Sweetgreen has pulled jalapeños from its menu after a voluntary recall tied to produce distributed by Coast Citrus Distributors from Sinaloa, Mexico.
The salad chain confirmed that jalapeños appear in only two of its 15 dressings, making the ingredient a relatively minor part of its overall sales mix.
CEO Jonathan Neman said, “As an added precaution, we proactively removed and discarded all jalapeños from the supplier in the affected areas.”
Neman added that “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.”
The recall compounded an already difficult stretch for Sweetgreen, which saw sales fall sharply in July as customers grew wary of fresh produce amid the broader cyclospora outbreak.
Sweetgreen does not serve iceberg lettuce, which the FDA has identified as the likely source of the outbreak, traced to a Taylor Farms facility in central Mexico.
The cyclospora outbreak has sickened at least 10,000 people and caused two deaths, according to the CDC, though Sweetgreen has not been directly implicated.
Despite not being linked to the illness, Sweetgreen slashed its full-year same-store sales forecast on Thursday, now projecting declines of 7% to 8%, compared to its prior guidance of just 2% to 4%.
The company also revised its adjusted EBITDA outlook, now expecting a loss of between $23 million and $27 million, a sharp deterioration from its earlier forecast of $1 million to $6 million in positive EBITDA.
Shares of Sweetgreen fell more than 15% in extended trading following the earnings report, reflecting investor concern over the worsening financial picture.
During the second-quarter earnings call, Neman said, “The cyclospora has been attributed to iceberg lettuce, which we do not carry,” seeking to distance the brand from the outbreak’s direct cause.
CFO McConnell acknowledged uncertainty ahead, saying that while the timing of a full recovery in consumer confidence is “difficult to predict, we are confident in our ability to rebuild momentum.”
Sweetgreen is not alone in feeling the financial pressure, as Chipotle Mexican Grill reported that cyclospora fears had roughly a 2 percentage point impact on its sales in the second half of July.
Rival chain Qdoba also moved Wednesday to proactively pull jalapeños from all of its restaurants as a precautionary measure during the ongoing investigation.
The CDC noted that given the actions taken by restaurant chains to remove the product, “neither of these establishments are considered a current ongoing risk to consumers in this outbreak.”
Health officials in Mexico said they opened an investigation and conducted a field visit to a packing plant in the northern state of Nuevo Leon as the probe continues.
The FDA is also examining whether any of the recalled jalapeños reached grocery store shelves, broadening the scope of the investigation beyond restaurant supply chains.
