Sweetgreen Q2 FY2026 Earnings: Same-store sales decline squeezes restaurant margins

Sweetgreen (NYSE: SG) reported fiscal Q2 2026 revenue of $192.7 million, up 3.8% year over year, while diluted net loss per share widened to $0.22 from $0.20. For the 13 weeks ended June 28, 2026, revenue from newer restaurants offset declining comparable-store sales, but restaurant-level margin fell by roughly 600 basis points and adjusted EBITDA turned slightly negative.

Core financial results

New restaurants kept total revenue growing despite a 6.2% same-store sales decline. Profitability weakened because restaurant operating costs increased faster than revenue, with restaurant-level profit falling by $9.9 million.

Restaurant-Level Profit and Adjusted EBITDA are non-GAAP measures. The operating loss, net loss and diluted loss per share are reported under GAAP.

New restaurants drove growth while comparable-store demand remained weak

Restaurants opened during or after the prior-year quarter generated $18.4 million of incremental revenue. That contribution more than offset an $11.2 million decline in comparable restaurant revenue, allowing consolidated revenue to rise even as established locations remained under pressure.

The 6.2% same-store sales decline consisted of a 2.0% decrease in traffic and a 4.2% decrease attributed to product mix. Sweetgreen said the mix decline reflected increased promotional activity, a shift toward wraps and the removal of ripple fries. The company opened two net new restaurants during the quarter, compared with nine a year earlier.

Digital channel penetration continued to increase. Total digital revenue represented 66.3% of sales, up from 60.8%, while owned digital revenue rose to 38.8% from 33.4%. Sweetgreen’s owned digital measure includes qualifying in-store transactions made through its rewards program.

Restaurant cost pressure offset lower corporate expenses

Total restaurant operating costs increased to 86.9% of revenue from 81.1%. Food, beverage and packaging costs rose to 29.8% of revenue from 27.7%, while labor costs increased to 29.2% from 27.5%. Occupancy and other restaurant operating costs also consumed larger shares of revenue.

Management attributed the restaurant-level margin contraction to negative same-store sales, higher ingredient usage, investments in chicken and tofu portions, and increased promotional activity. These factors reduced Restaurant-Level Profit Margin to 13.1% from 18.9%.

Lower corporate expenses provided a partial offset. General and administrative expense declined to $29.7 million, or 15.4% of revenue, from $34.5 million, or 18.6%. The decrease included $2.8 million less stock-based compensation and a $1.2 million reduction in management salaries and benefits. Impairment and closure costs also declined to $2.2 million from $5.3 million, helping keep the operating margin unchanged at negative 14.2% despite weaker restaurant economics.

At June 28, 2026, Sweetgreen had $142.6 million in cash and cash equivalents, compared with $89.2 million at December 28, 2025. Total liabilities decreased slightly to $428.0 million from $432.0 million over the same period.

Fiscal 2026 guidance

Sweetgreen updated its fiscal 2026 outlook after reduced demand for fresh prepared foods following a multistate cyclosporiasis outbreak that began in mid-July. Because the outbreak started after the reported quarter ended, its main disclosed financial effect is on the forward outlook; management said the pace and timing of demand recovery remain uncertain.

About half of the planned new restaurants are expected to feature Infinite Kitchen. Restaurant-Level Profit Margin and Adjusted EBITDA guidance are non-GAAP and were not reconciled to comparable GAAP measures because of uncertainty surrounding potential adjustments.

Management’s view

CEO Jonathan Neman acknowledged that the quarterly results were below the company’s objectives but said guests were responding to wraps, restaurant execution was improving and transactions strengthened over the course of the quarter. Management’s stated priorities are improving the guest experience, attracting more customers and rebuilding restaurant-level profitability.

Recent insider transactions

During the reported six-month period, insiders purchased 975,478 shares across 12 transactions and sold 16,439 shares across two transactions, resulting in net purchases of 959,039 shares. Total insider holdings were reported at 4.15 million shares.

Among the latest transactions with monetary values provided, two executives completed direct sales in May, while Goldman Sachs Group, identified as a beneficial owner of more than 10% of a class of securities, made an indirect purchase in April.

Seven directors also received stock awards on June 11, 2026, at a reported price of $0 per share, but the supplied data did not provide award share counts.

Risks investors should monitor

• Outbreak-related demand pressure: The cyclosporiasis outbreak has reduced demand for fresh prepared foods, and management cannot yet determine the timing or pace of recovery.
• Persistent comparable-store weakness: Same-store sales remained negative because of lower traffic and product mix. Continued promotions could support transactions while weighing on revenue mix and margins.
• Restaurant-level cost pressure: Higher ingredient usage, larger chicken and tofu portions, and increased promotions contributed to the roughly 600-basis-point margin decline.
• Continued losses: Adjusted EBITDA moved from positive $6.4 million to slightly negative in the quarter, while the updated full-year outlook calls for an adjusted EBITDA loss of $23 million to $27 million.

Summary

Sweetgreen’s new restaurants sustained modest revenue growth in fiscal Q2 2026, but declining comparable-store sales and higher restaurant costs weakened profitability. Lower corporate and impairment expenses prevented further operating-margin deterioration, yet restaurant-level margin compression and the outbreak-related reduction in demand now define the near-term outlook. The main indicators to monitor are comparable-store traffic, promotional intensity, ingredient usage and progress toward restoring restaurant-level profitability.