Restaurant chains face a difficult balancing act as customers become more selective about where they eat, how much they spend, and whether premium-priced meals are worth the cost.
According to the National Restaurant Association’s October 30 report, 44% of restaurant operators reported declining customer traffic in September compared with a year earlier. It marked the 19th of the previous 20 months in which more operators reported declining rather than increasing traffic.
For fast-casual chains which are built around fresh ingredients and customizable meals, attracting customers while managing rising operating costs has become particularly difficult.
While some chains, like the Mediterranean restaurant brand Cava, continue to expand aggressively, Sweetgreen is taking a different approach.
The salad chain has permanently closed 9 restaurants and expects more closures in 2027 as it shifts its focus to improving existing locations rather than rapidly expanding its footprint.
Sweetgreen confirms 9 closures, expects additional shutdowns
According to Sweetgreen’s third-quarter SEC filing, 9 permanently closed restaurants were excluded from its comparable-sales calculations for the first nine months of 2026.
This compares with 6 permanent closures disclosed in its second-quarter filing, indicating that 3 additional restaurants were included in the closure count during the third quarter.
The company also excluded 10 temporary closures from its year-to-date calculations, separate from the 9 permanent shutdowns.
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The closures follow an earlier warning from Sweetgreen that additional restaurants could shut down as leases expired. As TheStreet’s Fernanda Tronco reported in March, Sweetgreen closed three restaurants in 2025 and was reviewing additional underperforming locations.
Now, management is outlining further changes for 2027.
During Sweetgreen’s November 5 earnings call, CEO Jonathan Neman said the chain expects to open approximately 10 new restaurants next year but anticipates additional closures, particularly at locations approaching the end of their leases.
“We are expecting a few closures,” Neman said, explaining that Sweetgreen sees opportunities to strengthen nearby restaurants. Management has not yet identified which locations could shut down or finalized the number of closures.
Sweetgreen expects approximately five net new restaurant openings in 2027, about half of its projected net growth of 10 locations in 2026. The slowdown represents a significant change for a chain that previously relied heavily on new restaurant openings to expand its business.
Sweetgreen operated 290 restaurants across 26 states and Washington, D.C., as of September 27, up from 287 at the end of June.
Despite continuing to add restaurants, management is now placing greater emphasis on site selection, construction expenses, and improving the profitability of existing locations.
Falling customer traffic puts pressure on Sweetgreen’s turnaround
The closures come after another challenging quarter for Sweetgreen.
According to the company’s earnings release, revenue increased 2.1% to $176 million during the third quarter, but same-store sales declined 6.4%.
Customer traffic fell 4.9%, while changes in the mix of products customers purchased reduced comparable sales by another 2.1 percentage points. Menu price increases partially offset those declines.
Sweetgreen’s restaurant-level profit margin also fell to 10.4% from 13.1% a year earlier, while the company reported a net loss of $30.7 million.
Part of the sales pressure came from lower-priced menu items.
Earlier this year, Sweetgreen introduced wraps averaging approximately $12.50 to offer a more affordable alternative to premium salads and bowls. Although the products have helped attract customers, they have also reduced average order spend.
The company has been making broader changes to its menu, including hiring a former Shake Shack executive chef and introducing more affordable meal options, as TheStreet previously reported.
Despite emphasizing affordability, Sweetgreen raised menu prices by approximately 3% in September.
During the earnings call, CFO Jamie McConnell said the company was responding to inflation in food and operating costs while maintaining lower entry prices on selected menu items.
Sweetgreen’s sales were also affected by consumer concerns about a multistate Cyclospora outbreak linked to fresh produce during the summer. The company was not identified as a source of the outbreak.
However, management reported signs of improvement in October, when comparable sales increased approximately 5%, supported by 4% transaction growth. The challenge now is translating that recovery into more consistent performance across its restaurants.
Cava’s expansion highlights Sweetgreen’s turnaround challenge
On the other hand, another fast-casual rival, Cava, contrasts with Sweetgreen in that it continues to expand despite broader pressures in the restaurant industry.
According to Cava’s November 4 earnings release, the Mediterranean chain opened 24 net new restaurants during its latest quarter, bringing its total to 500. Cava reported a 3.1% increase in same-restaurant sales and a restaurant-level profit margin of 23.4%, compared with Sweetgreen’s 10.4%.
The difference between the chains has also been visible in customer traffic.
A May 2026 Placer.ai analysis found that Sweetgreen’s same-store visits declined 7.6% year over year in March, while Cava recorded a 6.8% increase.
Placer.ai suggested that Cava’s broader protein-focused menu and wider price range were helping the chain appeal to more consumers across different income groups. Sweetgreen is now pursuing changes to its menu and restaurant operations to address similar challenges.
During the November earnings call, Neman said Sweetgreen had begun renovating older restaurants and was seeing encouraging results.
“We have begun to renovate a number of our older stores,” Neman said, adding that the slower expansion schedule would provide more time to invest in existing locations.
The company is also reviewing staffing schedules, food preparation, and inventory management to reduce waste and improve service.
McConnell acknowledged that Sweetgreen had been wasting food by preparing full batches late in the day. The company is now testing smaller, more frequent batches and daily inventory counts for critical ingredients.
Management believes those changes could improve restaurant-level profit margins by approximately 1.5 percentage points in 2027.
Sweetgreen has also introduced higher compensation incentives for restaurant managers, with eligible leaders potentially earning more than $200,000 annually as part of its effort to improve service and retain experienced employees.
For customers, the turnaround could mean improvements to older restaurants, more affordable menu choices, and more consistent service, although some neighborhoods may lose a nearby Sweetgreen location.
Neman expects restaurant expansion to accelerate again in 2028, targeting approximately 10% annual restaurant growth by 2029.
