Sweetgreen (SG) Stock Plunges on Wider-Than-Expected Loss

Sweetgreen (SG) shares tumbled on Friday, November 7, 2024, after the salad restaurant chain reported a wider-than-anticipated loss in the third quarter. The company posted a loss of 18 cents per share, missing analysts' estimates of a 15-cent loss per share. Revenue increased by 13% year-over-year to $173.4 million, but this was also short of expectations. The company attributed the loss to higher protein costs, higher staffing expenses, and increased spending on expanding its locations.



Sweetgreen's operating losses expanded to $49.3 million from $32.3 million in the prior-year period, partly due to restructuring charges related to the relocation of the company's support center. However, the company did make some progress toward achieving sustained profitability, as its restaurant-level profit margin improved by 2 percentage points to 16%.



Investors were more concerned about Sweetgreen's guidance for the full year. The company said it anticipates coming in at the lower end of its prior outlook, with revenue at or slightly below the low end of its prior outlook. Management had previously guided for revenue of $480 million to $500 million.

Despite the expected near-term shortfall, Sweetgreen in a regulatory filing repeated its long-term goal of operating 1,000 restaurants by the end of the decade. "Sweetgreen is in the early stages of building a national brand that leads and defines a category and we are excited about our expansion plans," CEO Jonathan Neman said.



In conclusion, Sweetgreen's stock price fell today due to a wider-than-expected loss in the third quarter, driven by higher costs and increased spending on expansion. While the company made progress in improving its restaurant-level profit margin, investors were concerned about the company's guidance for the full year. Despite the near-term challenges, Sweetgreen remains committed to its long-term expansion plans.