Is Sweetgreen (SG) a Sell or a Buy? Evaluating Earnings, Analyst Revisions, and Strategic Moves in a Weak Restaurant Sector

The restaurant sector, long a barometer of consumer confidence, has faced relentless headwinds in 2025. Rising ingredient costs, labor shortages, and shifting consumer preferences have eroded margins across the industry. Against this backdrop, Sweetgreen (SG), the once-celebrated fast-casual salad chain, has delivered a Q3 performance that underscores both the fragility of its business model and the potential for contrarian value. To assess whether SG is a sell or a buy, we must dissect its earnings, the absence of analyst revisions, and the implications of its strategic choices.

A Deteriorating Earnings Picture

Sweetgreen's Q3 2025 results were a stark reminder of the challenges facing even well-capitalized players in the sector. Total revenue fell 0.6% year-over-year to $172.4 million, missing forecasts and reflecting a broader slowdown in discretionary spending. The company's earnings per share (EPS) of -$0.31-well below the expected -$0.15-highlighted deteriorating profitability according to financial reports. Same-store sales, a critical metric for restaurant operators, plummeted 9.5%, driven by a 15% decline in spending among the 25-35 age group, a demographic central to its brand identity.

The root causes are both macroeconomic and operational. As management stated, the transition to a new loyalty program disrupted customer habits, while higher ingredient costs and operational expenses squeezed margins. Restaurant-level profit margins contracted sharply to 13.1% from 20.1% in the prior year, and adjusted EBITDA turned negative at $(4.4) million, compared to $6.8 million in 2024. These figures suggest a company struggling to adapt to a cost-driven environment and a customer base that is increasingly price-sensitive.

The Absence of Analyst Optimism

In contrast to the robust data on earnings, there is a conspicuous void in recent analyst revisions or strategic initiatives to offset these declines. Searches for 2025 analyst ratings or strategic moves returned no valid results, a silence that is itself telling. In a sector where even modest improvements in same-store sales or margin stabilization can trigger upgrades, the lack of commentary from analysts suggests a lack of conviction in Sweetgreen's near-term prospects. This absence may reflect either a lack of actionable information or a broader reluctance to bet on a company whose core value proposition-health-conscious, premium-priced salads-has been tested by inflation and shifting consumer priorities.

Contrarian Considerations in a Weak Sector

For contrarian investors, the question is whether Sweetgreen's struggles are cyclical or structural. The company's brand equity remains intact; its focus on fresh, locally sourced ingredients and its alignment with wellness trends are enduring strengths. However, these advantages are now being eroded by operational missteps and a failure to innovate in pricing or product offerings. The loyalty program transition, for instance, appears to have been poorly timed, alienating a key customer segment during a period of economic uncertainty.

A contrarian case for SG would require a belief that the company can stabilize its operations, reverse the decline in same-store sales, and re-engage its core demographic. This might involve aggressive cost controls, a reimagined loyalty strategy, or a pivot toward value-oriented offerings without compromising its brand identity. Yet, given the absence of recent strategic moves or analyst optimism, such a turnaround remains speculative.

Conclusion: A Sell, but with Caveats

Sweetgreen's Q3 results present a compelling case for a sell decision. The combination of declining revenue, eroded margins, and a lack of strategic clarity suggests a company in distress. While its brand and market positioning offer long-term potential, the immediate risks-further margin compression, continued customer attrition, and a lack of investor confidence-outweigh the rewards. For contrarian investors, the stock might warrant a watchlist status, but only if there are clear signals of operational discipline and a coherent path to profitability. Until then, the weak restaurant sector offers little room for optimism.