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Chipotle faces plaintiff in proceedings pertaining to portion pandemonium

A disgruntled investor said Chipotle’s handling of its portion-size debacle cost him.

J. Edward Moreno

11/12/24 1:00PM

Chipotle was hit with a securities lawsuit by a disgruntled investor who claims leadership at the burrito chain lied about its portion-size debacle.

According to Michael Stradford, investors like him who owned Chipotle stock between February 8 and October 29 got misled by then-Chipotle CEO Brian Niccol and other leaders.

Specifically, Stradford said Chipotle downplayed social-media scrutiny over the chain’s portion sizes that started this spring. He also pointed to some quantitative evidence: Wells Fargo analysts bought 75 burritos from eight Chipotles to show the portion-size problem was real.

Niccol, now at Starbucks, assured investors in a July earnings call that the skimpy portions were simply outliers. But Stradford notes that Chipotle executives in their past two earnings calls have said their cost of sales are rising and profit margins are dipping, in part because they’re assuring generous portions to counteract the allegations.

Chipotle’s stock fell 1.9% and 7.9% after their July and October earnings reports, respectively, which Stradford said hurt him and other similarly situated Chipotle shareholders. (The company’s stock is still up over 33% year to date.)

In a statement, Chipotle’s chief corporate affairs officer, Laurie Schalow, said the company does not comment on active litigation but it “will vigorously defend our industry leading real food.”

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Texas sues Netflix, accusing streamer of spying on children and collecting user data without consent

The state of Texas filed a lawsuit Monday against streaming giant Netflix, alleging that the company has built a “behavioral-surveillance program of staggering scale.”

The suit alleges that Netflix is “deceptively designed” to be addictive, using features like autoplay to get viewers hooked, “mining those users for data, and then converting that data into lucrative intelligence for global advertising juggernauts.”

“When you watch Netflix, Netflix watches you,” the lawsuit reads.

“This lawsuit lacks merit and is based on inaccurate and distorted information,” Netflix said in a statement to Sherwood News. “Netflix takes our members’ privacy seriously and complies with privacy and data‑protection laws everywhere we operate.”

Texas is seeking civil penalties of “up to $10,000 per violation” of the Texas Deceptive Trade Practices-Consumer Protection Act, along with an additional penalty of up to $250,000 per violation involving a consumer aged 65 or older.

“Netflix is not the ad-free and kid-friendly platform it claims to be. Instead, it has misled consumers while exploiting their private data to make billions,” said Texas Attorney General Ken Paxton in the press release announcing the lawsuit.

Netflix did not immediately respond to a request for comment.