Sweetgreen's CEO is beefing up protein portion sizes because corporate America is demanding more from $16 sad desk salads

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4 days ago

Faced with slumping lunch traffic from downtown offices and waning consumer interest in pricey salads, Sweetgreen CEO Jonathan Neman is leaning into America's 2020s-era protein craze. The fast-casual salad chain announced significant changes to its menu this summer—a response to shifting habits in corporate America, where employees are less likely to order delivery salads for solitary desk lunches, and are demanding more value for their dollar.
Sweetgreen's turnaround strategy includes 25% bigger portions of chicken and tofu, recipe upgrades for proteins like chicken and salmon, and member deals on salads as cheap as $13. The decision follows months of disappointing sales: Same-store sales have dropped by as much as 7.6% this summer, with a reported 10.1% plunge in customer traffic. Sweetgreen also cut its annual outlook for the second quarter in a row as it struggles to keep budget-strained diners interested in salads averaging $16 a bowl.
Same-store sales are now expected to decline 4%-6% for 2025, a stark reversal from previous hopes for flat performance. It was a bruising second quarter for the salad chain, and investors responded by sending Sweetgreen shares plunging more than 25% to their lowest levels since 2023. The stock has lost more than 70% of its value since January, and is trading well below its IPO price of $28.
'So I think it's pretty obvious that the consumer is not in a great place overall,' Neman said Thursday in the company's second-quarter earnings call. Several factors have converged to force Sweetgreen's hand. The biggest: Working habits have permanently changed since the pandemic. Corporate lunch orders, once the backbone of Sweetgreen's urban business, have slumped as office occupancy fluctuates and hybrid schedules persist. Affluent customers, long willing to shell out for digitally ordered salads, are now scrutinizing every expense as inflation pinches and economic uncertainty lingers.
Business districts, once Sweetgreen's prime locations, are no longer packed with lunchtime regulars. Instead, urban outlets now depend on local traffic and dinner orders—which require more substantial fare than a bowl of greens. Sweetgreen's own consumer surveys reveal guests want more protein—the gravitational center of a 'meal' that feels worth its ticket price.
Slowing growth and mounting losses
For the quarter ended June 29, Sweetgreen reported total revenue of $185.6 million, barely up from $184.6 million a year prior—an increase of just 0.5% and well below Wall Street expectations of $191.73 million. Traffic sharply deteriorated even as Sweetgreen raised menu prices, with executives citing a 'more cautious consumer environment' and headwinds in urban markets where office lunch traffic remains weak.
Restaurant-level profit margin dropped to 18.9% from 22.5% a year prior, squeezed by higher food costs (notably new tariffs on packaging) and rising labor costs. The company posted a net loss of $23.2 million, widening from a $14.5 million loss in the prior year, and reported adjusted EBITDA of $6.4 million—down by nearly half from last year's $12.4 million.
Neman cited drag from the revamped SG Rewards loyalty program, which prompted fewer repeat visits; only one-third of Sweetgreen restaurants currently meet operational standards for speed and consistency. The firm recently hired former Chipotle executive Jason Cochran as COO to address issues ranging from portioning to speed across both digital and in-store channels. Sweetgreen is also closing two underperforming locations and recording a $5.3 million impairment charge.
Management cautiously optimistic, but confidence shaken
Despite the rocky performance, Sweetgreen is forging ahead with expansion, opening nine new restaurants (including four Infinite Kitchens) in Q2, and plans for at least 40 new openings this year—many featuring automation and lower labor requirements. Neman and CFO Mitch Reback stressed 'actions taken are already showing positive results,' pointing to steady improvement in guest frequency from the revamped loyalty program and enthusiasm for seasonal menu items.
Still, the street remains skeptical. Sweetgreen's stumbles have reinforced doubts about whether premium salad chains can thrive in today's value-conscious dining environment, especially as hybrid work saps the desk-lunch crowd and consumers search for more affordable options.
Feedback on the new protein portions has been swift: Guest satisfaction improved by 30% following the July rollout of larger chicken and tofu servings. In recent weeks, Sweetgreen has expanded its repertoire with 'protein plates'—larger servings of steak, chicken, or tofu over grains, aimed at winning dinner traffic and meeting customer demand for heartier offerings.
When Sweetgreen first tested steak protein plates in Boston, the item accounted for nearly 20% of dinner orders—a sign that more substantial meals may be a key to capturing lost revenue from desk salads. 'We need to meet people where they are. For us, it's about healthier options that are still filling,' Neman said. Steak is sourced from grass-fed, regenerative farms to keep Sweetgreen's sustainability ethos intact.
Even as Sweetgreen tweaks its menu, reviews and ratings remain mixed. Some loyalists grumbled for months about skimpy chicken portions. Reddit threads catalog the question of whether portions are getting smaller for the $16 bowl, and company executives acknowledge that consistency remains a concern.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.
This story was originally featured on Fortune.com