After customers protested its inconsistent portion sizes earlier this year, Chipotle made sure that all its stores’ scoop sizes were up to par. And apparently, it paid the price for more rice.
The company reported mixed earnings this week, with its revenue coming in lower than analysts expected, even as foot traffic to its restaurants and same-store sales increased.
Food and beverage costs also rose, said chief financial officer Adam Rymer, in part thanks to its decision to fix the inconsistent portion problem following widespread social media backlash.
“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,” Rymer said on the earnings call.
The combination of higher prices for avocados among other ingredients, along with its portion policy, increased cost of sales by just over one percentage point, Rymer added.
Still, despite the higher costs, Chipotle interim CEO Scott Boatwright said the company remains committed to doling out generous portions, a policy announced in July by former chief executive Brian Niccol, who jumped ship to lead Starbucks just a month later.
“We know that portioning is a core equity of ours in the organization,” Boatwright said. “We are committed to ensuring that we give the right portion to every guest that walks into the building.”
Chipotle’s move to guarantee hefty servings comes after former CEO Niccol as well as founder Steve Ells both denied that anything had changed with the restaurant chain’s portions. Yet a report by Wells Fargo from June found a wide disparity in the weights of 75 burritos ordered at New York City locations.
Chipotle did not immediately respond to Coins2Day’s request for comment.
Jack Hartung, Chipotle’s former CFO and now president of strategy, finance, and supply chain, told Bloomberg in July that every customer would be guaranteed two substantial scoops of rice and four ounces of meat.
The restaurant chain will look to make up for the investment it made in its generous portions policy with “efficiencies and innovation” in its supply chain over the next several quarters, said Rymer on this week’s earnings call.
And so far, the company’s portion efforts have made a difference, with its consumer metrics numbers showing higher scores for portions, Boatwright said. He has also seen the change firsthand in social media posts about Chipotle.
“We’ve seen strong improvement, even through our social channels … Now it’s a reverse of what we saw earlier in the year, around people posting big burritos, big bowls, and really excited about portioning they’re getting in the Chipotle brand,” he said.
