Chipotle Faces Class Action Lawsuit Over Misleading Portion Sizes
New York, Wednesday, 8 January 2025.
Levi & Korsinsky has filed a class action lawsuit against Chipotle, alleging securities fraud over portion size misrepresentations, impacting stock prices and investor losses from February to October 2024.
Legal Action Details
The class action lawsuit, filed in the United States District Court for the Central District of California under the case title Stradford v. Chipotle Mexican Grill, Inc., No. 24-cv-02459, targets Chipotle Mexican Grill, Inc. (NYSE: CMG) [2]. The lawsuit alleges that between February 8, 2024, and October 29, 2024, the company made materially false and misleading statements regarding portion sizes and their impact on customer satisfaction [1][3]. Multiple law firms, including Levi & Korsinsky, Robbins Geller Rudman & Dowd LLP, and Rosen Law Firm, are actively involved in representing affected investors [1][2][3].
Core Allegations
The lawsuit centers on serious allegations about Chipotle’s business practices. According to the complaint, the company failed to disclose that its portion sizes were inconsistent and left many customers dissatisfied with their offerings [4]. Furthermore, to address these issues and maintain customer loyalty, Chipotle would need to ensure more generous portion sizes, which would inevitably increase their cost of sales [1][4]. This came to light during the Q3 2024 earnings call when interim CEO Scott Boatwright reported a cost of sales increase of 90 basis points from the previous year, reaching 30.6% [2].
Financial Impact and Investor Response
The revelation of these issues had immediate financial consequences, with Chipotle’s stock price dropping 8% following the October 29, 2024 earnings announcement [2]. The lawsuit seeks to recover losses for investors who purchased Chipotle shares or options during the specified period [1][3]. Former CEO Brian Niccol’s acknowledgment that ‘portion inconsistency was an issue at Chipotle’ and would lead to higher costs in Q3 2024 has become a central element of the case [2].
Immediate Action Required
Investors have until January 10, 2025 - just two days from today - to file for lead plaintiff status in this securities class action [1][3][4]. The law firms are particularly encouraging investors with losses exceeding $100,000 to come forward [3][4]. Notably, investors can participate in potential recovery without any out-of-pocket expenses through contingency fee arrangements [3], and class membership does not require serving as lead plaintiff [4].