Between hellacious jalapeños and lamentable lettuce, salad-centric chains are getting slammed.
The latest victim is Sweetgreen, shares of which fell 8% Friday after the “slop bowl” chain said diners are avoiding its salads over fears of a cyclospora outbreak and removed jalapeño peppers from its restaurants due to a separate string of illnesses. Shares closed at $5.40.
In its earnings report Thursday evening, Sweetgreen slashed its full-year forecast to an adjusted loss before interest, taxes, depreciation and amortization of $27 million to $23 million – much deeper than its previous estimate of $1 million to $6 million.
The company also said it expects its annual same-store sales could shrink 7% to 8% this year, worse than a previous forecast of a 2% to 4% decline.
“The company’s updated outlook reflects reduced consumer demand for fresh prepared foods due to the multistate outbreak of cyclosporiasis since mid-July,” Sweetgreen said in a statement.
“The pace and timing of recovery remain uncertain.”
For the second quarter ending June 28, Sweetgreen’s same-store sales fell 6.2% – its sixth straight decline.
The stock has plunged roughly 30% since mid-July as fearful diners avoid salads and fresh produce over fears of cyclospora, an explosive diarrhea-causing parasite – even though Sweetgreen and its products have not been linked to the outbreak.
But it seems Sweetgreen’s outbreak troubles are not yet behind the salad chain, as it revealed on Thursday that it removed jalapeños from its supply chain earlier this week amid a new salmonella outbreak.
“In a separate and unrelated matter, a voluntary recall involving jalapeños was issued yesterday. As an added precaution, we proactively removed and discarded all jalapeño from the supplier in the affected areas,” CEO Jonathan Neman said during an earnings call Thursday.
“Jalapeños are used in only two of our 15 dressings and nowhere else on our menu, representing a very small portion of our sales mix. Because the communication was issued only yesterday, it is too early to reasonably estimate any potential impact,” Neman added.
The salmonella outbreak — which has sickened at least 345 people and led to 36 hospitalizations across the country — has been linked to fresh jalapenos from Mexico supplied by Coast Citrus Distributors.
Chipotle and QDOBA, a Mexican fast-casual restaurant chain, both received shipments from Coast Citrus and have since removed the impacted peppers from their stores, according to the FDA.
Meanwhile, shoppers are still avoiding restaurant menu items with lettuce and fresh produce at the grocery stores as they fear an outbreak of cyclosporiasis that has sickened at least 10,000, caused around another 10,000 suspected cases, hospitalized hundreds and led to two deaths, according to the CDC.
Sweetgreen has not been linked to the outbreak.
The FDA has tied the pestilential plague to iceberg lettuce from a Taylor Farms facility in Mexico.
Taco Bell is the only major national restaurant chain to be linked to the outbreak, though it has already recalled the contaminated products and started to see sales bounce back.
Many other restaurants have been hit by the dampened demand for lettuce.
Chipotle said its sales weakened about 2% around the time of the outbreak in the second half of July.
Earlier this week, Salad and Go filed for bankruptcy and announced plans to close all of its locations, saying the cyclospora outbreak “compounded” challenges it was already facing.
Cyclospora is a microscopic parasite that is typically transmitted when food or water is contaminated with infected feces.
It can cause an intestinal illness called cyclosporiasis, characterized by symptoms like watery diarrhea, loss of appetite, weight loss, stomach cramps or pain, bloating, gas, nausea and fatigue, according to food safety regulators. Some people show no symptoms after becoming infected.
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