Sweetgreen (SG -0.31%) hasn't been in the public markets for long. But it has certainly taken investors on a roller-coaster ride, tanking and soaring in a seemingly never-ending cycle. Shares are down 74% in 2025, as the market is clearly losing confidence in the business.
Investors might view the fast-casual chain as a ripe opportunity on the dip. Should you buy this under-the-radar restaurant stock right now?
Image source: Getty Images.
Skip this meal
Chipotle Mexican Grill historically set the tone in the sector, proving that a fast-casual model could thrive. Sweetgreen followed this path, focusing on healthy salads and grain bowls. But it's been struggling mightily this year, so it's best that investors don't buy shares.
During the second fiscal quarter (ended June 29), Sweetgreen reported a worrying 7.6% year-over-year decline in same-store sales (SSS), which is a critical metric for restaurant and retail investors to follow closely. Annual unit volumes also fell to $2.8 million.
Macro uncertainty is hitting the consumer, who's being discerning with how they spend. And Sweetgreen is showing that it's much more sensitive to economic forces.
Cheap for a reason
Sweetgreen isn't profitable. It posted an operating loss of $26.4 million during Q2. It's generally a very risky proposition to invest in companies that aren't yet registering positive earnings on a consistent basis. It's anyone's guess when the business will reach this important milestone.
Management expects SSS to drop 5% (at the midpoint) for the full fiscal year of 2025. It could take some time for things to improve for Sweetgreen, which isn't encouraging.
Even though shares trade at a historically cheap price-to-sales ratio of 1.4, it's smart to avoid Sweetgreen.
