Casual salad chain Sweetgreen (NYSE: SG) missed Wall Street’s revenue expectations in Q3 CY2025, with sales flat year on year at $172.4 million. The company’s full-year revenue guidance of $685 million at the midpoint came in 2.5% below analysts’ estimates. Its GAAP loss of $0.31 per share was 76.2% below analysts’ consensus estimates.

Is now the time to buy SG? Find out in our full research report (it’s free for active Edge members).

StockStory’s Take

Sweetgreen’s third quarter results were met with a significant negative market reaction, as the company’s revenue and profit fell short of Wall Street expectations. Management attributed the performance to soft sales trends in key Northeast and Los Angeles markets and lighter spending among younger guests, especially those aged 25 to 35. CEO Jonathan Neman noted, “Performance was impacted by softer sales trends in our Northeast and Los Angeles markets, which together represent about 60% of our comp base.” The leadership team acknowledged that operational execution and guest engagement remain areas needing improvement as the company navigates a challenging consumer environment.

Looking ahead, Sweetgreen’s updated guidance is shaped by a renewed focus on operational discipline, menu innovation, and digital engagement to drive a return to profitable growth. Management outlined a five-point transformation plan, emphasizing operational excellence, improved value messaging, and more personalized digital experiences. CFO Jamie McConnell cautioned, “There’s meaningful work ahead…Over time, this work will drive margin improvement, stronger cash flow, and tighter financial discipline across the company to deliver steady, stable results.” The company aims to balance disciplined investment with product and technology enhancements as it seeks to strengthen performance.

Key Insights from Management’s Remarks

Management focused on addressing declining same-store sales and margins by pursuing operational upgrades, new menu options, and a strategic technology partnership to support future growth.

• Operational process overhaul: Sweetgreen launched Project One Best Way to standardize operating procedures and introduced new restaurant scorecards, aiming to improve throughput and accountability. Early results showed increased operational consistency, with the portion of restaurants meeting internal standards rising from one-third to approximately 60%.

• Menu and pricing architecture review: The company began a comprehensive review of its menu and pricing structure, including testing new entry price points and promoting larger protein portions. Management believes clearer value messaging and more accessible price tiers can attract and retain a broader customer base.

• Sale of Spyce business unit: Sweetgreen announced the sale of its Spyce technology division to Wonder, expecting to unlock around $100 million in liquidity and annualized G&A savings of $8 million. The agreement allows Sweetgreen to continue using Infinite Kitchen automation at favorable terms while focusing resources on core operations.

• Leadership changes: The company welcomed Jamie McConnell as the new CFO and Zipporah Allen as Chief Commercial Officer, with both roles expected to drive tighter financial controls and more effective brand and menu strategies.

• Loyalty program development: The SG Rewards platform, now at a six-month milestone, is seeing ongoing customer activation and increased frequency among loyal users. Management plans to expand personalized offers and enhance digital engagement to boost traffic and retention.

Drivers of Future Performance

Sweetgreen’s forward outlook is shaped by efforts to improve operational efficiency, enhance menu value, and leverage technology partnerships, while contending with persistent consumer headwinds.

• Operational discipline and cost control: Management is prioritizing tighter expense management, reviewing restaurant-level costs, and streamlining the organization to offset inflation and labor expenses. The company expects these actions to gradually improve margins and cash flow, though near-term pressures remain from tariffs and increased ingredient costs.

• Product and menu innovation: Sweetgreen plans to launch new menu items, such as protein-focused offerings and a handheld product, and is refining its pricing strategy. The company’s new stage-gate process is intended to ensure more predictable results from menu development and support a more compelling value proposition.

• Technology and partnership benefits: The Infinite Kitchen agreement with Wonder is expected to lower automation costs and provide access to future innovations, supporting productivity and food quality goals. Management believes these partnerships will help scale the business efficiently, despite a planned slowdown in new store openings.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will focus on (1) progress in stabilizing same-store sales and traffic in key markets, (2) evidence that new menu items and pricing strategies are attracting and retaining customers, and (3) measurable benefits from operational initiatives and the Infinite Kitchen partnership with Wonder. Monitoring the effectiveness of the loyalty program and improvements in restaurant-level margins will also be essential.

Sweetgreen currently trades at $5.02, down from $6.25 just before the earnings. In the wake of this quarter, is it a buy or sell? Find out in our full research report (it’s free for active Edge members).

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