Chipotle wins lawsuit over its portion sizes after claims that company leaders defrauded investors
Chipotle has emerged victorious from a lawsuit claiming that it lied to investors about shrinking its portion sizes to cut ingredient costs.
In a ruling last week, a federal judge in California found there was no evidence the fast casual chain’s executives had lied to shareholders about its portions, despite much “viral criticism”.
The company was engulfed by controversy last year after numerous customers complained of smaller meals, especially when ordered online rather than in person.
Chipotle denied it and then-CEO Brian Niccol was widely mocked for a TikTok video in which he insisted “the portions have not gotten smaller.”
On Thursday last week Judge Sherilyn Peace Garnett of the U.S. District Court sided with Chipotle and dismissed the lawsuit, which was filed last November by disgruntled investor Michael Stradford.
“The facts alleged do not show Niccol and [food safety officer Laurie] Schalow made a false or misleading statement by denying that the Company had reduced the size of its portions,” wrote Garnett.
Whistleblower testimony cited by Stradford’s attorneys amounted to “vague hearsay”, she said, and were not sufficient to show that Chipotle had systematically reduced portions.
“Instead, the most plausible inference from the allegations set forth in the complaint is that Defendants honestly believed the Company had not changed the size of its portions,” Garnett concluded.
It’s not yet clear whether Stradford will appeal the verdict.
Criticism of Chipotle’s portions began to bubble up through social media in late 2023 and 2024, after rising supply costs caused an epidemic of corporate “shrinkflation”.
“Hey Chipotle, we need to talk,” said TikTok comedian and consumer advocate Ryan Lynch in an October 2023 video watched by 5.5 million people. “Your portion control is causing people to be very frustrated… and we all are personally taking out on your employees.”
“The CEO of Chipotle must have never gotten an online order before,” snarked Barstool Sports on X in June last year in response to Niccol’s denials.
One Detroit man was even sentenced to 12 years in prison for barging behind the counter and shooting a Chipotle employee because he felt that his guacamole portion was too small.
Many other customers took to filming staff with their smartphones while their orders were being prepared, based on viral tips claiming it would ensure they got bigger portions (though Chipotle denied this).
