Can Anything Save Sweetgreen Stock Now?

Core Viewpoint - Sweetgreen, a salad restaurant chain, is in urgent need of a turnaround as its stock has plummeted over 90% from its all-time high, despite having strong consumer demand for its products [1][2][10]. Financial Performance - Sweetgreen has average unit volumes (AUV) of $2.8 million per location annually, indicating strong sales potential [2]. - The company reported a net loss of $89 million on a trailing-12-month basis, highlighting its struggle to achieve profitability [2]. - The stock is currently valued at a price-to-sales (P/S) ratio of less than 1, reflecting investor skepticism about its ability to become profitable [10]. Sales and Growth Strategy - Management anticipates a decline in same-store sales of approximately 8% year-over-year in 2025, indicating challenges in maintaining sales momentum [4]. - Sweetgreen plans to open only up to 20 new locations in 2026, representing a single-digit growth rate, as it focuses on improving operations rather than rapid expansion [12]. Cost Management and Automation - The company is investing in automation to reduce expenses, but the initiative has not yet yielded significant profit improvements, leading to the sale of its automation unit, Spyce [5][8]. - Despite selling the automation business, Sweetgreen retains rights to the technology, which remains central to its operational strategy [13][14]. Operational Challenges - Two-thirds of Sweetgreen's restaurants faced operational issues last quarter, but this has improved to 40%, indicating ongoing challenges that need to be addressed before scaling [11]. - Profit margins at locations utilizing automation technology have only improved by about 800 basis points, which is insufficient given the company's negative 21% profit margin [15]. Future Outlook - Sweetgreen has a cash position of over $200 million, providing it with the runway needed to implement changes and invest in necessary areas [8][9]. - While there is potential for recovery, the company faces a long and challenging path to profitability, necessitating careful monitoring of its progress [16].