Could Buying Sweetgreen Stock Today Set You Up for Life?
Key Points
Sweetgreen's traffic and same-restaurant sales were obliterated in 2025.
Management is looking to revamp operations, but is facing a difficult pricing war.
The stock looks cheap, but it comes with significant risks for investors right now.
Perhaps no stock has been hit harder by the decline in restaurant stocks over the past few years than Sweetgreen (NYSE: SG). Shares of the salad and bowl chain are down 90% from all-time highs, marking a brutal performance since its 2022 market debut.
The company is facing pricing pressure from restaurant competitors and declining traffic as customers pinch pennies by eating at home. But with management looking to turn things around with new menu items this year, does that make the stock a contrarian pick that could set you up for life?
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Hard hit comp store sales growth
Comparable store sales growth is the lifeblood of any restaurant chain. It measures revenue growth from existing locations, and the general rule of thumb is that this figure should match your inflationary inputs (or, ideally, beat them) to maintain restaurant-level profit margins.
Sweetgreen's have gone off the deep end, with same-store sales growth of negative 11.5% last quarter in an environment where inflation is still elevated. This has resulted in huge losses for the company, with a net loss of $49.7 million last quarter, compared with a net loss of $29 million in the same quarter a year ago.
Management understands that it is failing to keep customers around due to the perceived high prices of its salad bowls. It is cutting costs at the corporate level, revamping its store operations and customer rewards program, and has introduced a Sweetgreen wrap at a lower price point, closer to $10, to entice price-sensitive customers.
In 2026, management is still expecting same-store sales growth of negative 4% to negative 2%, which would be below inflation once again.
Can Sweetgreen stock make a turnaround?
There is some excitement around Sweetgreen's new product offerings. They are cheaper and innovative, which could lead some customers to return to the chain as regular diners. With just 281 locations across the United States, there is also plenty of room to keep expanding with new store openings. Management expects to open 15 in 2026.
Shares of the stock look cheap on a price-to-sales (P/S) ratio, with the metric just below 1 based on its 2025 sales figures. If profitability can be solved, there is a chance investors look back a few years from now and think Sweetgreen was a dirt cheap stock at the beginning of 2026.
However, there is still some intense pricing competition that should worry any investor looking to buy today. McDonald's just announced new menu items that will cost just $3 and $4, which is one of many examples of the price wars among restaurant chains at the moment.
Sweetgreen stock could be a steal today, but it comes with massive risks if current management cannot turn around its traffic and same-store sales growth woes. I would avoid buying Sweetgreen stock right now due to these long-term risks.
Brett Schafer has no position in any of the stocks mentioned. The Motley Fool recommends Sweetgreen. The Motley Fool has a disclosure policy.