Sweetgreen cut its full-year outlook on Thursday, projecting steeper same-store sales declines due to diner fears of eating fresh produce during the ongoing cyclospora outbreak. The salad chain’s shares fell more than 15% in extended trading.
The company has not been implicated in the outbreak, which has sickened at least 10,000 people and led to 2 deaths, according to data from the Centers for Disease Control and Prevention. The Food and Drug Administration has pointed to iceberg lettuce supplied by a Taylor Farms facility in central Mexico as the likely culprit.
The contaminated products have been recalled, and the only nationwide restaurant chain linked to the outbreak is Yum Brands’ Taco Bell. However, fear of the waterborne parasite has weighed on many consumers’ desire for fresh produce, particularly salad.
Sweetgreen said in a statement, “The Company’s updated outlook reflects reduced consumer demand for fresh prepared foods due to the multistate outbreak of cyclosporiasis since mid-July.” The pace and timing of recovery remain uncertain.
For 2026, Sweetgreen is now projecting its annual same-store sales could shrink 7% to 8%. Its previous forecast anticipated same-store sales declines of just 2% to 4%. Sweetgreen is also expecting to report an adjusted loss before interest, taxes, depreciation, and amortization of $27 million to $23 million.
Other restaurant chains not linked to the contaminated iceberg lettuce have also seen their sales fall. Chipotle Mexican Grill said in late July that cyclospora fears had about a 2 percentage point impact on sales in the second half of July.
Salad and Go, an already struggling chain, filed for bankruptcy protection on Tuesday, saying that consumer mistrust from the outbreak exacerbated its ongoing business challenges. This situation is similar to past outbreaks, where consumer confidence in certain food types has taken time to recover.
Sweetgreen’s experience is not unique, as other companies in the food industry have faced similar challenges in the past. They will need to adapt to changing consumer preferences and concerns to handle this difficult period. Second-Quarter results show they are still struggling.
Sweetgreen reported its second-quarter results after the bell on Thursday. Its quarterly loss was steeper than expected, and its revenue fell short of Wall Street’s expectations.
The company’s revised outlook and disappointing quarterly results have raised concerns about its ability to recover from the impact of the cyclospora outbreak. As the situation continues to evolve, Sweetgreen will need to find ways to regain consumer trust and restore sales growth, much like entrepreneurs who run a storage unit business need to adapt to changing market conditions.
