Sweetgreen stock dips following analyst downgrade, menu prices in elevated rate environment

A Cowen analyst recently shared concern over whether Sweetgreen has the pricing power to keep up in the current environment.

Video Transcript

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- In a weird way, it brings me to my next triple play because I spend so much money at this place that I might be bankruptcy soom someday. But it is Sweetgreen. The stock is moving to the downside, down about 2 and 1/2 percent after Cowen downgraded shares to market perform from outperform, citing greater macro challenges like rising inflation, higher interest rates, as well as a hybrid work environment.

And guys, we know a standard Sweetgreen salad, it's going to set you back about $20 bucks. And Cowen basically said that they're not quite sure if Sweetgreen has the pricing power to keep up amid this competitive environment, coupled with the fact that it'll-- it's going to be a lot harder to raise capital in this higher interest rate environment.

DAVE BRIGGS: I've got to tell you, it's been one of the first things to go for me is the $20 salad. As times get a little bit tight, you start to watch the balance sheet and realize that's what's got to go, although I love that crispy rice bowl. Crispy rice bowl is outstanding. I don't know either--

SEANA SMITH: I've never tried that one. I do love Sweetgreen. But I've got to say, I actually don't go there because it's so expensive.

- Yeah, it hurts my soul to pay that much for a salad when I can easily very much make it myself.

DAVE BRIGGS: I think the price about the same as terms of Chopped, though, right? It's about that--

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SEANA SMITH: --a little bit less. $1-- we're not talking big savings here. You're still paying a heck of a lot for a salad.

- But Sweetgreen sources their food, goes out there locally. And that obviously contributes to the higher price point. But I think, at a time when consumers are not pinching pennies but definitely pulling back a little bit, like you said, it's the first thing to go.

DAVE BRIGGS: Tightening your belts with salads.

SEANA SMITH: Yeah, exactly.

DAVE BRIGGS: Yeah, I'm trying. I did see five firms, including Goldman and JP, maintain buy and outperform ratings. But four of those five lowered their price targets, so not alone there.