Sweetgreen Cuts Outlook – Second Quarter Earnings
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Sweetgreen shares tumbled 23% on Friday after the fast-casual salad chain considerably lowered its 2025 revenue outlook for the second consecutive quarter. The company cited a confluence of challenges, including issues with its loyalty program, weakening consumer sentiment, tariff headwinds, and operational difficulties within its stores.
Revenue Outlook Slashed
Sweetgreen now anticipates full-year 2025 revenue between $700 million and $715 million,a substantial reduction from its previous projections. In May, the company forecast revenue of $740 million to $760 million, and in February, it initially predicted $760 million to $780 million.
The company also expects negative same-store sales for the entire year, forecasting a decline of 4% to 6%, a stark contrast to its earlier expectations of single-digit growth. Restaurant-level profit margin for 2025 is projected to be 200 basis points lower than the May outlook, with tariffs contributing a 40 basis-point decrease.
“A really, Really Rough quarter”
During a Thursday analyst call, Sweetgreen CEO Jonathan Neman acknowledged a difficult quarter, attributing the poor performance to both external pressures and internal factors. He pointed to “a more cautious consumer habitat starting in April, lapping a tough comparison with last year’s prosperous steak launch and the transition of our new loyalty program at the beginning of the quarter.”
Q2 Earnings and Revenue Fall Short
Sweetgreen reported a second-quarter earnings and revenue miss. The company posted a loss of 20 cents per share, exceeding the analysts’ expected loss of 12 cents (as surveyed by LSEG). Revenue reached $186 million, falling short of the LSEG estimate of $192 million.
Same-store sales experienced a notable drop of 7.6% during the quarter, a considerable underperformance compared to the 9.3% increase reported in the same quarter last year.Analysts, according to StreetAccount, had anticipated a 5.5% decline.
Loyalty Program Transition a Drag
Executives highlighted “loyalty headwinds” as a key contributor to the disappointing results. The shift from the Sweetgreen+ subscription program to the new SG Rewards program created a 250 basis-point drag on second-quarter same-store sales. Neman noted a decline in revenue from the smaller, high-frequency Sweetgreen+ customer base, but expressed confidence that this impact would be temporary.
Focus on Operational improvements and customer Satisfaction
Looking ahead, Sweetgreen leadership emphasized a focus on enhancing customer satisfaction and improving store operations.Neman revealed that currently, only one-third of restaurants are meeting or exceeding performance standards, indicating a substantial prospect for improvement within the remaining two-thirds of locations.
The company plans to address these operational challenges through the leadership of new Chief Operating Officer Jason Cochran and the implementation of “Project One Best Way,” a program designed to improve speed,food quality,and portion sizes.
Consumer Spending Concerns
Sweetgreen Chief Financial officer Mitch Reback acknowledged that pressure on consumer spending has persisted longer than initially anticipated.
“It’s pretty obvious that the consumer is not in a great place ” Neman added, underscoring the broader economic challenges impacting the company’s performance.