Sweetgreen's Performance Plummets, Stock Crashes
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 5 days ago
0mins
Should l Buy SG?
Source: Fool
- Performance Collapse: Sweetgreen's Q1 comparable sales plummeted 12.8%, with overall revenue falling 2.9% to $161.5 million, missing estimates of $163.6 million, indicating severe challenges in the fast-casual salad market.
- Customer Loss Intensifies: Average annual sales per store dropped from $2.91 million to $2.57 million, highlighting significant customer attrition, which poses revenue challenges even as new stores are opened.
- Profit Margin Decline: Restaurant-level profit margin fell from 17.9% to 10%, and GAAP operating loss widened to $34.3 million; although a net profit was reported, it was primarily due to gains from the sale of Spyce, reflecting the company's fragile profitability.
- Cautious Future Outlook: While management anticipates a 2%-4% decline in comparable sales for the year, there is optimism surrounding the newly launched lower-priced wraps, which are expected to attract both new and returning customers; if comparable sales rebound before year-end, the stock could see a significant recovery.
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Analyst Views on SG
Wall Street analysts forecast SG stock price to rise
14 Analyst Rating
3 Buy
10 Hold
1 Sell
Hold
Current: 6.890
Low
5.00
Averages
7.57
High
10.00
Current: 6.890
Low
5.00
Averages
7.57
High
10.00
About SG
Sweetgreen, Inc. is a restaurant and lifestyle brand that serves healthy food at scale. The Company has designed its menu to be customizable and convenient to empower its customers to make healthier choices for both lunch and dinner. The Company's core menu features approximately 13 signature items which are offered year-round in all of its locations, including its new steak plate. In addition to its core menu items, its single most popular item is the custom salad or bowl, which can include combinations from 40-plus ingredients as well as its made-from-scratch dressings. On its Owned Digital Channels, it offers exclusive menu items, including seasonal digital exclusives and collections relevant to each customer. It has a five-channel model that is designed to help its customers to order. The Company's five-channel model includes Pick-Up, Native Delivery, Outpost and Catering, In-Store, and Marketplace. It has approximately 250 restaurants across the country.
About the author

Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Performance Collapse: Sweetgreen's Q1 comparable sales plummeted 12.8%, with overall revenue falling 2.9% to $161.5 million, missing estimates of $163.6 million, indicating severe challenges in the fast-casual salad market.
- Customer Loss Intensifies: Average annual sales per store dropped from $2.91 million to $2.57 million, highlighting significant customer attrition, which poses revenue challenges even as new stores are opened.
- Profit Margin Decline: Restaurant-level profit margin fell from 17.9% to 10%, and GAAP operating loss widened to $34.3 million; although a net profit was reported, it was primarily due to gains from the sale of Spyce, reflecting the company's fragile profitability.
- Cautious Future Outlook: While management anticipates a 2%-4% decline in comparable sales for the year, there is optimism surrounding the newly launched lower-priced wraps, which are expected to attract both new and returning customers; if comparable sales rebound before year-end, the stock could see a significant recovery.
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- Industry Traffic Decline: According to Black Box Intelligence, restaurant traffic fell 2.3% in March compared to the previous year, indicating that consumers are opting for lower-cost dining options in a high gas price environment, posing ongoing risks for many restaurant chains.
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- Applebee's Strategy: To attract budget-conscious diners, Applebee's is accelerating its rollout of an All-You-Can-Eat special for $15.99, aiming to boost traffic and enhance its competitive position in the market amid rising costs.
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