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Sweetgreen (SG -19%) is under pressure today and continues its downward trend, which started after peaking in late November at $45.12. The stock is now down 67% from its highs. The main problem for this fast food restaurant operator with a focus on salads and bowls is that consumers are becoming more value-oriented and Sweetgreen's prices tend to be more on the high end of the fast food spectrum. SG defied gravity in 2024, but that is changing in 2025.

• The company missed slightly on EPS with slight revenue upside. It also lowered FY25 guidance for sales to $740-760 mln from $760-780 mln, which tells us management is getting more cautious. SG said the recent industry data shows that consumer sentiment has fallen sharply.
• The change in consumer behavior was most evident in Sweetgreen's Q1 same store comp of -3.1%, a notable drop off from +4% in Q4 and +6% for all of 2024. The silver lining is that Q1 comps were at the high end of prior guidance of -5% to -3%, but that is not a huge consolation.
• Another concern is that Sweetgreen chose not to provide Q2 comp guidance, which makes investors nervous. It did guide to 2025 full year comps of "approximately flat," which should translate as better comps in 2H25. However, this guidance was lowered from its previous 2025 outlook of +1-3%.
• After returning to positive comps in March, SG saw a mid-single digit decline in April comps, coinciding with the tariff announcements. SG believes the soft April sales trends are reflective of a broader consumer slowdown. This has been particularly true in its largest markets, such as NY, Boston and LA. Despite the demand headwinds, SG reaffirmed guidance to open at least 40 net new restaurants in 2025, with 20 featuring the Infinite Kitchen.
• In terms of possible value pricing, SG defended itself saying that it has raised prices less than most of the industry in recent years during an inflationary period. Instead, it chose to launch heartier, warmer options, things like protein plates and steak. One option is to use its seasonal menu to flex into different price points and possibly some additions are possible to its core menu. SG would not present them as necessarily as a value menu, rather it would just be finding things to add to the mid to lower price tiers. And of course, loyalty becomes a really big lever to possibly offer promotions.

Sweetgreen was sort of the talk of the town in 2024, putting up huge numbers despite a more value-conscious consumer in the face of inflation. However, the macro seems to finally be catching up to Sweetgreen. It looks like at least the first half of 2025 is going to be rough. Right now, SG is pointing to better comps in 2H25, but investors do not have a lot of faith right now.