Chipotle customers were right — some restaurants were skimping, CEO says
It turns out that Chipotle customers were right in their complaints about skimpy portion sizes at some locations. On Wednesday, CEO Brian Niccol disclosed that a company investigation found that 1 in 10 of its restaurants were too meager with their servings.
Chipotle looked into the issue after rumors of shrunken portions circulated on social media, including from influential food reviewers on TikTok who shared images of small helpings. Some customers claimed they got bigger meals when they filmed workers putting their orders together.
The issue came to a head after two years of bruising inflation has made consumers increasingly cost-conscious, with many grousing about surging prices at restaurants. The smaller portions at Chipotle were especially hard to swallow after the restaurant raised prices in recent years, some customers said on social media.
In its initial response to complaints, Chipotle earlier this month told CBS MoneyWatch that it hadn't changed its portion sizes, but that some meals "may have variability in their size or weight."
On Wednesday, however, Niccol disclosed that skimpy portions have been a problem at about 10% of its roughly 3,500 locations.
"[W]e've always felt the key equity of Chipotle is these generous portion sizes, so we wanted to make sure we're executing consistently across the system," he told analysts on an earnings call Wednesday. "And we've probably found about 10% or more of restaurants that we really view as outliers that needed to be retrained, re-coached to be executing against what we believe are the right standards."
But boosting portion sizes at those Chipotle locations will make a dent in the chain's financial results, with CFO John Hartung saying that part of its higher cost of sales in the most recent quarter was due to ensuring "correct and generous portions" at those restaurants. Still, it's an investment that will continue, he added.
"We decided that this brand equity called 'generous portions' is something that we don't want to take for granted," Hartung told investors. "We don't want to take something that's been a positive for all these years and then have it turn out to be a negative because of some of the social media comments."
The issue even sparked a Wall Street firm to investigate. Earlier this year, analysts at Wells Fargo ordered and weighed 75 identical burrito bowls from eight Chipotle locations in New York City, with half ordered online and half in-store. Their conclusion: Chipotle's portions "varied widely," with some restaurants selling bowls with identical orders that weighed roughly 33% more than other outlets.
On Wednesday, Niccol said he believes fixing the problem at the 1-in-10 locations that were skimping portions can help win back customers via positive word of mouth on social media.
"But the thing I want to emphasize is for 90% of our restaurants, they're doing business as usual," Niccol said yesterday. "[B]ut we really needed to kind of train up roughly 10% of the system."
