MW Sweetgreen's customers are becoming 'more sensitive' to prices, analysts caution

By Steve Gelsi

JPMorgan cut its rating on Sweetgreen to neutral from overweight and reduced its price target to $25 from $32

Analysts at J.P. Morgan said more price-wary consumers, steep competition and the need to offer more value fueled a downgrade Tuesday of salad chain Sweetgreen Inc.'s stock to neutral from overweight.

Consumers are growing more wary of the higher prices for meals sold by Sweetgreen $(SG)$, which charges $13 to $17 for a salad with protein, analysts said. That's about 7% to 30% higher than average peers.

"We see underlying demand trends continue to soften with further impact moving into higher income demographics," analysts led by J.P. Morgan's Rahul Krotthapalli said Tuesday in a research note. "Absolute value has become an issue at the brand."

The company could improve its relative value by keeping prices stable in the near-to-medium term and reinvesting in larger portions, particularly in its digital pickup and delivery business, as well as developing "entry level" price points.

The team said that consumers have a range of choices for meals, particularly during the current times of low confidence, with multiple options to trade down or even switch to grocery stores for meal-prepped work lunches.

Sweetgreen is expected to show free cash flow until 2030, with a spending rate of about $50 million in 2025 and about $217 million in cash on hand.

McDonald's Corp. $(MCD)$ has cited pressure on lower-income consumers, which has spread to middle-income consumers. This should shape Sweetgreen's strategy moving forward, the analysts said.

Sweetgreen's stock fell 1.5% in premarket trading on Tuesday.

The stock has fallen 39% in 2025 as of Monday's closing bell, while the Nasdaq COMP has dropped 7.6%.

-Steve Gelsi

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May 06, 2025 07:54 ET (11:54 GMT)

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