Chipotle Mexican Grill (CMG) recently reported its second-quarter results. The restaurant chain beat Wall Street analysts’ estimates in revenue and earnings and noted an increase in traffic. However, after fans complained about the issue on social media, the CEO also accepted that some of its restaurants offered smaller portions to its web fans.
Chipotle reported adjusted earnings per share of 34 cents, while Wall Street analysts polled by LSEG had estimated an EPS of 32 cents. It also posted a higher revenue of $2.97 billion, while analysts had estimated a revenue of $2.94 billion.
The company also reported an 18.2 percent net sales increase to $2.97 billion. Same-store sales climbed 11.1 percent, higher than the StreetAccount estimate of 9.2 percent.
Chipotle shares rose 13 percent in extended trading but fell to about 3 percent higher. The restaurant, famous for its burritos, saw a 17 percent decline in July, and investors were concerned about the restaurant industry’s general decline. The company also offered a 50-for-1 stock split last month.
Chipotle faced a backlash on social media as web fans complained that their burrito bowls were smaller. However, it reported an 8.7 percent increase in restaurant traffic.
On a Wednesday earnings call, CEO Brian Niccol finally disclosed that Chipotle had investigated its restaurants and found that one in ten offered smaller portions to its web fans.
The company looked into the small portions issue after many complaints on social media from web fans and a Wells Fargo team, who ordered and weighed 75 identical bowls from different locations and found portions “varied widely.”
CEO Niccol also said, “But I want to emphasize that 90% of our restaurants are doing business as usual. [B]ut we needed to train roughly 10% of the system.”
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