Sweetgreen’s ongoing turnaround efforts may be beginning to yield results, though the salad chain is still handling a period of soft sales. CEO Jonathan Neman stated on an earnings call Thursday that investments in regional and restaurant-level management are paying off. The company reported a 6.2% decline in same-store sales for the quarter.
While a drop is negative, it marks an improvement over the 7.6% decline recorded in the previous quarter and the 12.9% drop seen in the first quarter. The trajectory suggests the brand’s operational fixes are gaining some ground. Neman pointed to specific success stories, noting that in Seattle and New York, the results are clear. In those markets, where turnaround changes are most advanced, both locations returned to positive transaction comps in the second quarter.
Overall transaction comps were flat in June. “Our results are not where they need to be,” Neman said, acknowledging the work ahead. The chain is still facing significant financial pressure. The company posted a net loss of $26.3 million in the second quarter, which equates to a negative 13.6% margin.
Operational Speed and Efficiency
A major component of the recovery strategy involves preparing restaurants for peak demand. Throughput is critical for fast-casual chains, and Sweetgreen has spent recent months reworking its processes. In June, the company introduced weekly accountability measures at its high-volume locations.
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The changes produced immediate data. Frontline peak entrees prepared per hour rose from the low 50s in May to the low 60s in June. “On our busiest days, our best restaurants surpassed 250 entrees an hour, which shows the opportunity ahead as we scale this process,” Neman said.
This operational focus mirrors the playbook used by other fast-casual chains that hit a growth wall, where fixing the basics usually precedes marketing blitzes. It is a slow, unglamorous process, but stabilizing kitchen operations often provides the foundation for any sustained sales recovery later on.
New Menu Items and Pricing
The company is also betting on menu innovation to drive traffic. Wraps launched in May and quickly became a significant part of the business. They accounted for about 20% of order incidence. This item helped drive a 200-basis-point positive shift in comps and a 500-basis-point lift in transactions.
Analyst Sharon Zackfia noted that wraps helped customers see the chain as offering better value. Building on that, Sweetgreen is testing a new pricing architecture for its create-your-own salad options. The test began in June in Indianapolis. It has since expanded to the Washington, D.C., market, as well as Southern California and Orange County.
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The new system aims to make ordering more intuitive. “It’s a much simpler way to order CYO without the price shock,” Neman said. He added that it is too early to predict the impact on frequency, but early feedback on value perception has been positive. Despite these product wins, the chain has not succeeded in drawing many new customers.
Neman attributed this to a media strategy that previously focused on engaging existing consumers. The company now plans to pivot its marketing to increase awareness and attract new or disengaged guests.
Industry-Wide Health Scares
External factors are complicating the recovery. Outbreaks of Cyclospora and Salmonella have created a difficult environment for the entire sector. Sweetgreen does not serve iceberg lettuce, which is the ingredient linked to at least 6,000 out of roughly 22,000 cyclosporiasis cases reported recently. Despite this distinction, the brand is not immune to the broader consumer hesitation.
William Blair analyst Sharon Zackfia estimated that the epidemic “penalized July comps by an estimated 600 basis points.” She projects that Sweetgreen’s comparable sales for the third quarter could fall by double digits as a result.
