Sweetgreen Cuts Outlook After Cyclospora Fears
Sweetgreen cuts outlook after cyclospora outbreak fears curbed demand, lowering comparable-sales targets and raising investor focus on near-term earnings.
KEY TAKEAWAYS
- Lowered full-year comparable-sales guidance to a decline of 7.0% to 8.0%.
- Adjusted EBITDA guidance moved to a $23 million to $27 million loss, signaling a near-term profitability hit.
- Management said July comps were hit by about 600 basis points, leaving recovery timing uncertain.
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Sweetgreen, Inc. cut its full-year 2026 outlook on Aug. 6, 2026, citing reduced consumer demand linked to a multistate cyclospora outbreak. The company also removed jalapeños from an affected supplier as a precaution.
Guidance and Earnings Impact
Sweetgreen reported second-quarter results for the period ended June 28, 2026, showing comparable sales down 6.2%, marking the chain’s sixth consecutive quarterly decline. The company lowered its full-year comparable-sales forecast to a decline of 7.0% to 8.0%, down from a prior projection of 2.0% to 4.0%. The updated outlook reflects reduced consumer demand for fresh prepared foods since mid-July, the company said in its release.
Adjusted EBITDA guidance shifted to a loss of $23 million to $27 million, reversing an earlier expectation of a $1 million to $6 million gain. This change signals a near-term profitability setback, increasing pressure on cash flow and operational spending.
CFO Jamie McConnell attributed about a 600-basis-point hit to July comparable sales following the mid-July cyclospora headlines, indicating a sharp, concentrated drop in customer activity. The company said the pace and timing of recovery remain uncertain, complicating efforts to restore sales and margins.
Food Safety and Exposure
Sweetgreen said it is not implicated in the cyclospora outbreak and does not carry iceberg lettuce, which management identified as the implicated ingredient. The company emphasized these points to limit reputational damage from the broader produce scare.
As a precaution, Sweetgreen removed jalapeños from an affected supplier after a voluntary recall tied to a separate salmonella investigation. Public-health agencies described a multistate Salmonella outbreak linked to jalapeños, with regulators assessing whether contaminated products reached grocery stores. This added caution for consumers wary of fresh produce, further challenging Sweetgreen’s recovery.
The guidance reduction and precautionary product removal highlight management’s warning that the timing of recovery and near-term profitability remain uncertain.
