Dive Brief:
- Sweetgreen’s already bad fortunes worsened Thursday when the company reported an 11.5% drop in same-store sales in Q4, according to an earnings release. Net losses ballooned to $49.7 million on the quarter and $134.1 million for the whole year,
- The dire straits the brand now finds itself in led to its Sweet Growth Transformation Plan, an initiative announced last quarter that focuses primarily on operational improvements, food quality, customer experience and brand relevance.
- Pricing is a likely point of intervention, CEO Jonathan Neman said on Sweetgreen’s Q4 earnings call, and the chain is planning a number of moves to strengthen its value propositions following a “comprehensive review of our menu and pricing architecture.”
Dive Insight:
One year ago, Sweetgreen was projecting same-store sales growth of 1% to 3% for 2025, a target it missed by a dramatic margin. While consumer headwinds have hurt most major fast casuals, Sweetgreen’s traffic drop in the fourth quarter was over 13%, by far the worst of the major players including Cava, Chipotle, Wingstop and Shake Shack.
Neman said that improving Sweetgreen’s value perception is one of its most important strategic priorities. The brand introduced lower-priced seasonal items last year, and its $10 ‘Tis the Season Harvest Bowl performed well enough that Sweetgreen launched a similarly priced promotion for a Chicken Ranch Avocado bowl on Feb. 9.
Neman said the offer was part of a “Craving of the Month” program, by which the brand presents loyalty members with an exclusive limited-time offer each month. The exclusivity of these initiatives helps drive digital engagement from new loyalty members and from lapsed consumers.
Bigger price changes are in store for the chain, Neman said. Sweetgreen will rework the pricing of its Create Your Own option to “deliver greater price clarity and a more intuitive ordering experience alongside clearly defined entry price entrees across our core menu categories,” Neman told analysts and investors.
Sweetgreen is testing a series of wraps, priced between $10.95 and $15, in 68 restaurants across Los Angeles, the Midwest and Manhattan, with a wider national deployment to follow if the test meets expectations, Neman said. During the testing process, Sweetgreen is working to integrate the wraps into its prep flow without disrupting the preparation of salads and bowls. The chain axed its popular Ripple Fries last year after adding too much complexity to restaurant operations.
Sharon Zackfia, a William Blair analyst, said in a research report that Sweetgreen has made significant progress in improving its operations.
“With a new COO hired last May and a new operations scorecard introduced last summer, about two-thirds of units are now meeting operational standards (versus 60% in the third quarter and one-third in the second quarter) against a moving benchmark (expectations raised as performance improves),” Zackfia noted.
The brand is tying manager compensation to store performance metrics, according to chief financial officer Jamie McConnell.
“We have updated our field bonus plan to align incentives directly with restaurant level performance, encouraging our leaders to think and act like owners with full accountability for sales and margin,” McConnell said on the earnings call.
This tighter control of operations could help integrate new menu items into store workflows, making it more likely for the wraps to perform well. If the wraps succeed, Neman said, they could fundamentally reshape Sweetgreen’s consumer base.
“If you look at the addressable market [for] wraps [and] handhelds there's a huge segment of the population being a bowl-only concept that we were not capturing,” Neman said. “This opens up the aperture a lot for the type of customers and occasions that we can see.”
But it could be several quarters before the chain sees any significant shifts and initiatives under its turnaround plan take hold. At present, Sweetgreen faces sharp pressure on traffic. Zackfia estimated the chain’s Q1 2026 same-store sales declines could top 10%, as consumer weakness and adverse weather plague the brand. Other factors also weigh against Sweetgreen in the short term.
“Key risks include geographic portability, a high concentration of locations in the New York metro area, and greater-than-average exposure to urban markets,” Zackfia wrote.
