To counter its reputation for high prices, Sweetgreen added lower-cost wraps to its menu. Just as sales picked up, food-safety scares involving lettuce and jalapeños ate into demand in the restaurant sector.
But Sweetgreen executives remain convinced that menu changes will help bring in more diners.
The chain launched four below-$15 wraps in all its locations in May, in part to help address its standing as a place with $20 lunches. The new menu items also anchor a turnaround effort that includes improving food quality and speeding up service. After several quarters of double-digit declines, transactions stabilized in June and turned positive in early July, signaling initial momentum for the wraps.
When consecutive contamination scares hit shredded iceberg lettuce and jalapeños, Sweetgreen rushed to reassure diners that it doesn't use iceberg lettuce and its suppliers weren't affected, and it tightened safety protocols. But customers pulled back anyway: Same-store sales fell 6.2% in the company's latest quarter compared with a year earlier as traffic dropped 2%.
Management in response cut its full-year outlook. The chain now expects same-store sales to drop between 7% and 8% for the year, compared with its previous forecast for a decline between 2% and 4%.
The hope is that as some food safety fears fade, Sweetgreen's sales and traffic will benefit from its focus on value, especially the wraps. "When you'd walk into a Sweetgreen, you'd see more things above $15 than you would see under $15," said Chief Financial Officer Jamie McConnell. "So psychologically, even though a lot of our prices could be lower than some of our peers, we were viewed as a very expensive company because we didn't have any of those entry prices in."
Sweetgreen has also increased portion sizes and is clarifying pricing when customers create their own bowls or salads. "What used to happen is you'd start off with a $10 green bowl, and then you go down the line, add all of these different things, and before you know it, you have a $22 salad and you're pissed, right?" McConnell said. "We want to make sure that's more transparent," which means diners get a protein, two bases and four toppings for around $13, with dressing and bread included, she said.
The chain's all-in average order value, including extras such as drinks and delivery, is around $20, with entrees averaging nearly $15, according to the CFO.
At an entry price of around $11 and averaging roughly $13 with premiums like avocado, wraps provide a lower price point as Sweetgreen moves away from deep discounts. While deals like buy-one-get-one free and $10 promotions for loyalty members initially brought people in, guests rarely converted to regular full-price diners, McConnell said.
Lower starting prices give customers flexibility, letting budget-conscious diners stay under $15 while leaving room to splurge on more premium menu items such as salmon or steak. For McConnell, driving store traffic takes priority over upsells, particularly as consumers grapple with persistent inflation and elevated gas prices.
Wraps also attract customers who avoid salads altogether, said Margaret-May Binshtok, a restaurants equity research analyst at Wolfe Research. Binshtok, who tracks social-media sentiment, found that roughly a third of first-time visitors posting about Sweetgreen in September ordered a wrap. Meanwhile, social-media complaints about prices fell to around 1.5% in the third quarter from between 4% and 5% in the first three months of the year.
"You're starting to see that momentum with wraps kind of reappear," Binshtok said, adding that improving value perception remains critical for Sweetgreen's long-term same-store sales growth.
Beyond pricing, Sweetgreen is improving food quality. Kitchens are looking at how often to cook chicken without sacrificing flavor. They cut lettuce and tomatoes every morning instead of the night before.
The chain is also pushing to get food out faster. For instance, kale now comes de-stemmed from suppliers. The new wraps slowed lines down because some workers struggled to roll them quickly, so now one person is assigned to wrap assembly during peak hours, primarily at busy locations, McConnell said.
"People don't want to always come into Sweetgreen, because they feel like it's slow," she said. "If you can go into a restaurant, be in and out with your salad in under five minutes, that would be the goal."
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