Sweetgreen lowers sales outlook citing illness outbreaks
Salad chain Sweetgreen has significantly lowered its future sales outlook, now predicting same-store sales to drop by up to 8%. The decline is attributed to a multi-state outbreak of cyclosporiasis impacting demand.
Sweetgreen, a prominent salad chain, has revised its 2026 financial outlook downward, projecting a 7% to 8% decrease in same-store sales. This marks a substantial shift from its previous forecast of a 2% to 4% decline. The company cited the ongoing multi-state outbreak of cyclosporiasis, which began in mid-July, as the primary reason for reduced consumer demand for fresh prepared foods.
The company also reduced its restaurant-level profit margin expectations to a range of 10.5% to 11%, down from 14.2% to 14.7%. The most significant impact is on its adjusted EBITDA forecast, which has swung from a projected $1 million to $6 million profit in the first quarter to an anticipated loss of $23 million to $27 million for the year. Sweetgreen stated that the pace and timing of recovery remain uncertain.
This revised forecast comes shortly after the company removed jalapeños from two dressings due to a Centers for Disease Control and Prevention (CDC) recall of the pepper linked to salmonella infections. Sweetgreen's stock price reflected these concerns, falling more than 15% in premarket trading on Friday and already down over 24% in the past month.
Sweetgreen maintained its plan to open approximately 13 net new restaurants this year. However, this figure represents a considerable slowdown compared to previous years. CEO Jonathan Neman indicated that restaurant openings will continue at a conservative pace, focusing on high-performing locations. He suggested that the company is in a "slow down to speed up" phase, aiming to strengthen the core business before accelerating expansion.