Chipotle says ensuring 'consistent and generous portions' has taken a toll on its profitability
- Chipotle says it's tried to ensure "consistent and generous portions" after customer complaints.
- The move and unusual price fluctuations for avocados have hit the chain's profitability.
It has been a big year for the humble scoop — at Chipotle, at least.
It started when dissatisfied customers, protesting against what they saw as skimpy or inconsistent serving sizes at the restaurant chain, took to social media this summer to complain and to try to maximize their meals.
Then, investors noticed, with one analyst going so far as to order 75 chicken and rice bowls from eight New York City Chipotle locations and finding that the total weight of each varied considerably.
All the scrutiny prompted the burrito-and-bowl chain to embark on an initiative to make sure everyone is getting a consistent meal with every visit.
"We know that portioning is a core equity of ours in the organization," interim CEO Scott Boatwright said during Tuesday's third-quarter earnings call. "We are committed to ensuring that we give the right portion to every guest that walks into the building."
While that's good news for Chipotle diners, the chain said it was partly the reason for a hit to profitability in the last fiscal quarter.
"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 call.
Rymer detailed that an unusual price trend for avocados — which he said had "abnormally low" prices last year — and the portion "investment" combined to create more than a percentage point drag on profits.
It appears to be money well-spent, however, as Boatwright highlighted significant improvement in internally tracked customer satisfaction metrics compared to the spring.
"We know we're delivering value for the consumer, especially in this really tight environment, and we'll continue to lean into that," he said.