Daily Times

TORONTO, April 6 (Reuters Breakingviews) – The fight for the American office lunch is getting spicy. Chipotle Mexican Grill (CMG.N)sued salad purveyor Sweetgreen (SG.N) this week for using its trademark “to sell a product that is very similar and directly competitive to Chipotle’s chicken burrito bowl.” The companies said by Thursday that they had settled amicably after Sweetgreen decided to rename the contentious offering. The short-lived fight nonetheless underscores the lengths at which scrappy restaurant operators will go to chase consumer dollars.

The two companies may have similar recipes, but their financial fortunes are very different. Shares of Sweetgreen, backed by tennis extraordinaire Naomi Osaka, are down 86% from the company’s $52 opening price during its public debut in November 2021, while Chipotle’s are down just 5% over the same time period. For restaurants that have been open longer than 13 months, Chipotle’s sales grew faster than Sweetgreen’s in the fourth quarter. Earnings at the home of the Chicken Al Pastor are growing, while Sweetgreen remains in the red.

Both companies have slathered on a technology-flavored dressing, meanwhile. Sweetgreen billed itself as a tech innovator when it first went public and acquired robotic-kitchen company Spyce back in 2021. Chipotle, for its part, announced last year that it was launching a $50 million venture fund, and has also tested a robotic tortilla-chip maker, Chippy. That could explain why Chipotle’s valuation, at nearly 5 times forward sales, is more than double that of Sweetgreen’s.

Everyday competition takes on a new urgency in a recessionary environment. Consumers are more discerning about how they spend their money, and have cut back on restaurant spending, meaning that companies are having to safeguard their intellectual property. Chipotle, through brand recognition alone, appears to have the upper hand, but for smaller rival Sweetgreen, which has had to rename its copycat bowl, the stakes are much higher. Sweetgreen has tweaked its menu in response to the lawsuit; it will have to make bigger changes if it wants to survive more existential battles.

Chipotle Mexican Grill sued rival U.S. take-out chain Sweetgreen for violating its trademarks rights in a similarly branded burrito bowl on April 4, leading to a prompt settlement.