Consumer tariff fears dampen Sweetgreen’s usual April growth

Sweetgreen, a fast-casual salad chain, faced challenges in the first quarter of the year due to a variety of factors, including bad weather, the lingering effects of the Los Angeles fires, and a broader consumer slowdown. These issues led to a 3.1% decline in same-store sales, with a 6.5% decrease in traffic and product mix, partially offset by a 3.4% benefit from menu price increases. The fires in Southern California, where 15% of Sweetgreen’s system sales volume comes from, continued to impact sales.

The company saw some positive results in March with the launch of their new air-fried Ripple Fries, which became the most popular side dish and led to an increase in ticket averages. However, in April, consumer sentiment took a hit due to announcements about tariffs by the Trump Administration, particularly affecting purchases in Washington, D.C., where the brand originated and maintains a significant presence. Government layoffs in the greater D.C. area worsened the situation.

Typically, April is a strong month for Sweetgreen, benefiting from good weather that usually encourages healthful eating habits. However, this year saw a departure from this trend, as consumer apprehension and a decrease in purchasing behavior affected sales. This shift in consumer sentiment was reflected across discretionary spending categories, impacting the overall frequency of visits.

To combat the decline in sales, Sweetgreen is focusing on innovation and new menu offerings. A promotion launching in May introduces Korean barbecue-inspired flavors to the menu for the first time, in collaboration with COTE Korean Steakhouse, a popular New York eatery. The company’s revamped loyalty program is also expected to drive traffic and increase customer frequency, with around 20,000 new members joining weekly.

In terms of expansion plans, Sweetgreen opened five new restaurants in the quarter and aims to open a total of 40 this year, with a focus on locations featuring an automated digital makeline format called Infinite Kitchens. The company is also moving forward with drive-thru locations, referred to as Sweetlanes, with promising results from the one unit that opened in 2022.

Despite the challenges posed by tariffs and other external factors, Sweetgreen remains optimistic about its growth strategy. The company expects tariffs to raise unit buildout costs by approximately 10%, but the impact is not anticipated until later in the year due to strategic material pre-purchases. The introduction of Infinite Kitchens has been successful, offering cost efficiencies and operational benefits that align with Sweetgreen’s long-term growth objectives.

Looking ahead, Sweetgreen remains committed to its mission of providing healthy, convenient food options to consumers. While short-term uncertainties persist, the company is confident in its ability to navigate challenges and sustain its position in the market. With a focus on menu innovation, digital enhancements, and strategic expansion, Sweetgreen is poised to overcome current obstacles and drive long-term success.