Chipotle Mexican Grill has confronted no scarcity of lawsuits over time, from food-safety crises to wage-and-hour disputes and shareholder claims.
This month, the fast-casual restaurant chain got here out a winner in courtroom.
A federal decide dismissed a securities class motion lawsuit accusing Chipotle of deceptive buyers about portion sizes and buyer dissatisfaction, as first reported in Bloomberg Regulation.
Within the ruling, the decide stated the grievance didn’t present Chipotle made “materially false or misleading statements.”
On November 11, 2024, investor Michael Stradford filed a lawsuit on behalf of shareholders. The case, Stradford v. Chipotle Mexican Grill, Inc., et al., was filed within the U.S. District Court docket for the Central District of California (Case No. 24-cv-02459).
Stradford’s grievance centered on shareholders who bought Chipotle inventory or sure choices between February 8 and October 29, 2024. It claimed Chipotle had downplayed inner points associated to inconsistent portion sizes.
Stradford asserted the complaints have been fueling buyer backlash, largely on social media. In his grievance, Stradford referenced viral posts displaying clients accusing the chain of “skimping” on parts and alleged that the inconsistent portion sizes would have an effect on margins and earnings.
Final 12 months, then-CEO Brian Niccol disputed accusations of skimpy servings.
“First, there was by no means a directive to supply much less to our clients,” he stated throughout a July 2024 earnings name, just a few months earlier than the go well with was filed. “Beneficiant portion is a core model fairness of Chipotle. It at all times has been, and it at all times will probably be.”
However, Niccol stated the complaints had led him to re-examine Chipotle’s practices throughout its operations.
“To be extra constant throughout all 3,500 eating places, we’ve got centered in on these with outlier portion scores primarily based on shopper surveys,” he stated. “We’re re-emphasizing coaching and training round guaranteeing we’re persistently making bowls and burritos appropriately.”
On December 18, Decide Sherilyn Peace Garnett of the U.S. District Court docket in Los Angeles sided with Chipotle and dismissed the lawsuit.
Garnett stated the plaintiff failed to satisfy the authorized normal for securities fraud, noting that shopper complaints and social-media criticism — even when the posts go viral — didn’t show that Chipotle knowingly misled buyers or made false statements with the intent to deceive.
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“The info alleged don’t present Niccol and [food safety officer Laurie] Schalow made a false or deceptive assertion by denying that the Firm had lowered the scale of its parts,” wrote Garnett, in keeping with reporting in The Unbiased.
