A Chipotle shareholder is suing the company over a skimpy-portions uproar that allegedly ruined their investment.
Revelations of Chipotle’s inconsistent portion sizes that rocked social media in July and August sparked a “precipitous decline” in the fast food chain’s stock, causing “significant losses and damages,” according to a proposed class-action lawsuit, CNN reported.
The shareholder’s beef hinges on the timing of the controversy, claiming Chipotle execs initially understated how dissatisfied customers were as hangry regulars posted visual proof of what they said were widely varying amounts of food across menu items.
At one point, food influencer Keith Lee panned the chicken portions in a TikTok review that went viral. A Wells Fargo analyst went so far as to order 75 burrito bowls, finding wildly inconsistent portion sizes.
The lawsuit, filed Monday in federal court in Santa Ana, Calif. alleges the “defendants failed to disclose that Chipotle’s portion sizes were inconsistent and left many customers dissatisfied with the Company’s offerings,” shareholder rights law firm Robbins LLP, which is representing the plaintiffs, said in a statement. “And in order to address the issue and retain customer loyalty, the Company would have to ensure more generous portion sizes, which would increase cost of sales.”
In an earnings call in July, Chipotle promised to correct the errant portion sizes in restaurants that then-chairman and CEO Brian Niccol branded as “outliers.”
“There was never a directive to provide less to our customers,” Niccol said, according to WJRT-TV. “Generous portions is a core brand equity of Chipotle. It always has been, and it always will be.”
Yet he admitted “getting the feedback caused us to re-look at our execution across our entire system” and promised to serve bigger portions.
Soon after, he was lured to Starbucks to replace CEO Laxman Narasimhan.
Chipotle declined to comment Wednesday.
“We don’t comment on litigation and will vigorously defend our industry leading real food,” the company’s corporate affairs officer, Laurie Schalow, told the Daily News in an emailed statement.
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