NEW YORK 鈥 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 鈥渉ighly inconsistent鈥 portion sizes in official disclosures. The lawsuit said that unhappiness wasn鈥檛 clear until the spring and summer of 2024, when customers鈥 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 , slammed the chain鈥檚 chicken portions in a . And, as the lawsuit cited, in June, to test portion sizes and found that the consistency of the portions varied widely.
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An employee prepares a burrito bowl at a Chipotle restaurant in Louisville, Kentucky on February 2, 2019.
鈥淲e don鈥檛 comment on litigation and will vigorously defend our industry leading real food,鈥 Laurie Schalow, Chipotle鈥檚 chief corporate affairs officer, said in a statement Wednesday.
It鈥檚 the latest development in Chipotle鈥檚 鈥渟kimpgate,鈥 which comes at a time when cash-strapped customers have an eagle eye on , the downsizing of products without lowering prices, and , the cutting down on quality or services to save on costs. Customers this year have also called out at some locations and a .
It wasn鈥檛 until July 2024 that then-Chipotle CEO Brian Niccol said in an earnings call that the company would make 鈥済enerous portions鈥 more consistent across its more than 3,500 restaurants.
鈥淔irst, there was never a directive to provide less to our customers,鈥 Niccol said during the earnings call. 鈥淲ith that said, getting the feedback caused us to re-look at our execution across our entire system.鈥
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鈥檚 stock by more than 800% since he took over in 2018.
Last month, interim CEO Scott Boatwright promised 鈥渃onsistent and generous portions,鈥 claiming customers are posting proof of bigger burritos and bowls on social media. Boatwright was , the same day the lawsuit was filed.
After that earnings call on October 30, Chipotle stock dipped 7.86%.
鈥淎s a result of Defendants鈥 wrongful acts and omissions, and the precipitous decline in the market value of the Company鈥檚 common shares, Plaintiff and other Class members have suffered significant losses and damages,鈥 the lawsuit said.
The proposed class action would make eligible anyone who purchased or sold Chipotle stock from February 8 to October 29, 2024.
Chipotle Mexican Grill appointed Scott Boatwright as its permanent CEO, filling the role after Brian Niccol's departure to lead Starbucks. Boatwright, who joined Chipotle in 2017 after eighteen years with Arby鈥檚, has vowed to expand the chain to 7,000 locations across North America. Analysts view Scott Boatwright as the logical choice for Chipotle鈥檚 CEO, citing his contributions to the company, and they believe he will strengthen investor confidence. Chipotle shares initially lost $6 billion following Niccol鈥檚 exit before rebounding by 14%.
