Sweetgreen Stock Plummets Amid Cyclosporiasis Outbreak

Sweetgreen Inc. (NYSE: SG) is experiencing a substantial downturn, with its stock price falling over 15% in premarket trading on Friday and already down more than 24% in the past month. This decline follows the company's second-quarter earnings report, released on Thursday, which revealed a significantly lowered financial outlook for 2026. The revised forecast directly attributes reduced consumer demand for fresh prepared foods to a multistate outbreak of cyclosporiasis that has been ongoing since mid-July. Sweetgreen now projects that same-store sales for the year will decrease by 7% to 8%, a stark contrast to its previous outlook, which anticipated a decline of only 2% to 4%.

In addition to the drop in same-store sales, Sweetgreen has also revised its restaurant-level profit margin expectations downwards. The company now anticipates a margin ranging from 10.5% to 11%, a decrease from its prior projection of 14.2% to 14.7%. The most significant financial impact is seen in its adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization). Sweetgreen's first-quarter report had predicted an adjusted EBITDA between $1 million and $6 million for the year. However, the company's latest outlook projects a substantial loss, estimated between $23 million and $27 million. Sweetgreen acknowledged the uncertainty surrounding the recovery timeline, stating in its report that "the pace and timing of recovery remain uncertain."

Further compounding the challenges, Sweetgreen has taken the precautionary measure of removing jalapenos from two of its dressings this week. This action was prompted by a recall of the pepper issued by the Centers for Disease Control and Prevention (CDC) due to potential salmonella infections. The company's expansion plans have also been scaled back. Sweetgreen intends to open approximately 13 net new restaurants, a figure that remained consistent with previous projections. However, this represents a considerable reduction compared to the 35 net new restaurants opened in 2025 and the 25 net new openings planned for 2024. Sweetgreen currently operates 287 restaurants across the United States, including 35 locations featuring its automated Infinite Kitchen technology. During a post-earnings call, cofounder and CEO Jonathan Neman indicated that the company would continue to open stores at a conservative pace, similar to or slower than the current year, with a primary focus on profitability.