On Wednesday morning, Sweetgreen stocks dropped by 10% after Chipotle Mexican Grill sued the company for trademark infringement over its new “Chipotle Chicken Burrito Bowl.” The lawsuit comes less than a week after the menu item was announced.
Sweetgreen is well-known for providing healthy food at scale, and the company has recently been attempting to diversify beyond its signature salads. The bowl will only be available for a limited time.
In its complaint, Chipotle claims to have sent Sweetgreen a cease and desist notice asking the company to drop “Chipotle” from the item’s name. Sweetgreen did not respond.
Chipotle alleges that it also suggested Sweetgreen alter the name to something that uses “chipotle in lower-case, in a textual sentence, to accurately describe ingredients of its menu item,” like a “chicken bowl with chipotle.”
In a statement during the product’s release, Sweetgreen’s co-founder and chief concept officer Nicolas Jammet explained that diner suggestions prompted the addition to the menu.
“Our customers’ feedback plays a major role in the new menu items we introduce, and the Chipotle Chicken Burrito Bowl is our answer to heartier meal options that can be enjoyed any time of the day. Inspired by bold chipotle spices, this protein-heavy option balances a brand-new flavor profile for Sweetgreen with whole grains and better-for-you ingredients that our customers love.”
The lawsuit further claims that the new product’s advertisements feature the word “Chipotle” in a font very similar to the one used in Chipotle’s logo and occasionally uses a shade of red that resembles Chipotle’s trademarked Adobo Red. Chipotle also alleges that the two chains are competitors in the fast-casual dining industry.
Along with asking for an injunction against Sweetgreen using “Chipotle” in the bowl’s name, Chipotle is also asking the courts for the profits made by Sweetgreen off the menu items.
In a statement to CNBC, Laurie Schalow, Chipotle’s chief corporate affairs officer, said that the lawsuit is a matter of protecting the company’s brand. The lawsuit states the item is “very similar and directly competitive.”
“We don’t typically comment on litigation, but we will say generally that we’re committed to protecting our valuable trademarks and intellectual property. Consistent with that, we will take appropriate actions whenever necessary to protect our rights and our brand.”
Shares of Sweetgreen have dropped 24% in 2023, reducing the company’s market value to $726 million and causing investors to worry about the company’s future.
However, despite general economic uncertainty, Chipotle has continued to enjoy robust business. During the same period, the fast food behemoth saw its stock value increase by 22% to $47 billion.
Moumita Basuroychowdhury is a Contributing Reporter at The National Digest. After earning an economics degree at Cornell University, she moved to NYC to pursue her MFA in creative writing. She enjoys reporting on science, business and culture news. You can reach her at email@example.com.