Sweetgreen lowers full-year outlook as cyclospora concerns impact sales

Sweetgreen, a fast-casual salad chain, has revised its financial forecasts for the year amid growing concerns regarding a nationwide outbreak of cyclosporiasis. The company now expects to see a significant decline in same-store sales, projecting a drop of 7% to 8%, a stark contrast to its previous estimate of a modest 2% to 4% decline. This downward revision follows a marked decrease in consumer enthusiasm for fresh produce, spurred by fears surrounding the consumption of salad ingredients during the ongoing health crisis.

Market reactions were immediate and severe, with Sweetgreen’s stock price dropping more than 15% in after-hours trading following the announcement of its updated outlook. The company stressed that, while it has not been directly implicated in the outbreak—which has affected over 10,000 individuals and resulted in two fatalities—the health scare has significantly impacted consumer behavior.

The Centers for Disease Control and Prevention attributes the outbreak to contaminated iceberg lettuce, allegedly sourced from a facility operated by Taylor Farms in central Mexico. The Food and Drug Administration has since initiated a recall of potentially dangerous products linked to this outbreak. Despite Sweetgreen’s lack of direct involvement, the overall atmosphere of consumer mistrust regarding fresh food options remains palpable across the industry, hindering sales for many entities reliant on fresh produce.

In its recent financial disclosures, Sweetgreen reported a second-quarter loss that exceeded analysts’ expectations. For the year 2026, the company anticipates an adjusted loss before interest, taxes, depreciation, and amortization ranging from million to million, sharply contrasting with its earlier projections of breakeven to a million profit. This financial strain can be seen across the fast-casual segment, where other chains, including Chipotle Mexican Grill, have also reported adverse effects from consumer apprehension related to the cyclospora outbreak.

Amidst these challenges, Sweetgreen has indicated that the timeline for recovering consumer confidence remains uncertain. As restaurants attempt to navigate the evolving dynamics of the food industry, the lingering impact of health-related outbreaks continues to shape market performance and consumer choices in significant ways.

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