Sweetgreen, a fast-casual restaurant chain known for plant-forward salads and bowls, reported its financial results on August 7, 2025. The release revealed GAAP revenue of $185.6 million, missing consensus GAAP revenue estimates of $191.73 million by a significant margin. Same-store sales deterioration, weaker customer traffic, and increased costs drove a net loss of $(0.20) per share (GAAP). Overall, the quarter highlighted operational challenges, pressures on profitability, and disappointing demand trends despite continued investments in digital platforms and restaurant expansion.
| Metric | Q2 2025 | Q2 2025 Estimate | Q2 2024 | Y/Y Change |
|---|---|---|---|---|
| EPS (GAAP) | $(0.20) | $(0.10) | $(0.13) | (54 %) |
| Revenue (GAAP) | $185.6 million | $191.73 million | $184.6 million | 0.5% |
| Adjusted EBITDA | $6.4 million | $12.4 million | (48.4 %) | |
| Same-Store Sales Change | (7.6 %) | 9.3 % | (16.9 pp) | |
| Restaurant-Level Profit Margin | 18.9 % | 22.5 % | (3.6 pp) |
Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.
About Sweetgreen’s Business and Key Focus Areas
Sweetgreen (SG +0.00%) operates a network of restaurants across the United States, specializing in salads, warm bowls, and sides made from locally sourced, organic, and sustainable ingredients. It sets itself apart by emphasizing transparent sourcing through more than 140 food partners and a mission to serve plant-forward, nutrient-dense meals.
The company’s recent strategy has centered on digital transformation, building a robust online ordering experience and streamlining operations with technology such as its Infinite Kitchen automation. Expansion into new formats and locations plays a critical role, backed by a data-driven real estate approach. To succeed, Sweetgreen relies on a strong Food Ethos, consistent menu innovation, operational efficiency, digital engagement, and clear brand differentiation in a market shared with chains like Chipotle and Panera.
Quarter in Review: Performance, Operations, and Notable Events
Sweetgreen opened 9 net new restaurants, up from 4 in Q2 FY2024. Despite expanding its footprint and maintaining a focus on high-traffic sites, the company encountered a pronounced decline in same-store sales, with Same-Store Sales Change of (7.6)%. The (7.6)% decrease in Same-Store Sales, compared to 9.3% growth in Q2 FY2024, was mainly due to a 10.1% fall in customer traffic and changes in the mix of products sold. Menu price hikes provided a partial offset, adding 2.5% to same-store sales, but could not overcome the volume pressures.
Revenue grew slightly by 0.5%, reflecting the new restaurant openings, but did not meet expectations. Management noted that the $14.5 million in revenue from new restaurants was nearly canceled out by a $13.9 million decline in revenue from existing ones. The rapid expansion pace placed further strain on operations, leading to increased impairment and closure costs as five underperforming restaurants were written down.
Digital channels remained a notable strength, with 60.8% of sales generated online—up from 55.7% in Q2 FY2024. Owned digital channels, such as the proprietary app and website, accounted for 33.4% of revenue. The launch of the updated SG Rewards loyalty program in April contributed to digital engagement, adding about 20,000 new members a week. Early signs from the program were described by management as “encouraging,” and digital efforts help Sweetgreen collect valuable customer data and drive personalized marketing.
Menu innovation continued with the national rollout of Ripple Fries—a new side item—and collaborative limited-time offers, such as the Korean barbecue menu developed with COTE Steakhouse. Ripple Fries quickly became the company’s most-attached side offering and contributed positively to average transaction size. Such offerings are designed to sustain customer interest and increase the frequency of visits. These menu changes serve a dual role: reinforcing Sweetgreen’s food ethos and responding to consumer trends for variety and value.
Profit Margins, Cost Trends, and Operational Highlights
Restaurant-level profit margin (non-GAAP) was 18.9%, down from 22.5% in Q2 FY2024, a reduction of 3.6 percentage points versus Q2 FY2024. Restaurant-level profit margin was primarily impacted by a negative same-store sales change of 7.6% and increased restaurant-level advertising spend, partially offset by improved labor optimization. Restaurant-level profit (non-GAAP) dropped to $35.1 million from last year’s $41.5 million in Q2 FY2024, affected by both cost increases and lower same-store sales.
Adjusted EBITDA, a non-GAAP measure of core operating cash flow before certain expenses, halved from the previous year. Management cited increased restaurant-level advertising spend and a negative same-store sales change of 7.6% as key factors. General and administrative expense, which covers overhead costs, fell as a share of revenue due to reduced stock-based compensation and management salaries—a partial offset to margin pressure.
Impairment, pre-opening, and restructuring charges rose meaningfully compared to the prior year, signaling both aggressive expansion and the risks associated with underperforming locations. Tariff-related impacts on certain imported packaging were also noted, with management quantifying the impact as approximately 0.75% of revenue and expecting a reduction to approximately 0.4% in the second half of FY2025, but mitigation plans are underway to shift to domestic suppliers and limit future cost growth.
Leadership changes during the quarter included hiring a new Chief Operating Officer, Jason Cochran, who brings experience from restaurant brands such as Chipotle and Pizza Hut. His mandate is to improve operational standards, especially in older urban markets, and to address issues with speed, portioning, and consistency across digital and on-premise channels. The company’s AI-driven workforce management system is now live in the majority of its restaurants and has improved labor scheduling efficiency.
Forward Outlook and Guidance
Management lowered its guidance for FY2025. The new revenue target now stands at $700–$715 million, down from the previous range of $740–$760 million. Guidance for same-store sales was cut to a decline of (6)% to (4)% versus prior expectations of approximately flat performance. Restaurant-level profit margin (non-GAAP) is forecast at approximately 17.5%, and adjusted EBITDA was reduced to a range of $10–$15 million—half the earlier target.
Sweetgreen expects to open at least 40 new restaurants, with 20 incorporating Infinite Kitchen automation. Management cited early positive results from loyalty and menu launches but remained cautious given ongoing consumer demand weakness, promotional transitions, and sustained cost pressures. SG does not currently pay a dividend.
Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.
