Sweetgreen announced a reduction to its full-year financial guidance following weakness in consumer demand tied to concerns about a multistate cyclospora outbreak. The salad chain now anticipates same-store sales declines ranging from 7% to 8%, a substantial revision from the company’s prior projection of declines between 2% and 4%.
The company disclosed that adjusted earnings before interest, taxes, depreciation and amortization would fall to a range of negative $27 million to negative $23 million, compared with prior expectations for positive earnings between $1 million and $6 million. Sweetgreen emphasized that the pace and timing of consumer demand recovery remained uncertain amid the outbreak.
Notably, Sweetgreen has not been identified as a source in the cyclospora outbreak, which has affected at least 10,000 individuals and resulted in two deaths according to CDC data. The FDA attributed the contamination to iceberg lettuce from a Taylor Farms facility in central Mexico, with affected products subsequently recalled. Taco Bell, a Yum Brands restaurant, emerged as the sole nationwide chain linked to the outbreak and has already experienced a rebound in sales.
The outbreak’s impact extended beyond Sweetgreen. Chipotle Mexican Grill reported that cyclospora-related concerns dampened sales by approximately 2 percentage points during the second half of July. Additionally, Salad and Go, a struggling salad chain, filed for bankruptcy protection earlier in the week, citing consumer mistrust stemming from the outbreak as a factor that compounded its existing operational difficulties.
Sweetgreen also released its second-quarter financial results following the earnings announcement. The company reported a quarterly loss that exceeded analyst expectations, while revenue similarly underperformed Wall Street projections.
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