Shares of Sweetgreen, Inc. (SG) took a sharp dive in after-hours trading on Thursday, plummeting 6.99% following the release of the company's financial outlook for fiscal year 2025. The significant drop reflects investor disappointment with the salad chain's projections, which fell short of market expectations.

Sweetgreen announced that its same-store sales change for FY25 is expected to be approximately flat, indicating stagnant growth in existing locations. This lackluster forecast was compounded by the company's revenue outlook, projecting FY25 revenue between $740 million and $760 million. The combination of flat same-store sales and a cautious revenue forecast appears to have shaken investor confidence in the company's growth trajectory.

Adding to the concerns, Sweetgreen reported a 3.1% decline in same-store sales for the first quarter of 2025. This negative trend, coupled with the flat outlook for the full year, suggests the company is facing challenges in attracting repeat customers or increasing average transaction values in its established locations. The after-hours plunge indicates that the market is reassessing Sweetgreen's growth prospects and profitability potential in light of these announcements.

Despite the gloomy outlook, Sweetgreen remains bullish on restaurant automation as a potential driver of efficiency. The company's proprietary automated salad builder, costing approximately $500,000 per unit, is expected to provide labor savings that could offset rising costs. However, the company anticipates that elevated U.S. tariffs could add around $100,000 to each unit's cost, with about 15% of components imported from China. This balance between automation benefits and tariff-related cost increases adds another layer of complexity to Sweetgreen's financial picture, which investors will likely monitor closely in the coming quarters.