Sweetgreen's (SG +0.37%) disastrous 2025 is finally in the books, and the fast-casual salad slinger saved the worst for last.
Comparable sales declined 11.5% in the fourth quarter, and revenue fell 3.5% to $155.2 million. The company missed estimates on both the top and bottom lines, and its guidance for 2026 was uninspiring, calling for comparable sales of between -2% and -4%, and for its restaurant-level profit margin to compress to 14.2%-14.7%.
The news closed out an epic collapse for the salad chain, which had come into 2025 riding high. Comparable sales rose 6% in 2024, and the company reported adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) of $18.7 million that year.
The stock is now down 87% from its peak in late 2024.
Image source: Sweetgreen.
What went wrong with Sweetgreen
It's not entirely clear how things went in reverse so quickly for Sweetgreen. The fast-casual stock faced a setback from the LA wildfires in the first quarter and lost some loyalty members when it switched from its Sweetpass+ subscription to a more traditional loyalty program in the second quarter.
In November, Sweetgreen said it was selling Spyce, the business that contains its Infinite Kitchen automation system, a surprising move that seemed designed to raise cash for the company, though Sweetgreen retained the rights to use the Infinite Kitchen in its restaurants.
Other fast-casual chains like Chipotle and Cava have also struggled recently due to headwinds in discretionary spending for younger consumers, seeing sales growth evaporate, but Sweetgreen's performance was still significantly worse as it finished the year with a same-store sales decline of 7.9% and a revenue increase of just 0.4%. Complaints are common online about high prices for its food, and poor value perception seems to play a role in its struggles.
While its 2026 guidance doesn't call for a comeback, the company will benefit from easier comparisons and seems to be staking its chances of a recovery on wraps, a brand-new menu item for the chain. CEO Jonathan Neman said that menu innovation is a key part of its transformation plans.
Wraps are coming to Sweetgreen
Last week, Sweetgreen said it had begun a limited market test of wraps in New York, the Midwest, and Los Angeles locations. The move marks the company's first major move to expand its entree selection beyond bowls. To start with, the menu includes classic chicken caesar, chicken jalapeno ranch, and chicken salad bacon club.
The wraps could also solve the problem Sweetgreen is facing with its price perception, as wrap prices start at $10.95 at select locations and are priced below $15 at all restaurants where they're available.
There are some positive reviews for the wraps online, but it's too soon to judge how they're performing. Sweetgreen said that they would be rolled out to more locations in mid-2026 if they prove to be popular enough.
NYSE: SG
Key Data Points
Can Sweetgreen get back in the green?
If there's a silver lining here, it's that Sweetgreen stock has fallen so far that its valuation seems to ignore the chance of a recovery. After a horrendous earnings report, the stock was down 9.6%, which seems like a relatively modest response given the poor results.
Sweetgreen stock now trades at a price-to-sales ratio of just 1, though the company will have to return to growth and improve profitability for the stock to move higher.
Despite the considerable headwinds facing the company, its average unit volumes have historically been high, at $2.9 million before the recent decline, showing its restaurants are popular. A turnaround is not out of the question, especially if the broader macro climate improves.
2026 is likely to be another tough year for Sweetgreen, but even a modest sign of improvement could send the stock higher. Wraps could be the catalyst the company needs.
