A bit of a surprise emerged earlier today, as restaurant chain Sweetgreen (NYSE:SG) found itself in a lawsuit that was filed by Chipotle (NYSE:CMG) over a new product release at Sweetgreen. Both stocks lost ground in Wednesday’s trading, with Sweetgreen coming off much worse with a 6.3% loss and Chipotle losing a little under half that.
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The cause of all this value-burning kerfuffle? A new product at Sweetgreen that probably should have had a little more workshopping on its product name. The product in question is the Chipotle Chicken Burrito Bowl at Sweetgreen. It’s likely pretty obvious where the confusion comes in, and Chipotle Mexican Grill was not at all happy about it, calling it “trademark infringement.”
It doesn’t exactly help matters that Sweetgreen didn’t respond to Chipotle’s first attempt at settling the matter with a cease-and-desist letter that Chipotle sent. Yet Chipotle noted that not only did Sweetgreen use a similar font to Chipotle’s own trademark, but it also used a color scheme that was close to the Adobo Red that Chipotle favors on menus and promotions. This puts the obviously competitive food item in a position where it “may confuse consumers.”
Overall, analyst consensus calls Sweetgreen a Moderate Buy with an average price target of $11.17, giving it 62.12% upside potential. However, Chipotle stock is considered a Strong Buy with 9.32% upside potential thanks to its average price target of $1,853.81 per share.
