Chipotle Blames Bigger Portions for Profit Dip

Chipotle may have recently come under fire for its smaller portions, but the company noted in its recent earnings call that its more generous servings have negatively impacted profitability.

According to Business Insider, the company stated on Tuesday, Oct. 29, that the chain’s profit margins decreased last quarter as a result of a concentrated effort to give “consistent and generous portions” in every purchase.

“We know that portioning is a core equity of ours in the organization,” Chipotle’s interim CEO, Scott Boatwright, said during Tuesday’s earnings call. “We are committed to ensuring that we give the right portion to every guest that walks into the building.”

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The problem was initially brought to light this past summer when unhappy patrons of the restaurant chain took to social media to express their displeasure with the size of their protein scoops. They were protesting against what they perceived to be insufficient or irregular serving amounts.

Investors took notice; analysts from Wells Fargo even ordered 75 bowls of rice and chicken from eight Chipotle restaurants in New York City and discovered that the weight of each bowl varied significantly.

The burrito and bowl restaurant has since launched an attempt to guarantee that every customer receives a consistent meal at every visit as a result of the increased scrutiny.

“The benefit of last year’s menu price increase was more than offset by inflation across several items, most notably avocados and dairy, as well as higher usage as we focused on ensuring consistent and generous portions,” CFO Adam Rymer said on the earnings call.

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In response to criticism on social media about its flimsy portions over the summer, Chipotle acknowledged that some of its locations were undercharging their patrons and stated that it had recommitted to offering “generous portions.”

“There was never a directive to provide less to our customers,” said Brian Niccol, who was chairman and CEO at the time and has subsequently defected to Starbucks. “‘Generous portion’ is a core brand equity of Chipotle. It always has been, and it always will be.”

Niccol acknowledged during the analyst call that the criticism caused him to reflect. About 10% of its about 3,500 restaurants were identified as “outliers” in terms of serving portions by an internal inquiry based on customer surveys, and they required retraining to the “right standards.”

“We have also leaned in and reemphasized generous portions across all of our restaurants, as it is a core brand equity of Chipotle,” he said. “Our guests expect this now more than ever, and we are committed to making this investment to reinforce that Chipotle stands for a generous amount of delicious, fresh food at fair prices for every customer, every visit.”