Sweetgreen has lowered its full-year sales forecast, warning that consumer anxiety over a broader cyclospora outbreak is weighing on demand at the salad chain, even though its restaurants have not been linked to the illness.
The company said it recalled jalapenos as a precaution, while stressing that it does not use iceberg lettuce and relies on jalapenos in only two of its dressings. Shares tumbled in after-hours trading following the disclosure.
Cyclospora is a microscopic parasite that causes an intestinal infection, typically spread through contaminated fresh produce. Symptoms can include prolonged watery diarrhea, fatigue and loss of appetite, and outbreaks in North America have historically been tied to imported fresh vegetables and herbs.
Sweetgreen’s decision to trim guidance underscores how reputational spillover can ripple across the fresh-food sector even when a specific chain is not directly implicated. The company positions itself around fresh, seasonal ingredients, a strategy that can leave it particularly exposed when consumers grow wary of raw produce.
The move comes amid a wider outbreak that has already rattled the restaurant industry. Several operators have flagged softer traffic and cautious consumer sentiment, and one fast-casual chain, a salad-focused competitor that recently sought bankruptcy protection, has felt acute pressure as the situation has unfolded.
The outbreak has been especially severe in Michigan, where public-health authorities have reported the first fatalities in the United States linked to the parasite. Experts have pointed to consolidation in the food supply chain as a factor that can allow contamination to spread quickly across multiple brands and regions.
Sweetgreen has invested heavily in reshaping its operations in recent years, including automated kitchen technology aimed at faster, fresher service. Those efficiency gains, however, offer little protection against a demand shock driven by broader industry headlines.
The revised outlook reflects the company’s expectation that softer sales tied to cyclospora concerns will persist over the near term. Management framed the recall of jalapenos as a cautionary step rather than a response to any confirmed contamination in its supply.
For investors, the guidance cut signals continued uncertainty for fresh-food operators as the outbreak plays out. Attention now turns to whether consumer confidence in salads and fresh produce recovers in the coming quarters, and how quickly traffic stabilizes across the sector.