Sweetgreen shares dropped 11.5% following the quarter as investors reacted negatively to a sharper-than-expected deceleration in comparable restaurant sales and ongoing margin pressure, compounded by a cautious outlook that incorporated uncertainties from recent produce-related health incidents.
- Comparable restaurant sales declined 6.2%, signaling continued traffic weakness despite sequential monthly improvement.
- Restaurant-level profit margin contracted to 13.1%, reflecting margin compression amid operational challenges.
- Adjusted EBITDA showed a slight loss of $0.2 million, indicating the business is still struggling to return to profitability.
- Management highlighted operational improvements and new initiatives like wraps to drive frequency, but these have yet to offset broader sales declines.
- The outlook was tempered due to potential impacts from external supply issues, including a cyclospora outbreak (affecting the category) and a jalapeño recall, adding uncertainty to future performance.
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