Chipotle says it is taking steps to address portion size controversy

Investing.com-- Chipotle Mexican Grill Inc (NYSE:CMG) said on Wednesday that the fast food chain will commit to keeping portion sizes uniform across all its restaurants, addressing a slew of social media accusations that the firm was shrinking its portions. 

The firm denied that there was ever a directive to provide smaller portions to customers, and said that management had identified about 10% to 15% of its restaurants which were receiving a disproportionate amount of criticism over portion sizes. 

The company will be “doubling down” on training those restaurants, Chief Financial Officer Jack Hartung said in a post-earnings call. 

Hartung’s comments came after Chipotle clocked a stronger-than-expected second-quarter profit and also saw strong growth in comparable restaurant sales. 

But Hartuan also noted that the firm will take a hit from efforts to standardize its portion sizes, and that it was expected to see some margin pressure in the coming quarters. 

Still, CEO Brian Niccols noted that the Mexican fast food chain was already seeing improvements in customer feedback. 

“We have also leaned in and reemphasize generous portions across all of our restaurants as it is a core brand equity,” Niccols said in the post-earnings call.

Analysts at TD welcomed the management’s comments on portion sizes, and that the issue could be resolved in time for Chipotle to meet 7% comparable sales growth for the year. 

“We are pleased management grabbed the bull by the horns and addressed negative

publicity surrounding portion sizing that has been weighing on the investor narrative,” TD analysts wrote in a note. 

Still, TD cut Chipotle’s price target to $65.0 from $72.0, while lowering its 2024 EPS outlook by 2 cents. 

Chipotle had sparked controversy on social media earlier this year after several posters accused the firm of intentionally serving smaller portions. Social media users had also accused Chipotle employees of adding larger portions when they were they were being filmed, which resulted in a viral trend of filming Chipotle workers.