(Bloomberg) — Sweetgreen Inc. cut its annual guidance — another sign that US restaurant spending is softening.
The company now expects sales at established locations to be flat this year, down from a prior forecast of growth between 1% and 3%. It also lowered revenue expectations, as well as adjusted earnings excluding items such as interest and taxes, according to a statement Thursday.
The shares fell 7.3% at 4:30 p.m. in late trading in New York.
Same-store sales fell 3.1% in the first quarter, less than the 3.5% decline that was projected by analysts polled by Bloomberg.
The chain cautioned in February that sales at established restaurants would drop as much as 5% due in part to extreme weather and the fires in Los Angeles, which generates 15% of the company’s revenue. Its warning came just as President Donald Trump’s trade war was sparking a slump in consumer confidence. Restaurants such as McDonald’s Corp., Wendy’s Co. and Chipotle Mexican Grill Inc. have posted weak results tied to the economic malaise.
Sweetgreen’s plan to bring in consumers during the first quarter included a ranch-forward lineup with higher protein and no seed oils, which US health secretary Robert F. Kennedy Jr. has decried as unhealthful despite limited evidence. It also introduced airfried fries, likely helping lift traffic in early March, according to an analysis of Placer.ai mobility data by Morgan Stanley analyst Brian Harbour.
Since then, it’s launched a revamped loyalty program and a new Korean-inspired menu, in line with a strategy to offer more novelty to frequent customers. Still, Harbour is cautious on the chain in a tough economic environment given it’s higher-priced than peers and because of its popularity as an office lunch concept, he wrote in a note ahead of earnings.
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