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Sweetgreen Stock Soars 112% in 3 Months: More Upside Ahead?
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Key Takeaways
Sweetgreen's shares surged 112.2% over three months, outpacing the restaurant industry amid turnaround hopes.
October comparable sales climbed about 5%, while Sweetgreen expects roughly 4% growth in the fourth quarter.
Sweetgreen trades at 2.12 times forward sales versus the industry's 3.32, but operating losses persist.
Shares of Sweetgreen, Inc. (SG - Free Report) have surged 112.2% over the past three months, reflecting renewed investor optimism surrounding the fast-casual restaurant chain's turnaround prospects. Improving customer traffic, menu innovation, digital engagement and progress under its Sweet Growth Transformation Plan appear to be strengthening confidence in the company's growth trajectory. The stock has outperformed the Zacks Retail - Restaurants industry’s 2.2% gain, the broader Zacks Retail and Wholesale sector’s 1.2% rise and the S&P 500 Index’s 4.3% decline over the same period.
The company is benefiting from menu innovation, expanding digital and loyalty engagement, improved restaurant execution and efforts to strengthen unit economics. Management's expectations for positive fourth-quarter comparable sales and opportunities for cost efficiencies in 2027 further support the recovery outlook. However, persistent operating losses, restaurant-level margin pressure and a slower expansion strategy remain concerns. Sustaining the rally will depend on Sweetgreen's ability to translate improving demand into consistent profitability.
SG’s Three-Month Price Performance
Image Source: Zacks Investment Research
For additional peer context, Shake Shack Inc. (SHAK - Free Report) and Darden Restaurants, Inc. (DRI - Free Report) have gained 1.9% and 2.4%, respectively, over the past three months, while Brinker International, Inc. (EAT - Free Report) has declined 15.9% during the same period.
Improving Traffic Trends Strengthen Sweetgreen's Outlook
Sweetgreen's improving sales momentum is a key factor supporting its turnaround prospects. Although third-quarter comparable sales declined 6.4%, reflecting a 4.9% traffic decline and a 2.1% unfavorable product mix, management reported sequential improvement throughout the quarter. The company estimated that the summer sales disruption associated with the cyclosporiasis outbreak reduced traffic by approximately 500 basis points.
Encouragingly, comparable sales increased approximately 5% in October, primarily driven by higher transactions. Management expects fourth-quarter comparable sales growth of approximately 4%, including transaction growth of about 4%, indicating improving underlying demand.
The company's Sweet Growth Transformation Plan is also gaining traction. Its Project One Best Way initiative focuses on improving food preparation, staffing consistency and peak-hour throughput. Notably, 40 restaurants achieved new peak-hour records during September and October, highlighting opportunities to improve service speed and customer experience. Management believes throughput improvements could contribute hundreds of basis points to comparable sales growth over time.
Menu Innovation Broadens SG's Customer Appeal
Menu innovation remains central to Sweetgreen's efforts to attract new customers and increase visit frequency. The introduction of wraps has helped broaden the brand's appeal, particularly among Gen Z consumers, while providing more accessible entry price points. Wrap incidence has remained in the high teens, supported by successful collaborations, including the Molly Baz partnership.
The company is also expanding beyond its core salad offerings through Plates, warm meals, sides and desserts. With dinner accounting for only about one-third of total sales, management sees meaningful opportunities to capture additional evening dining occasions. The renewed focus on Plates, alongside new protein offerings and desserts, could help increase customer frequency and average spending.
Digital and Loyalty Initiatives Could Drive Repeat Visits
Sweetgreen's expanding digital ecosystem provides another important growth opportunity. Total digital revenues accounted for 66.1% of third-quarter sales, up from 61.8% a year ago. Owned digital revenue penetration increased to 38% from 35.3%, reflecting the growing importance of the company's direct customer relationships.
Meanwhile, enhancements to SG Rewards have supported stronger member engagement and a 50% increase in monthly redemptions. The redesigned mobile app, launched in September, emphasizes easier navigation, menu discovery and personalization. Management plans to further enhance SG Rewards in 2027 through experience-based benefits and deeper customer engagement.
A more disciplined development strategy could also support profitability. Sweetgreen ended the third quarter with 290 restaurants, including 36 Infinite Kitchen locations. The company expects approximately 10 net new restaurant openings in 2026, with the 2027 net opening pace anticipated to be roughly half that level. This approach prioritizes improving existing restaurant performance, controlling construction costs and generating stronger returns on invested capital.
Still, margin pressures remain significant. Third-quarter restaurant-level profit declined to $18.3 million from $22.5 million a year earlier, while restaurant-level margin contracted 270 basis points to 10.4%. Higher labor expenses, sales deleverage and increased operating costs weighed on performance.
Adjusted EBITDA was a loss of $6.8 million compared with a loss of $4.4 million in the prior-year quarter. Although management expects a restaurant-level margin of 11-11.5% for 2026, translating operational improvements into sustainable profitability remains critical.
Earnings Estimate Trend of SG
Sweetgreen's bottom line estimates for 2026 and 2027 have moved upward over the past 30 days to earnings of 37 cents and a loss of 74 cents per share, respectively. The revised estimates imply year-over-year earnings growth of 132.5% in 2026, followed by a 299.3% decline in 2027. The upward revisions indicate growing confidence in the company's near-term performance, although the projected loss in 2027 highlights ongoing profitability challenges.
Image Source: Zacks Investment Research
Meanwhile, earnings for Shake Shack are projected to decline 11.4%, while Darden Restaurants and Brinker International are projected to grow 5.6% and 25.8%, respectively, this year.
SG Stock Trades at a Discount
SG stock is currently trading at a discount to its industry peers, with a forward 12-month price-to-sales ratio of 2.12, compared with the industry average of 3.32, as the trend lines below suggest. The discounted valuation indicates that investors remain cautious despite Sweetgreen's improving traffic trends, menu innovation, expanding digital engagement and operational efficiency initiatives. However, following the stock's strong rally over the past three months, further upside will increasingly depend on sustained comparable-sales growth, restaurant-level margin recovery and progress toward profitability.
SG P/S Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Should Investors Chase SG's 112% Rally?
Sweetgreen's 112% rally over the past three months reflects improving confidence in its turnaround strategy. Strengthening traffic trends, menu innovation, expanding digital engagement and operational improvements are supporting recovery prospects. Positive October comparable sales and expectations for continued growth in the fourth quarter suggest that management's transformation initiatives are gaining traction.
Longer-term opportunities remain encouraging. Menu diversification, stronger loyalty engagement and improved restaurant execution could support customer frequency and sales growth. Meanwhile, food-cost savings, labor efficiencies and disciplined expansion offer opportunities to rebuild restaurant-level profitability. However, persistent operating losses, margin compression and slower restaurant development remain concerns. Sustaining the rally will require consistent comparable-sales growth and meaningful profitability improvements.
The stock's valuation remains supportive, with a forward 12-month price-to-sales ratio of 2.12, below the industry average of 3.32. This discount suggests potential upside as operating fundamentals improve. Earnings estimates for 2026 and 2027 have also moved higher over the past 30 days, indicating improving analyst sentiment despite projected losses in 2027. Overall, Sweetgreen's improving sales momentum, operational efficiency opportunities, attractive relative valuation and positive earnings revisions strengthen its investment appeal. Given its Zacks Rank #2 (Buy), the stock appears positioned for further upside, provided the turnaround continues.
View the Zacks #1 Rank List
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Sweetgreen Stock Soars 112% in 3 Months: More Upside Ahead?
Key Takeaways
Shares of Sweetgreen, Inc. (SG - Free Report) have surged 112.2% over the past three months, reflecting renewed investor optimism surrounding the fast-casual restaurant chain's turnaround prospects. Improving customer traffic, menu innovation, digital engagement and progress under its Sweet Growth Transformation Plan appear to be strengthening confidence in the company's growth trajectory. The stock has outperformed the Zacks Retail - Restaurants industry’s 2.2% gain, the broader Zacks Retail and Wholesale sector’s 1.2% rise and the S&P 500 Index’s 4.3% decline over the same period.
The company is benefiting from menu innovation, expanding digital and loyalty engagement, improved restaurant execution and efforts to strengthen unit economics. Management's expectations for positive fourth-quarter comparable sales and opportunities for cost efficiencies in 2027 further support the recovery outlook. However, persistent operating losses, restaurant-level margin pressure and a slower expansion strategy remain concerns. Sustaining the rally will depend on Sweetgreen's ability to translate improving demand into consistent profitability.
SG’s Three-Month Price Performance
Image Source: Zacks Investment Research
For additional peer context, Shake Shack Inc. (SHAK - Free Report) and Darden Restaurants, Inc. (DRI - Free Report) have gained 1.9% and 2.4%, respectively, over the past three months, while Brinker International, Inc. (EAT - Free Report) has declined 15.9% during the same period.
Improving Traffic Trends Strengthen Sweetgreen's Outlook
Sweetgreen's improving sales momentum is a key factor supporting its turnaround prospects. Although third-quarter comparable sales declined 6.4%, reflecting a 4.9% traffic decline and a 2.1% unfavorable product mix, management reported sequential improvement throughout the quarter. The company estimated that the summer sales disruption associated with the cyclosporiasis outbreak reduced traffic by approximately 500 basis points.
Encouragingly, comparable sales increased approximately 5% in October, primarily driven by higher transactions. Management expects fourth-quarter comparable sales growth of approximately 4%, including transaction growth of about 4%, indicating improving underlying demand.
The company's Sweet Growth Transformation Plan is also gaining traction. Its Project One Best Way initiative focuses on improving food preparation, staffing consistency and peak-hour throughput. Notably, 40 restaurants achieved new peak-hour records during September and October, highlighting opportunities to improve service speed and customer experience. Management believes throughput improvements could contribute hundreds of basis points to comparable sales growth over time.
Menu Innovation Broadens SG's Customer Appeal
Menu innovation remains central to Sweetgreen's efforts to attract new customers and increase visit frequency. The introduction of wraps has helped broaden the brand's appeal, particularly among Gen Z consumers, while providing more accessible entry price points. Wrap incidence has remained in the high teens, supported by successful collaborations, including the Molly Baz partnership.
The company is also expanding beyond its core salad offerings through Plates, warm meals, sides and desserts. With dinner accounting for only about one-third of total sales, management sees meaningful opportunities to capture additional evening dining occasions. The renewed focus on Plates, alongside new protein offerings and desserts, could help increase customer frequency and average spending.
Digital and Loyalty Initiatives Could Drive Repeat Visits
Sweetgreen's expanding digital ecosystem provides another important growth opportunity. Total digital revenues accounted for 66.1% of third-quarter sales, up from 61.8% a year ago. Owned digital revenue penetration increased to 38% from 35.3%, reflecting the growing importance of the company's direct customer relationships.
Meanwhile, enhancements to SG Rewards have supported stronger member engagement and a 50% increase in monthly redemptions. The redesigned mobile app, launched in September, emphasizes easier navigation, menu discovery and personalization. Management plans to further enhance SG Rewards in 2027 through experience-based benefits and deeper customer engagement.
Operational Efficiencies Offer Margin Recovery Potential
A more disciplined development strategy could also support profitability. Sweetgreen ended the third quarter with 290 restaurants, including 36 Infinite Kitchen locations. The company expects approximately 10 net new restaurant openings in 2026, with the 2027 net opening pace anticipated to be roughly half that level. This approach prioritizes improving existing restaurant performance, controlling construction costs and generating stronger returns on invested capital.
Still, margin pressures remain significant. Third-quarter restaurant-level profit declined to $18.3 million from $22.5 million a year earlier, while restaurant-level margin contracted 270 basis points to 10.4%. Higher labor expenses, sales deleverage and increased operating costs weighed on performance.
Adjusted EBITDA was a loss of $6.8 million compared with a loss of $4.4 million in the prior-year quarter. Although management expects a restaurant-level margin of 11-11.5% for 2026, translating operational improvements into sustainable profitability remains critical.
Earnings Estimate Trend of SG
Sweetgreen's bottom line estimates for 2026 and 2027 have moved upward over the past 30 days to earnings of 37 cents and a loss of 74 cents per share, respectively. The revised estimates imply year-over-year earnings growth of 132.5% in 2026, followed by a 299.3% decline in 2027. The upward revisions indicate growing confidence in the company's near-term performance, although the projected loss in 2027 highlights ongoing profitability challenges.
Image Source: Zacks Investment Research
Meanwhile, earnings for Shake Shack are projected to decline 11.4%, while Darden Restaurants and Brinker International are projected to grow 5.6% and 25.8%, respectively, this year.
SG Stock Trades at a Discount
SG stock is currently trading at a discount to its industry peers, with a forward 12-month price-to-sales ratio of 2.12, compared with the industry average of 3.32, as the trend lines below suggest. The discounted valuation indicates that investors remain cautious despite Sweetgreen's improving traffic trends, menu innovation, expanding digital engagement and operational efficiency initiatives. However, following the stock's strong rally over the past three months, further upside will increasingly depend on sustained comparable-sales growth, restaurant-level margin recovery and progress toward profitability.
SG P/S Ratio (Forward 12 Months)
Image Source: Zacks Investment Research
Should Investors Chase SG's 112% Rally?
Sweetgreen's 112% rally over the past three months reflects improving confidence in its turnaround strategy. Strengthening traffic trends, menu innovation, expanding digital engagement and operational improvements are supporting recovery prospects. Positive October comparable sales and expectations for continued growth in the fourth quarter suggest that management's transformation initiatives are gaining traction.
Longer-term opportunities remain encouraging. Menu diversification, stronger loyalty engagement and improved restaurant execution could support customer frequency and sales growth. Meanwhile, food-cost savings, labor efficiencies and disciplined expansion offer opportunities to rebuild restaurant-level profitability. However, persistent operating losses, margin compression and slower restaurant development remain concerns. Sustaining the rally will require consistent comparable-sales growth and meaningful profitability improvements.
The stock's valuation remains supportive, with a forward 12-month price-to-sales ratio of 2.12, below the industry average of 3.32. This discount suggests potential upside as operating fundamentals improve. Earnings estimates for 2026 and 2027 have also moved higher over the past 30 days, indicating improving analyst sentiment despite projected losses in 2027. Overall, Sweetgreen's improving sales momentum, operational efficiency opportunities, attractive relative valuation and positive earnings revisions strengthen its investment appeal. Given its Zacks Rank #2 (Buy), the stock appears positioned for further upside, provided the turnaround continues.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.