Sweetgreen announced a reduction to its full-year financial guidance on Thursday, citing consumer concerns about fresh produce consumption during an ongoing cyclospora outbreak. The company now projects annual same-store sales declines of 7% to 8%, compared to its prior forecast of 2% to 4% declines. The revision reflects diminished demand for fresh prepared foods, particularly salads, as the waterborne parasite outbreak has affected consumer purchasing behavior.
The cyclospora outbreak has sickened at least 10,000 people and caused two deaths, according to the Centers for Disease Control and Prevention. The Food and Drug Administration identified iceberg lettuce from a Taylor Farms facility in central Mexico as the likely source, resulting in product recalls. Although Sweetgreen has not been implicated in the outbreak, consumer anxiety about fresh produce has impacted sales across the sector.
The company also adjusted its earnings outlook significantly. Sweetgreen now expects to report an adjusted loss before interest, taxes, depreciation and amortization of $27 million to $23 million, compared to its previous forecast of earnings of $1 million to $6 million. Additionally, the company reported second-quarter results after trading closed, showing a steeper-than-expected quarterly loss and revenue that fell short of Wall Street expectations.
The outbreak’s impact extends beyond Sweetgreen. Chipotle Mexican Grill reported that cyclospora concerns affected sales by approximately 2 percentage points during the second half of July. Separately, Salad and Go filed for bankruptcy protection on Tuesday, citing consumer mistrust from the outbreak as a contributing factor to its business challenges. Taco Bell, the only nationwide restaurant chain directly linked to the outbreak, has already begun seeing sales recover.
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