Restaurant group Sweetgreen's Q1 revenue misses estimates, hurt by lower traffic

Overview

• U.S. fast-casual restaurant's Q1 revenue fell 2.9% yr/yr, missing analyst expectations

• Adjusted EBITDA for Q1 came in below expectations, reflecting operational losses and lower profit margins

• Revenue decline driven by lower traffic, increased promotions, partially offset by new openings

Outlook

• Company expects about 13 net new restaurant openings in fiscal 2026, half with Infinite Kitchen

• Sweetgreen forecasts same-store sales change between (4.0)% and (2.0)% for fiscal 2026

• Company sees restaurant-level profit margin of 14.2% to 14.7% and adjusted EBITDA of $1 mln to $6 mln

Result Drivers

• TRAFFIC DECLINE - Co said a 11.2% drop in traffic drove lower same-store sales and revenue

• PROMOTIONS AND LOYALTY PROGRAM - Increased promotional activity and transition to SG Rewards loyalty program reduced product mix and margins

• HIGHER INGREDIENT AND PORTION COSTS - Restaurant-level profit margin fell due to higher ingredient usage, investments in chicken and tofu portions, and increased promotions, partially offset by supply chain savings

Company press release: ID:nBw8JMSHza

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 3 "strong buy" or "buy", 12 "hold" and 2 "sell" or "strong sell"

• The average consensus recommendation for the restaurants & bars peer group is "buy."

• Wall Street's median 12-month price target for Sweetgreen Inc is $7.00, about 1.9% above its May 6 closing price of $6.87

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