MW Sweetgreen's customers are cutting back on pricey salads. Will extra chicken help?
By Emily Bary
Sweetgreen's stock is sliding toward its worst day on record, and the company says it's boosting some portion sizes to enhance the value proposition
Sweetgreen is doing away with Ripple Fries as it looks to make its business less complex.
Consumers are getting more cautious about their spending - and that means cutting back on expensive lunch salads.
At least, that's the sentiment coming out of Sweetgreen Inc.'s $(SG)$ latest earnings, as the salad chain called out weak performance at its Northeast stores and forecast a 4% to 6% drop this quarter in same-store sales, a measure of revenue performance at locations that have been open at least 13 fiscal months.
Same-store sales fell 7.6% in the latest quarter.
Sweetgreen shares are tumbling 26% on Friday toward their worst day on record, and management was blunt in its commentary on the earnings call. "Let me be clear, we are not satisfied with the results we're reporting today," Chief Executive Jonathan Neman said.
Pricey salads were a cultural phenomenon, but now consumers are more focused on value. That means Sweetgreen has changed some of the ways it does business. For instance, the company is boosting portion sizes of tofu and chicken by 25%, aiming for better-quality salmon and chicken recipes and employing "strategic" pricing around limited-time offers.
Neman said the portioning moves are starting to pay off in the form of a 30% boost to customer satisfaction around sizes, even though the company had yet to advertise the changes in the lead-up to the earnings call.
"This is the first time we've talked to our customers about it," he said on Thursday.
Portion sizes have been a hot topic in the industry, with Chipotle Mexican Grill Inc. $(CMG)$ catching fire last year for inconsistent allotments. In response to the backlash, Chipotle set out to "ensure consistent and generous portions," and Chief Financial Officer Adam Rymer said earlier this year that the chain would continue to lean into "abundant portioning."
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Bigger portions can bring financial costs, however, as Chipotle has learned and as Sweetgreen has indicated as well. While Chipotle now says it's more than offset the margin hit from greater portion sizes by finding other efficiencies in its business, that wasn't the case earlier in its efforts.
Meanwhile, Sweetgreen has "found many offsets" to fund its own portion moves, by targeting items in general and administrative expenses, according to Neman. The restaurant chain is "working on other productivity efficiencies within the restaurant to offset that investment" in portion sizes.
He shared that Sweetgreen would be doing away with Ripple Fries, which are seasoned, air-fried potatoes. These are "something that consumers love," according to Neman, but the company realized that serving fries had become a "complexifier" for the business and a "distraction for our teams."
TD Cowen's Andrew Charles seemed somewhat skeptical that the company's efforts would turn things around quickly.
"Given the severe deterioration in trends, and one of the softest restaurant industry quarterly same-store-sales we can recall ex-COVID-19, we respectfully disagree with management's view of 'temporary headwinds,'" he wrote in a note to clients.
UBS's Dennis Geiger took an upbeat long-term view, however, writing that elements like the company's "leading store development, kitchen automation, menu innovation, and loyalty" could drive same-store-sales and earnings growth in the coming years.
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-Emily Bary
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August 08, 2025 12:01 ET (16:01 GMT)
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