Shares of Sweetgreen (SG -11.95%) took a dive at the moment, because it was one among a number of restaurant shares to react negatively to President Trump’s “Liberation Day” tariff announcement final evening.
On a day when the S&P 500 (^GSPC -4.84%) fell 4.8%, Sweetgreen completed down 12%.
Picture supply: Sweetgreen.
What’s Sweetgreen’s tariff publicity?
Although Sweetgreen sources most of its substances domestically, it does import some meals merchandise from exterior the U.S., together with Mexico, and counts on elements from China for its Infinite Kitchen methods.
Nevertheless, Sweetgreen and its restaurant friends could also be extra uncovered to any weak point in shopper spending that outcomes than from the affect of the tariffs instantly. In spite of everything, shopper confidence has been quickly falling, and the tariffs may result in a recession, which tends to hit restaurant shares laborious, as they’re depending on discretionary spending. Customers can select to eat meals from the grocery retailer as a substitute, or deliver their very own lunches into work.
Can Sweetgreen recuperate?
Sweetgreen inventory had tumbled earlier within the 12 months, as the corporate gave disappointing steering, due partly to the affect of the wildfires in Los Angeles. Nevertheless, its investments within the Infinite Kitchen, an automatic system it is deploying to extra eating places, may assist give it a bonus over different restaurant chains by serving to it save on labor.
In the end, the tariffs should not disrupt Sweetgreen’s long-term progress path. It is a distinctive enterprise because the chief within the fast-casual salad area, and it has a protracted runway of progress forward of it. Whereas the tariffs and any ensuing financial headwinds may current a setback, they should not derail the corporate’s progress plans.
