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Investing.com -- TD Cowen downgraded U.S. salad chain Sweetgreen to Hold and trimmed its price target to $15, warning that a deeper‑than‑expected slide in same‑store sales could block any near‑term upside from the company’s high‑profile “Infinite Kitchen” automation push.
The brokerage expects same‑store sales to decline in the June quarter, below both consensus estimates and management’s guidance for flat 2025 growth.
“What may be a bigger surprise is our estimate that the seasonal bowls resuming in July + macro improvement implicitly need to provide a 4.5% lift to comps to reach implied 2H25 same‑store‑sales guidance,” the analysts wrote, calling that target “too optimistic.”
TD flagged three hurdles to a return to “normalized” sales trends in 2026: softer ramp‑up from new stores after two years of slower openings, value perception challenges at a time when diners are price‑sensitive, and sustained pressure on the chain’s largely urban footprint amid tepid office‑return rates and rising competition.
While the firm remains positive on Sweetgreen’s robotic Infinite Kitchen, which can cut in‑restaurant labor costs by roughly 800‑900 basis points, it said investors are unlikely to “give credit” for those savings until the core sales trajectory improves.
It also cautioned that pursuing the technology aggressively could create a financing overhang and that management may reinvest part of the margin boost in lower menu prices.
TD’s analysis suggests restaurants at least four years old, a proxy for mature urban locations, are posting double‑digit percentage sales declines.
With only one net new outlet opened in New York City since early 2023, the brokerage said growth now leans heavily on newer suburban stores whose strong first‑year volumes still need to prove durable as the company accelerates openings in 2025.