Dive Brief:

• Chipotle filed suit against Sweetgreen for alleged copyright infringement on April 4, according to a complaint filed in the United States District Court for the Central District of California Southern Division.
• The burrito giant alleges the salad brand’s use of the word “Chipotle” in marketing for its Chipotle Chicken Burrito Bowl infringes on Chipotle’s copyrighted uses of that word, citing the salad chain’s comments on Instagram as evidence Sweetgreen intended to compete directly with Chipotle. 
• Chipotle seeks a jury trial, hoping to force Sweetgreen to stop using Chipotle with a capital C, or in all-caps, or on colorful backgrounds similar to Chipotle’s own colored branding. The Mexican chain seeks an order for Sweetgreen to pay Chipotle all the profits from the alleged infringement, plus damages and legal costs.

Dive Insight:

The suit targeting Sweetgreen’s Chipotle Chicken Burrito Bowl, which it debuted on March 30, comes as the salad chain struggles with steep losses. 

According to the company’s 10-K, Sweetgreen suffered a net loss of around $190 million in 2022 driven by growing G&A, labor and food costs, and the company’s stock significantly underperformed the NYSE average. In a statement on risk factors, Sweetgreen said it was possible that such expenses would continue to outstrip revenue for a while.

“We expect our operating expenses to increase significantly in the foreseeable future, as we grow our business, increase our new restaurant openings, and invest into new technology, and we may not achieve profitability,” the company said.

Sweetgreen’s Chipotle Chicken Burrito Bowl is part of a widespread trend towards emphasizing menu innovation to capture diner interest and compete against other QSR and fast casual brands. The menu item, Restaurant Business reported in an article cited in the lawsuit, may have been intended to help the salad chain capture diner share in the dinner daypart.

Sweetgreen has been trying to capture more sales by launching catering and experimenting with drone technology intended to save delivery labor. Last summer, the chain laid off 5% of its support staff to constrain costs as it struggled to reduce losses. This suit by Chipotle, a larger competitor, may prove a drag on Sweetgreen should it turn into a protracted and expensive legal battle.

Sweetgreen said it would not comment on ongoing litigation in an email to Restaurant Dive.