During Chipotle’s second quarter earnings call Wednesday after market, CEO Brian Niccol acknowledged the proverbial elephant in the room: shrinkflation accusations. Chances are if you’re a regular TikTok scroller, you’ve seen some of those accusations, most of them lobbed by customers recording the chain’s frontline workers with their phones to ensure there is no portion downsizing.
Chipotle has responded to these claims with its own TikTok content, while Niccol has also denied in several interviews that the company is issuing smaller portions. But during the company’s earnings call, he noted that the company now has a plan in place to further address such allegations.
“There was never a directive to provide less to our customers. Generous portions [are] a core brand equity of Chipotle. [They] always [have] been, and always will be,” he said. “With that said, getting the feedback caused us to relook at our execution across the entire system with the intention to always serve our guests … custom burritos and bowls with generous portions.”
To be more consistent, Chipotle is homing in on what it calls “outlier” portion scores based on consumer surveys. Niccol said lower scores impact about 10% of the company’s 3,500 restaurants.
“We are reemphasizing training and coaching around ensuring we are consistently making bowls and burritos correctly,” he said. “We have also reemphasized generous portions across all of our restaurants, as it is a core brand equity of Chipotle … We really needed to train up roughly 10% of the system.”
Niccol added that the company is committed to making this investment but did not disclose what that investment entails. CFO Jack Hartung said investments to ensure “generous” portions will be offset by “efficiencies and innovation.”
“We decided that this brand equity called ‘generous portions’ is something we don’t want to take for granted. We don’t want to take something that’s been a positive all these years and have it turn out to be a negative because of some social media comments,” Hartung said. “So, we’ve made this investment and we’ll continue to make this investment. We already have a number of initiatives underway; some are operational, some are supply chain efficiencies.”
Niccol said the initiatives and investments are already starting to pay off.
“We’re already beginning to see our actions positively reflected in consumer scores and our value proposition remains very strong,” he said. “I’m already seeing it in social media, people commenting on the burritos and bowls they’re getting. I think the best source of marketing is word of mouth as people have these experiences.”
Chipotle’s second quarter generated strong sales and traffic gains, including an 11.1% increase in same-store sales and an 8.7% increase in transactions.
Contact Alicia Kelso at [email protected]
