in Chipotle's "skimpgate," which comes at a time when cash-strapped customers have an eagle eye on shrinkflation, the downsizing of products without lowering prices, and skimpflation, the cutting down on quality or services to save on costs. Customers this year have also called out McDonald's $3 hash brown at some locations and a cheapened Whole Foods Berry Chantilly Cake slice.
It wasn't until July 2024 that then-Chipotle CEO Brian Niccol said in an earnings call that the company would make "generous portions" more consistent across its more than 3,500 restaurants.
"First, there was never a directive to provide less to our customers," Niccol said during the earnings call. "With that said, getting the feedback caused us to re-look at our execution across our entire system."
Niccol and CFO Jack Hartung are defendants in the lawsuit. Niccol stepped down from his position at Chipotle to take over as Starbucks CEO in September, after helping raise Chipotle's stock by more than 800% since he took over in 2018.
Last month, interim CEO Scott Boatwright promised "consistent and generous portions," claiming customers are posting proof of bigger burritos and bowls on social media. Boatwright was named CEO on Monday, the same day the lawsuit was filed.
After that earnings call on October 30, Chipotle stock dipped 7.86%.
"As a result of Defendants' wrongful acts and omissions, and the precipitous decline in the market value of the Company's common shares, Plaintiff and other Class members have suffered significant losses and damages," the lawsuit said.
The proposed class action would make eligible anyone who purchased or sold Chipotle stock from February 8 to October 29, 2024.
