Can Wraps Save Sweetgreen's Struggling Stock?

While it may sound like a silly question, whether wraps can help save Sweetgreen's (NYSE: SG) struggling stock, the introduction of new items at quick-service and fast-casual restaurants can actually have a huge impact on sales and a stock's price. We don't even have to look too far back to see this type of dynamic in action.

Cava (NYSE: CAVA) is a great recent example of a restaurant operator introducing a new menu item that drove huge sales. When the Mediterranean fast-casual restaurant owner launched its grilled steak option in the second quarter of 2024, it led to a significant increase in sales and traffic for the company over the next year.

That quarter, Cava saw its same-store sales increase from just 2.3% in the fiscal first quarter to 14.4% in fiscal Q2. That was followed by comparable-restaurant sales growth of 18.1%, 21.2%, and 10.8%, respectively, over the next three quarters. Meanwhile, its average unit volume (the average revenue per restaurant) climbed 12% from $2.6 million to $2.9 million in fiscal Q1 of 2025.

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Turning to wraps to reinvigorate growth

Just a few years ago, Sweetgreen was a fast-growing concept that looked destined to be a big market winner. However, as restaurant prices climbed and casual dining establishments came out with more competitive offerings, many fast-casual companies got squeezed between cheaper fast-food and better casual dining options. Sweetgreen was one of the hardest hit fast-casual companies, as its same-store sales plunged.

Sweetgreen is best known for its wide range of salads, while it also offers warm bowls. However, there has more recently been a pushback on the bowl trend, with consumers calling them "slop bowls" just thrown together. Meanwhile, the company made some menu mistakes, including adding fries to its generally healthy menu lineup. Losses have started to pile up, and the company is starting to close some stores as leases come up for renewal.

To try to turn around its struggling fortunes, the company is turning to high-protein wraps. Prices will start at around $11 in select New York City locations and will stay under $15 in all test markets. The company is basically using most of the same ingredients that are already in its stores, but it will be in a more trendy form.

Call me crazy, but I think it may work. My teenage daughter recently told me how excited she was because it was wrap day for lunch at school. Wraps appear to be popular among younger demographics, and the price points look reasonable. The high protein should also appeal to people on GLP-1 weight loss drugs.

Given the company's struggles, Sweetgreen stock is highly speculative, but it might be worth a small position -- if its wrap strategy works, the stock could have a lot of potential upside.

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cava Group. The Motley Fool recommends Sweetgreen. The Motley Fool has a disclosure policy.