Chipotle Mexican Grill CMG was sued by shareholders on Monday for hiding the fact that many of its restaurants were skimping on portions, forcing the chain to spend more on ingredients and hurting its stock price.
In a proposed class action lawsuit filed in federal court in Santa Ana, California, shareholders allege Chipotle failed to disclose growing customer dissatisfaction with inconsistent portion sizes for its burritos and rice bowls.
The truth emerged as customers voiced their displeasure on TikTok and other social media, prompting Chipotle to reinstate what CEO Scott Boatwright and his predecessor Brian Niccol called “generous portions” across its more than 3,600 restaurants to emphasize.
The cost of repairing the damage reduced profit margins, causing Chipotle’s stock price to fall after the company reported its second- and third-quarter results, the lawsuit says. The Oct. 30 decline wiped out about $6.5 billion in market value.
The lawsuit seeks unspecified damages for buyers of Chipotle stock and options from February 8 to October 29, 2024.
Chipotle did not immediately respond to requests for comment.
The lawsuit was filed hours after the Newport Beach, California-based company removed the word “interim” (link) from Boatwright’s job title.
Niccol resigned from his position as CEO (link) in August to take the same position at Starbucks 
SBUX to take over.
Chipotle’s stock price has increased more than eightfold during Niccol’s nearly 6-1/2 years at the helm of the company.
Niccol and former CFO Jack Hartung are also defendants in the lawsuit filed Monday. Hartung became Chipotle’s president and chief strategy officer on October 1.
Der Fall lautet Stradford v. Chipotle Mexican Grill Inc et al, US District Court, Central District of California, Nr. 24-02459.
