Chipotle customers express concerns over inconsistent portion sizes; viral ‘skimpgate’ posts circulate
Shrinkflation was a big topic during the recent presidential election, with companies offering less product for the same price as costs rose due to inflation. Following a Subway customer’s lawsuit over portions, Chipotle is now facing similar complaints.
A class action lawsuit has been filed against Chipotle and two top executives, accusing them of violating the Securities Exchange Act of 1934. The lawsuit claims that Chipotle deceived investors by hiding the fact that some of its restaurants were cutting portions, leading to increased ingredient costs and a hit to the stock price.
Chipotle denied any changes in portion sizes, despite widespread reports of inconsistent portions. The issue gained traction online as customers shared their experiences of “skimpgate.” Even a food influencer and a Wells Fargo analyst highlighted the problems with Chipotle’s portions.
During an earnings call in July, then-CEO Brian Niccol acknowledged the portion issues and pledged to make portions more consistent. However, this came at a higher cost of sales for Chipotle, leading to a drop in stock value.
Chipotle’s cost of sales increased significantly as they focused on providing consistent and generous portions. This effort impacted the chain’s profit margins and caused a substantial drop in stock value.
The lawsuit includes claims against Niccol and CFO Jack Hartung. Niccol, who helped Chipotle’s stock rise by over 800% since becoming CEO in 2018, resigned to join Starbucks in September. The new CEO, Scott Boatwright, was appointed the same day the lawsuit was filed.
Investors who bought or sold Chipotle stock between Feb. 8 and Oct. 29, 2024, can join the class action lawsuit until Jan. 10, 2025. While the damages sought are unspecified, plaintiffs are aiming for a significant resolution.
Chipotle’s chief corporate affairs officer declined to comment on the litigation but stated that they would vigorously defend their commitment to real food. If you have any questions about this case, feel free to reach out to Reg Wydeven, a partner at McCarty Law LLP in Appleton, at pcbusiness@postcrescent.com.
