Sweetgreen Faces Sales Decline and Strategic Shifts
Recent sales figures have not been favorable for Sweetgreen, the trendy salad chain that once dominated the lunch scene for young professionals. The company has experienced a noticeable drop in revenue, prompting it to rethink its approach to attract customers back with more affordable options and a stronger emphasis on protein.
Sweetgreen has attributed this decline to a spending slowdown among individuals aged 25 to 35, a demographic that previously fueled its growth. As restaurant prices continue to rise, this group is now being more cautious with their budgets. Additionally, Sweetgreen’s own pricing has come under scrutiny, with some salads priced over $15, which has led to customer hesitation.
According to the company’s third-quarter earnings call, sales fell by 9.5 percent compared to the previous year. In response, Sweetgreen is focusing on two key areas: value and protein. The latest dietary trend has seen Americans increasing their protein intake, and Sweetgreen aims to capitalize on this shift.
The brand has introduced a new ‘macro-tracking’ feature that allows customers to see the exact amounts of protein, fat, and carbohydrates in each meal, as well as how ingredient swaps affect the nutritional balance. This initiative is part of a broader effort to enhance transparency and provide better value to customers.
Operational Improvements and Menu Innovations
Earlier this year, Sweetgreen acknowledged that approximately two-thirds of its restaurant locations were not meeting operational standards. CEO and co-founder Jonathan Neman noted that only about 60 percent of the chain’s 266 restaurants meet the required operational benchmarks. The company is actively working to improve these numbers.
Neman emphasized the importance of creating clear entry prices and logical trade-up opportunities across both create-your-own and chef-curated menu options. He stated, “When guests know what they’re getting and feel good about it, it builds trust and drives loyalty over time.”
Sweetgreen has faced criticism for its high-priced salads, which many consider out of touch with consumer affordability. Earlier this year, the chain experimented with a $13 weekly bowl promotion, which generated significant engagement but also led to cannibalization among existing customers. Despite this, the promotion highlighted the potential for more entry-level price points on the menu.
In addition to its protein-focused initiatives, Sweetgreen may introduce new menu items that bridge the gap between affordability and health, including potential hand-held options. Neman mentioned that much of the pricing work will be evaluated in the coming months, with opportunities for different pricing tiers.
Strategic Growth and Financial Focus
Sweetgreen is also planning to slow down its development next year to focus more on operations. This year, the chain is on track to open a net of 37 new restaurants, including 18 that feature the Infinite Kitchen model. This model uses robotic automation to prepare food orders on a rotating conveyor belt, with ingredients dispensed from automated dispensers into bowls.
Next year, Sweetgreen expects to open between 15 to 20 restaurants, with about half of them being Infinite Kitchens. Neman stated, “We believe this strikes the right balance between growth and financial discipline.”
Jamie McConnell, Sweetgreen’s newly appointed chief financial officer, reported that the company initially saw a boost in sales in July following the launch of its summer menu. However, sales declined in August and September. “October is holding flat to September, so we’re running at low negative double digits right now,” said McConnell.
The 25 to 35-year-old consumer, who makes up about 30 percent of Sweetgreen’s customer base, has shown a 15 percent decline in activity. The company is also experiencing weaker performance during the dinner daypart, a segment that had shown strong growth just a year ago.
Following the earnings call, Sweetgreen’s stock plummeted more than 11% in after-hours trading. The company is now under pressure to implement effective strategies to reverse its declining sales and regain customer trust.