For those who appreciate saving a few pennies or are simply broke college students, Chipotle has always been the go-to place for a cheap meal that will keep you full for hours and still leave you with leftovers for the next day.
Chipotle had a reputation for serving massive portions, previously allowing its customers to get extra servings of most of its ingredients without any additional charges.
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However, sometimes people take advantage of the good deeds of others, and once customers caught on to Chipotle's generous hand, many began hacking the menu and sharing it on social media platforms so they could get more for their money.
These content creators would advise customers to get a burrito bowl with double servings of every ingredient that they typically get, except for meat and guacamole, which require an extra charge. They would also recommend getting a couple of tortillas on the side, which would allow them to make multiple burritos for the price of a single meal.
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But all that crumbled in 2020 when Chipotle quickly spotted the viral hacks and started charging extra for tortillas on the side.
Despite Chipotle's rising prices, mainly due to inflation and double servings of some items now coming at an extra charge, loyal customers continued purchasing their favorite menu items. This led the company to grow continuously since then, reporting a 23% growth in its stock year-to-date.
However, customers recently began complaining about the size of their beloved Chipotle burritos and bowls, claiming that the company was intentionally shrinking its portion sizes and instructing employees to serve less food.
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Although Chipotle initially denied all allegations, the controversy was partially true upon further investigation. Hence, Chipotle's former CEO, Brian Niccol, had to take one for the team and address the controversy during the company's Q2 earnings call.
Niccol first reassured customers that Chipotle never directed employees to serve less food and that serving generous portions has always been part of the company's core brand identity.
Then Niccol proceeded to reveal the findings, which proved that 10% of Chipotle's restaurants had outlier portion scores based on consumer surveys and that those locations would undergo training.
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Chipotle takes action on the social media backlash over small portion sizes
In its Q3 earnings report for 2024, Chipotle (CMG) stressed its nearly 30% increase in food and beverage costs, which the company attributed to an increase in prices across all its primary ingredients, and its commitment to "ensuring consistent and generous portions," as the company has received severe backlash over its decrease in its serving size.
During Chipotle's earnings call, the company reaffirmed its commitment to serving the right portion to all guests and announced its investment in new equipment, such as food slicers and double-sided grills, to ensure efficiency and consistency.
According to its total consumer metrics, which are measured through Chipotle's digital channel and in-restaurant experience, portioning is up 500 points over the spring.
"It's a reverse of what we saw earlier in the year, around people posting big burritos, big bowls and really excited about portioning they're getting in the Chipotle brand," said Chipotle's COO Scott Boatwright during the conference call.
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Chipotle publishes its Q3 earnings for 2024 and looks ahead of the controversy
In its recently reported third-quarter earnings, Chipotle's revenues increased by 13% to nearly $2.8 billion compared to last year but were slightly lower than analysts' expectations of $2.85.
Comparable sales were up by 6% from the year prior, missing analysts expectations of 6.38%.
Earnings per share increased by 17.4% to $0.27 compared to the same time last year, beating analysts expectations of $0.25.
However, its stock dropped more than 7% during Wednesday's market hours.
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For the rest of this year, Chipotle forecasts comparable restaurant sales to grow in the mid to high-single-digit range and will open between 285 to 315 new restaurants.
In 2025, it plans to open 315 to 345 new company-operated restaurants, with over 80% having a Chipotlane for online pick-up orders.
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