Sweetgreen Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
AI Insights on Sweetgreen
Insights
Invest better with AI
StocksGuide Unlimited – full access to AI analyses
👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Invest better with AI
StocksGuide Unlimited – full access to AI analyses
👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Invest better with AI
StocksGuide Unlimited – full access to AI analyses
👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Invest better with AI
StocksGuide Unlimited – full access to AI analyses
👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Is Sweetgreen a Top Scorer Stock based on the Dividend, High-Growth-Investing or Leverman Strategy?
As a Free StocksGuide user, you can view scores for all 9,127 stocks worldwide.
StocksGuide Premium
StocksGuide Unlimited
Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $917.81m | Revenue (TTM) = $681.77m
Market Cap = $917.81m | Estimated Revenue = $703.42m
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $775.18m | Revenue (TTM) = $681.77m
Enterprise Value = $775.18m | Forward Revenue = $703.42m
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
- A high revenue per employee indicates a scalable and margin-strong business model.
- A low figure may reflect labor-intensive operations or lower value-add.
- Especially helpful when comparing tech companies to industrial or service sectors.
Sweetgreen Stock Analysis
Analyst Opinions
23 Analysts have issued a Sweetgreen forecast:
Analyst Opinions
23 Analysts have issued a Sweetgreen forecast:
Sweetgreen Events
Past Events
|
AUG
6
Q2 2026 Earnings Call
about 2 months ago
|
|
MAY
7
Q1 2026 Earnings Call
5 months ago
|
|
MAR
12
J.P. Morgan Gaming
7 months ago
|
|
FEB
26
Q4 2025 Earnings Call
7 months ago
|
|
NOV
6
Q3 2025 Earnings Call
11 months ago
|
StocksGuide Free
Sweetgreen — Q2 2026 Earnings Call
1. Management Discussion
Ladies and gentlemen, thank you for joining us, and welcome to the Sweetgreen, Inc. Second Quarter 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Anthony Wiginton, VP of Finance and Investor Relations. Please go ahead.
Thank you, and good afternoon, everyone. Speaking on today's call will be Jonathan Neman, Co-Founder and Chief Executive Officer; as well as Jamie McConnell, Chief Financial Officer. Both will be available for questions during the Q&A session following the prepared remarks. Today's call is being webcast live and recorded for replay. The earnings release is available on the Investor Relations section of Sweetgreen's website at investor.sweetgreen.com.
I would like to remind everyone that the information under the heading Forward-Looking Statements included in our earnings release also applies to our comments made during the call. These forward-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward-looking statements.
We also direct you to our earnings release for additional information regarding our use of non-GAAP financial measures, including reconciliations of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. Our earnings release can be found on our investor website.
And now I will turn the call over to Jonathan to kick things off.
Thank you, Anthony, and good afternoon, everyone. I want to start by thanking our teams for staying focused, resilient and disciplined through what continues to be a challenging operating environment. Before discussing our results, I want to take a moment to address 2 separate public health matters affecting the fresh produce and restaurant industries. The safety of our guests and team members is always our highest priority. The cyclospora outbreak has been attributed to iceberg lettuce, which we do not use anywhere on our menu. We continue to monitor the situation closely and have no indication from our suppliers or public health authorities that Sweetgreen is connected to that outbreak.
As Jamie will discuss shortly, the impact of this outbreak, including the range of recovery assumptions, is reflected in our updated outlook. In a separate and unrelated matter, a voluntary recall involving jalapeños was issued yesterday. As an added precaution, we proactively removed and discarded all jalapeños from the supplier in the affected areas. Jalapeños are used in only 2 of our 15 dressings and nowhere else on our menu, representing a very small portion of our sales mix. Because the communication was issued only yesterday, it is too early to reasonably estimate any potential impact, and therefore, it is not reflected in our outlook.
We will continue to uphold our high standards through rigorous food safety systems, operating procedures and team training. Outside of the recent events, our results are not where they need to be. However, we know exactly where our opportunities are: ensuring every restaurant is consistently rush-ready during peak periods, increasing top-of-funnel awareness to bring more guests into the brand and moving with greater speed to capture the margin opportunities we see across the business.
That said, we did see progress during the quarter with comparable transaction trends improving sequentially each month, including flat transaction comps in June. This progress gives us confidence that our actions are beginning to have an impact and that we will get back to positive, sustainable transaction growth.
Now turning to our results for the second quarter. Revenue was $192.7 million. Comparable restaurant sales declined by 6.2%. Restaurant-level profit margin was 13.1% and adjusted EBITDA was a loss of $0.2 million. We ended the quarter with 287 restaurants. We've made deliberate choices about what to prioritize now and what to sequence later so we can strengthen the core, grow transactions, rebuild AUVs and improve restaurant-level cash flow. We're executing that plan with urgency and discipline across our 5 strategic priorities, which include operational excellence, food quality and menu innovation, brand relevance, personalized experiences and disciplined, profitable investment.
Let me walk you through how this is showing up across the business. Starting with operational excellence, which begins with consistently delivering a great guest experience in every restaurant during every visit. Throughput is our top priority, and we think about it as a flywheel. It starts with strong, stable leadership, which drives staffing, deployment and training decisions that put the right people in the right place at the right time, all in service of being rush-ready before peak. We've recently seen this flywheel work, and we're doubling down on it.
Over the past year, we've elevated our field leadership, improving headcount stability and driving greater accountability and execution. New York and Seattle show what this looks like in practice. New regional general managers raised the bar on throughput and hospitality, and both markets returned to positive transaction comps in the second quarter. With strong leaders, clear priorities and consistent routines, the business responds.
Our restaurant scorecard and Rush Ready before peak discipline give teams and field leaders real-time visibility into what matters: sales, throughput, guest satisfaction, food quality and people. And in June, we introduced a more structured process around throughput at our highest volume restaurants with weekly accountability built in and saw immediate improvement in both throughput and transactions. At these restaurants, frontline peak entrees prepared per hour rose from the low 50s in May to the low 60s in June. And on our busiest days, our best restaurants surpassed 250 entrees an hour, which shows the opportunity ahead as we scale this process.
Additionally, we redesigned our training programs for head coaches, kitchen leads and core team members with a sharper focus on hospitality, throughput and food quality. Rollout begins now, and this is expected to further strengthen our teams, reduce turnover and deepen our bench of leaders. Together, we believe we have the leadership and tools that get us back to sustainable transaction growth and a stronger, more profitable business.
Moving to food quality and menu innovation. Real food made from scratch with high-quality ingredients remains at the center of everything we do. It drives our mission of building healthier communities by connecting people to real food that tastes great and makes you feel great. Starting with wraps. Wraps drove a couple of hundred basis points of comparable sales uplift, including about 500 basis points improvement in transactions, and demonstrated how we can bring our food philosophy to new formats and occasions.
While overall comps didn't perform quite as strongly as our market test indicated, wraps have maintained approximately 20% incidence, exceeding our expectations. We intentionally introduced wraps at a more accessible entry price, giving guests a compelling value option while staying true to the quality and ingredients that define Sweetgreen. More importantly, wraps drove an increase in frequency with more than half of guests who ordered a wrap returning within 30 days, outperforming even our Harvest Bowl, which has historically been our most popular and highest retention menu item.
Beyond wraps, we are building a more consistent menu calendar with a regular cadence of seasonal offerings, collaborations and partnerships designed to give customers new reasons to visit and keep Sweetgreen top of mind all year long. We recently announced our collaboration with Fishwife, bringing together 2 culturally relevant brands that share an appreciation for high-quality ingredients, bold flavors and modern food culture. This fall, we'll welcome back our seasonal Brussels sprouts, along with the collaboration featuring a highly regarded chef that we're excited to unveil in the coming months.
At the same time, we are just as focused on strengthening our core menu. One recent example is our enhanced Hot Honey Chicken Plate featuring golden quinoa and Napa cabbage slaw, which has delivered higher reorder rates since its relaunch. We believe plates represent a meaningful opportunity to broaden our dinner business, and we have an exciting pipeline of menu innovation over the coming quarters and into 2027.
Strengthening the core also means ensuring guests get the quality, portions and experience they expect at a compelling price. We have not taken a price increase in over a year. And since 2019, our price increases have trailed broader restaurant industry inflation by more than 13 percentage points and grocery inflation by more than 7 percentage points. Wraps have further expanded our range of accessible entry points without compromising the quality or generous portions customers expect from Sweetgreen. This has translated into improving trends in our lower income and Gen Z customer cohorts.
Finally, we recently launched a redesigned Create Your Own test that includes a protein in the base price, along with greater transparency around premium add-ons. The experience is easier to navigate and makes it simpler for customers to understand the value that Sweetgreen delivers. We expect to have more to share on the test results next quarter.
Together, this work is focused on making Sweetgreen more craveable, accessible and relevant across more occasions, and that leads directly to our next priority, brand relevance. Sweetgreen has always been shaped by meaningful relationships with farmers, chefs and communities. Our opportunity is not to reinvent the brand, but to make what is already distinctive about Sweetgreen more visible to more people. Our latest brand health research shows that Sweetgreen resonates strongly with guests who are familiar with us. We continue to stand out for high-quality ingredients, food that makes you feel good, trust and cultural relevance.
We are also seeing frequency and reactivation growth among existing and lapsed guests. This shows up the most in our digital business, specifically our pickup channel, where comps were positive and accelerated each month of the quarter. However, we are not yet reaching enough potential guests. Building broader awareness and consideration is an important opportunity to introduce more people to Sweetgreen, drive trial and support transaction-led growth.
We are evolving our media mix, placing greater emphasis on upper-and middle-funnel channels and more consistent ongoing storytelling. Going forward, we also see an opportunity to build stronger local marketing capabilities around our restaurants and pursue culturally relevant partnerships that give more people new ways to discover and engage with Sweetgreen.
The launch of wraps demonstrated the potential of this approach. Wraps generated our highest social engagement to date, supported by over 1,000 micro influencers who brought the launch into local communities and relevant cultural conversations at scale. We now have an opportunity to build on that engagement, broaden awareness and convert more of that interest into trial.
Our summer menu turned Sweetgreen's distinctive ingredients into storytelling. And this year, that included Alice Waters' Peach & Goat Cheese Salad developed with Alice herself. She taught us that behind every extraordinary meal is an extraordinary farmer, introducing us to Frog Hollow Farm, whose peaches we've served every summer since. This is a model we intend to build upon. Distinctive food supported by authentic storytelling, a consistent content cadence, culturally relevant partnerships that break through the noise and local activation that connects attention back to our restaurants.
Together, these efforts are designed to expand awareness and consideration, attract new guests and support durable transaction-led growth. Personalized experiences supported the building momentum we experienced in the second quarter in our own digital business.
In April, SG Rewards reached its 1-year anniversary. During the first year, we learned a lot about how our guests engage with the program and what they value most. We put those learnings into action in June by making points easier to use and expanding the ways members can be rewarded. New redemption options include $3 off an entree and a wrap reward available at a lower point threshold than a full entree. We are encouraged by the early response with a meaningful percentage of active loyalty customers choosing these new redemption options. This reinforces that greater choice and more accessible rewards are resonating with our members.
SG Rewards also gives us a deeper understanding of what our guests love and enables us to make each interaction more relevant from how they discover our menu to the offers and communications they receive. Over time, we believe greater personalization will help increase frequency, deepen loyalty and strengthen our relationships with guests. We recently launched an AI-enabled personalization engine into tests in our CRM channel to understand the lift that we can expect from personalization.
Shifting to our final pillar, disciplined profitable investment. We believe Sweetgreen has significant room to grow, but we must earn the right to accelerate that growth. That starts with strengthening our existing restaurants by rebuilding AUVs, improving flow-through and driving greater discipline across labor and cost of sales. Our new Chief Development Officer, Ryan Slemons, is also refining our prototype design and construction costs, market selection and new unit economics.
During the second quarter, we opened 4 new restaurants, including 2 Infinite Kitchens, and closed 2, resulting in 2 net new openings. In July, we entered Tennessee with the opening of our Nashville restaurant in The Gulch. It is a strong example of how we want to enter new markets with the right site, a locally relevant launch and meaningful community partnerships. We remain confident in Sweetgreen's long-term growth opportunity and are building the operating discipline and development capabilities required to capture it profitably.
In closing, let me leave you with this. We are not satisfied with where we are today, but we have made the hard choices to center the organization on our core, and we are beginning to see encouraging signs that the work is taking hold. We know that when we consistently deliver what Sweetgreen does best, real craveable food made from scratch and served with genuine hospitality, the customer and the business responds.
That's how we build a stronger, more resilient Sweetgreen and lay the foundation for profitable new restaurant growth and long-term value creation. We believe we have the right plan and clear priorities to return to transaction-led comps, get back to $3 million AUVs and expand margins over time. I want to thank our teams again for their focus, resilience and heart.
With that, I will turn the call over to Jamie to take you through our financial results and outlook.
Thank you, Jonathan, and good afternoon, everyone. For the second quarter, total revenue was $192.7 million, an increase of approximately 4% year-over-year. Comparable restaurant sales declined 6.2%, driven by a 2% decline in transactions and a 4.2% decline in product mix. We had no year-over-year menu price increase. The product mix headwind primarily reflected targeted promotional activity to re-engage guests, wraps at a more accessible entry price and the comparison against higher side attachments following last year's Ripple Fries launch, which was discontinued in the third quarter of 2025. These headwinds were partially offset by continued strength in catering.
While we are disappointed with our overall results, we saw meaningful sequential improvement throughout the quarter. Comparable transactions improved from down 11.2% in the first quarter to down approximately 3% in both April and May before reaching roughly flat in June, supported by the successful national launch of wraps and early progress against our operational priorities. This improvement provided encouraging evidence that our Sweet Growth transformation plan was beginning to take hold.
Beginning in mid-July, heightened consumer concern related to the recent cyclospora headlines disrupted that momentum, and the impact to July comparable sales was about 600 basis points. We are taking targeted actions to reinforce consumer confidence and reengage guests. While the timing of a full recovery is difficult to predict, we are confident in our ability to rebuild momentum.
Against this backdrop, our priorities remain unchanged. As Jon discussed, we are focused on strengthening restaurant execution and throughput, increasing brand awareness to attract new guests and testing our redesigned Create Your Own experience. These initiatives are central to restoring sustainable transaction growth and rebuilding restaurant level profitability over time.
Turning to restaurant level profitability. Restaurant level profit was $25.2 million, representing a margin of 13.1% compared with 18.9% in the prior year. Food, beverage and packaging costs were 29.8% of revenue, an increase of approximately 210 basis points year-over-year. The increase primarily reflected higher ingredient usage, portion investments and targeted promotional activity. These were partially offset by supply chain savings.
We have improved visibility into the drivers of ingredient usage and are taking actions across the entire flow of food, from ordering and receiving inventory through preparation and point-of-sale accuracy. We are enhancing our recommended ordering tool to better align sales forecasts with restaurant needs and strengthening our outlier management process to share learnings and reinforce best practices across our teams.
These actions will improve consistency and simplify execution while maintaining our high-quality ingredients and culinary standards, and we expect to begin realizing some of these efficiencies in the second half of the year.
We are now testing the enhanced recommending ordering tool in select restaurants, and the results will help us refine the tools before scaling it across the system. We continue to see approximately 150 basis points of cost of sales opportunity from reducing waste and improving ingredient usage while ensuring restaurants have the ingredients they need.
Labor and related expenses were 29.2% of revenue, an increase of approximately 170 basis points year-over-year, primarily due to sales deleverage and wage inflation. Our recently completed labor study identified opportunities to align staffing more closely with demand. We are now preparing to test restaurant-specific scheduling and deployment models that shift labor toward peak periods and better reflect each restaurant sales volume and format.
These tests will help us evaluate the impact on throughput, the guest experience and labor productivity before scaling the approach more broadly. We expect to have more to share on the results in the coming quarters.
Other restaurant operating expenses were 18.5% of revenue, an increase of approximately 150 basis points year-over-year, primarily due to sales deleverage and, to a lesser extent, higher utility costs. G&A expense in the quarter was $29.7 million, a decrease of $4.8 million year-over-year. The improvement was primarily driven by lower stock-based compensation and reduced salaries and benefits. Underlying support center costs, excluding stock-based compensation and certain onetime expenses, was $24.2 million, a decrease of $2 million year-over-year. We are maintaining discipline in support center spending while continuing to invest in the capabilities that matter most to the transformation.
Depreciation expense in the quarter was $18.8 million, or 9.7% of revenue, flat year-over-year as a percentage of revenue. Adjusted EBITDA was a loss of $200,000, compared with a profit of $6.4 million in the prior year. The decline was primarily attributable to lower restaurant level profit. We ended the quarter with $142.6 million in cash. During the quarter, we opened 2 net new restaurants and ended the quarter with 287 restaurants, of which 35 restaurants are powered by the Infinite Kitchen.
Now turning to our fiscal 2026 outlook. We are updating our full year guidance to reflect the impact of the cyclospora outbreak and a range of potential recovery outcomes. While it is difficult to predict the expected recovery, our full year comparable sales guidance assumes a continued impact of 600 to 700 basis points to the third quarter, with the low end assuming a partial recovery in the fourth quarter and the high end assuming a return to the pre-disruption trend by the start of the fourth quarter.
Based on these assumptions, we now expect full-year comparable restaurant sales to decline between 8% and 7%, restaurant-level profit margin to range from 10.5% to 11% and adjusted EBITDA to range from a loss of $27 million to $23 million. Within the guidance, the estimated impact of disruption is between 200 to 300 basis points of comparable sales, 100 to 150 basis points to restaurant level margin and $7 million to $10 million in EBITDA.
We remain focused on what we can control by rebuilding sales momentum, executing our operational priorities and managing costs and capital with discipline. The progress we saw during the second quarter and into early July reinforces our confidence in the underlying direction of the business. We will continue to move with urgency as we position Sweetgreen for more consistent and profitable growth over time.
With that, I'll turn the call over to the operator to begin Q&A. Operator?
[Operator Instructions] Your first question comes from the line of Sara Senatore with Bank of America.
2. Question Answer
This is Aisling on for Sara. My question is really on wraps. And it sounds like wraps are resonating with guests, but they appear to be contributing to some outsized mix pressure. Just how are you thinking about this trade-off? Are they driving the kind of incremental traffic and repeat behavior you wanted? Or is the lower price point creating more of a check headwind than you initially anticipated?
Yes. So overall, we're really pleased with wraps. We launched wraps, and we've seen almost a 20% incidence, and it's held steady. I think what's even more encouraging is the frequency of wraps. The wraps customers are seeing about a 5-point increase in frequency and wraps are seeing the highest return rate on anything else on the menu, even more so than the Harvest Bowl. So I think the last thing I'll say about that is it is helping us resonate with younger consumers as well. We saw a lot of growth with our Gen Z consumers.
So overall, I'd say wraps are working. It's helping reposition Sweetgreen as a more affordable option, a more craveable option. And the real opportunity for us now is to leverage wraps around driving new customer acquisitions from a top-of-funnel perspective. So I think we'll see a long tail of wraps on continuing to compound. We do have a lot of new news coming with wraps, including next week, a new wrap that we are launching and more plans for continued innovation on wraps.
So overall, I think we're pleased with them. Customers, most importantly, are loving them. The feedback is great. And a lot of the concerns and worries we had about wraps in terms of throughput, we were able to iron out. And so within 4 weeks of launch, we were able to return our speed of service, and we're even able to accelerate throughput on the other side of that. So overall, I'd say it was a win and the goal now is to continue to build on it and use them to acquire more customers.
Your next question is from the line of Margaret-May Binshtok with Wolfe Research.
I just wanted to ask on the Create Your Own pricing test. Where does it stand today? And I mean, given some of the positive momentum that you guys have seen from wraps and that lower price point, I guess, how are you thinking about how the 2 can kind of go together to improve value perception towards the back half of the year?
Margaret, thanks for the question. So we launched our pilot of our new CYO pricing test. It's been about a month or so. We started in our Indianapolis market, slowly scaled out into our DC DMV market and just this week have expanded it to Southern California and Orange County. So, so far, we're seeing customers are happy with it. I think it's a much simpler way to order CYO without the price shock. And so it's too early to say what we're going to see around frequency or transaction lift.
But so far, we're pretty encouraged about what we're seeing in the customer feedback and the overall enhanced value perception. So we'll come back with more on that. Our goal is to continue to watch the test and as long as all goes well, complete the rollout by the end of the year.
Your next question is from the line of Sharon Zackfia with William Blair.
It was encouraging to hear about the flat transactions in June. Obviously, that came with some promotional activity. I'm curious kind of what your full price or nondiscounted transaction growth might have been like in the month of June. And I guess what I'm trying to get at is kind of that return to profitable growth that you alluded to, Jonathan.
Sharon, yes, so our discounts represented about 200 points of the mix. And so like you said, we are really happy with the momentum that we saw throughout the quarter, and that continued into Q3. And what we have done with promotions is we're seeing what's working and what is not. So that percentage of mix has gone down into June. And what we are doing is targeting those promotions around lapsed guests.
So it used to be for all loyalty members, you were getting a craving of the month, but we were not seeing the incremental transactions. So we've since pivoted and are only focused on our lapsed guests.
Yes, just to build on it, we've definitely weaned off the promotional activity throughout the quarter and into July. And before cyclospora hit, we were seeing really nice momentum in let's call it, the first 10 days of July with positive comps and transactions. So -- and that was without the promo running. So a lot of momentum as we work through the quarter.
Obviously, external events have changed things quite a bit, but we expect to continue to drive growth without much promotional activity and really shifting more of our focus to acquiring new customers and from a top-of-funnel perspective and using, as Jamie said, using loyalty and CRM and promos in a very, very targeted way.
Your next question is from the line of Brian Mullan with Piper Sandler.
Just a question on development. What's the current thinking for how you might want to approach store growth next year? Not looking for precise guidance, but just trying to get a sense with the new Chief Development Officer, would there be some sort of pause while he does a full assessment? Or would you think that you would continue to at least open some stores? Any elaboration on that would be great.
Sure. So we will continue to open stores at, I'd say, a pretty conservative pace, similar or slower to what we've done this year, really focused on the real estate profiles where we know Sweetgreen works and resonates. So really aiming for really kind of home run sites that build our brand and meet our return thresholds.
And during this time, as we are building the core business back, spending a lot of time really perfecting the prototype, the cost of it, the overall experience. So we are ready with that as we look to accelerate once the business recovers. So call it a slowdown to speed up phase.
Your next question is from the line of Rahul Kro with JPMorgan.
Jonathan, how should we think about retelling the brand story to resonate with potential future customers and capture a broader audience and drive wider awareness? I mean, attracting new customers into the system is oftentimes a bigger challenge than increasing frequency. And this has been an opportunity for the brand for some time. Can you elaborate on the specific initiatives? How are you planning to accomplish this?
Yes, absolutely. So there's a few ways that we're doing this. First and foremost, it starts with the diversification of the menu. So first was wraps. We are now spending a lot of time on a plates relaunch for the end of the year. What we're seeing is consumers are really resonating with our more protein-forward hot dishes. Just as an example, the Hot Honey Chicken has continued to perform really well. We actually did a what we call a glow up of that dish.
And with that, we saw a 30% improvement in the 30-day order rate of that reorder rate of it becoming kind of a stickier dish and have now taken that approach across a number of other items on the menu. So menu is the first thing. The second is shifting the media mix. So the media mix has been very focused on bottom, middle of the funnel, really engaging with our existing customers and our lapsed customers. And we saw that, that's worked. We actually saw our frequency increase for our existing customer base, and we saw our digital channels comp positive.
So as -- now that we've really gotten that working, the focus is moving more of the marketing mix to top of the funnel and working on some bigger tentpole moments, experiences and also bringing back a lot of the local and community marketing that we know works in terms of driving customers. So those are the big things. We have a really robust calendar for the back half of the year with a number of big moments.
The other 2 things that we're really working on is more on social and more on out-of-home. Lastly, we've rebuilt our entire brand and marketing team leadership over the past 6 months and have brought a lot of really awesome capable creative talent to help reinvigorate the brand, tell big stories and acquire new customers. So really excited for this back half of the year and already have a really robust marketing calendar for 2027.
Your next question is from Brian Bittner with Oppenheimer & Co.
This is Mike Tamas on for Brian. I just wanted to go back to the underlying business prior to any of the issues that are impacting the third quarter. I mean you started the quarter down 8% comps in April and thought you'd get back to, I think, the negative 4% range for the quarter.
You briefly touched on it with wraps a little bit, but what do you think were the biggest drivers that caused that shortfall versus what your plan was? And where do you see the greatest opportunity to improve sales moving forward outside of the cyclospora and the jalapeño issues?
Yes. So you're absolutely right. We saw great momentum going into the end of the quarter and also into July, and we're expecting for Q3 to turn to positive transactions before the outbreak. What I can tell you is -- what we saw in our test market with wraps, we saw more incrementality in tests versus what we saw during the launch. But the good news is what we're seeing is it's really resonating with our current guests, but we have the opportunity, like Jon said, to really acquire those new customers, but that really was the gap on the comparable sales guide.
Yes. It's really -- the gap has a lot to do with the mix shift and the check drag from wraps with such a high incidence. The good news is we are seeing a lot of momentum in terms of attachment on wraps. The attachment rate on wraps is higher. And as I mentioned earlier, the frequency of wraps customers is higher. So I think over time, you'll continue to see more incrementality out of that platform.
Your next question is from the line of Jon Tower with Citi.
Yes. I guess 2 questions in one maybe. On the idea that the wraps didn't test or didn't hit the market as well as test indicated, what does it tell you guys about your testing in general? I mean I thought much of that had been at least examined recently in the past year to ensure that it gets better. So what in the testing process maybe missed this?
And then on top of that, I guess the second question is thinking about the back half of the year, everything that's going on with industry headlines, are you accounting for a much greater promotional activity in this third quarter to get back to the guidance range that you've offered in the quarter from a same-store sales and, importantly, a profitability standpoint?
I'll take the second part of your question first is we really worked hard to wean off the promotions and are looking to be very disciplined there. So we have not built in a lot of promo in order to do that. We will invest in promos where we see it being accretive, but really trying to manage that very carefully, both from a business perspective and from a brand perspective.
As it relates to your question around wrap, I think the real reason is what you saw in the results is it's really resonating with our existing and lapsed users. So in the markets that we tested in, they had -- they were large markets. So we got a -- in some ways, it was a very good test, and we ran it for a long time, but there were markets like New York that had greater brand awareness. So in that market, for example, we did see more incrementality. We've shared and I shared in my prepared remarks that with wraps longer in that market, you've seen that market really start to perform and move not only to positive transaction, but positive comps. So again, it highlights the opportunity of bringing more guests top of funnel with wraps and overall for the brand.
Your next question comes from the line of Steve McManus with BNP Paribas.
So another question on wrap. So the 5% transaction lift, you got about 2 points showing up in comps and total traffic was still down 2%. So how much of the gap is cannibalization versus lower check on wrap visits? And what's the net like comp contribution once you strip that out?
Yes. So I'd say it's all primarily related to the lower check.
Got it. Okay. And anything you could share around like the margin profile and the labor intensity around wraps versus the average salad bowl?
Yes. So it's -- we price it margin neutral to the rest of our items on our menu.
Your next question is from the line of Kelly Merrill with Morgan Stanley.
I just wanted to go back to mix. So it went from a modest drag on comps in the first quarter to a much larger one in the second. And I know you noted promo shift towards wraps, lapping Ripple Fries, all those things is impacting ticket. And given that you just said you're trying to wean off of promotions in the third quarter, I just wanted to ask, how long do you expect this magnitude of mix drag to persist?
And what's baked into the back half guidance? And do you see this as like a new normal, a new baseline for mix? Or when do you see that moderating?
Yes. So we already started like we talked about moderating it into June. So in the back half of the year, we expect it to be in the low single digits. And we have completely lapped our launch of the Ripple Fries, so that will no longer be a mix headwind.
Yes. And just as a reminder, we have no price running through the system. And, like I said in the remarks, we've taken pretty significantly less price in both the category and grocery since 2019. So really trying to grow the business from a transaction perspective. We do have a lot of work being done around attachments. And so you'll see a lot more there.
And as we continue to innovate outside of wraps, we do see opportunities to lift the check. So we've been pretty conservative in the guide around mix, but we have a lot of work doing to kind of bridge that gap.
There are no further questions at this time. This concludes today's call. Thank you for attending. You may now disconnect.
Sweetgreen — Q2 2026 Earnings Call
Sweetgreen reported mixed Q2 progress: revenue up but comps down, operational fixes and wraps traction offset by mix pressure and a cyclospora-driven sales disruption.
📊 Quarter at a Glance
- Revenue: $192.7M (+~4% YoY)
- Comparable sales: -6.2% (same-store sales; -2% transactions, -4.2% mix)
- Restaurant margin: 13.1% (restaurant-level profit margin; down from 18.9% a year ago)
- Adjusted EBITDA: -$0.2M (non-GAAP operating profit measure)
🎯 What Management Says
- Operations: Priority on throughput and "Rush Ready" staffing—new field leadership, redesigned training, weekly accountability at busiest units drove measurable hour-by-hour entree throughput gains.
- Menu & brand: Wraps launched nationally (~20% incidence) boosted frequency and Gen Z appeal; ongoing menu calendar and partnerships aim to broaden occasions.
- Capital discipline: Slower, selective new-store cadence while refining prototype, unit economics and development costs to "earn the right" to scale.
🔭 Outlook & Guidance
- Full-year comps: now expected to decline ~8% to 7% (range reflects uncertainty from cyclospora)
- Margins & EBITDA: restaurant-level margin guided to 10.5%–11.0%; adjusted EBITDA loss $27M to $23M
- Disruption impact: management estimates 200–300 bps of comps, 100–150 bps margin and $7M–$10M EBITDA hit included in guidance; July saw ~600 bps impact.
❓ Analyst Q&A
- Wraps trade-off: Analysts pressed on check drag vs. traffic; management says wraps are margin‑neutral, drive repeat (higher frequency) and younger guests, but lower price pulled mix.
- Promotions: Company is weaning broad promos, moving to targeted offers for lapsed guests to limit mix headwind.
- Development pace: Expect conservative openings next year—"slow to speed up" while new Chief Development Officer refines prototype and site selection.
⚡ Bottom Line
- Conclusion: Near term: headline-driven demand shocks and a mix shift from wraps pressure comps and margins, prompting weaker full‑year guidance. Medium term: operational improvements, promising menu innovation and disciplined development aim to restore transactions and AUVs, but investors should watch transaction trends, mix normalization, and realized cost efficiencies.
Sweetgreen — Q1 2026 Earnings Call
1. Management Discussion
Ladies and gentlemen, thank you for joining us, and welcome to the Sweetgreen, Inc. First Quarter 2026 Earnings Call. After today's prepared remarks, we will host a question-and-answer session. [Operator Instructions]
I will now hand the conference over to Rebecca Nounou, Vice President, Head of Investor Relations. Please go ahead.
Thank you, everyone, and good afternoon. Speaking on today's call will be Jonathan Neman, Co-Founder and Chief Executive Officer; and Jamie McConnell, Chief Financial Officer. Both will be available for questions during the Q&A session following the prepared remarks. Today's call is being webcast live and recorded for replay. The earnings release is available on the Investor Relations section of Sweetgreen's website at investor.sweetgreen.com.
I'd like to remind everyone that the information under the heading, Forward-looking Statements included in our earnings release also applies to our comments made during the call. These forward-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward-looking statements. We also direct you to our earnings release for additional information regarding our use of non-GAAP financial measures, including reconciliations of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. Our earnings release can be found on our investor website.
And now I'll turn the call over to Jonathan to kick things off.
Thank you, Rebecca, and thank you, everyone, for joining us today. We entered 2026 focused on executing our Sweet Growth Transformation Plan with a clear priority on strengthening our fundamentals and improving execution across our restaurants.
As we communicated last quarter, this work takes time to translate into results, and we expected the first quarter to be the most challenging given a difficult comparison to the prior year Ripple Fries launch, weather-related headwinds and more work to be done on our transformation plan. While the quarter was pressured, we saw improvement as the quarter progressed with a further step-up in April, reflecting early progress from the actions we have underway through the Sweet Growth Transformation Plan.
As restaurant operations continue to improve, we are bringing innovation to market with stronger discipline. Yesterday, we launched Wraps nationwide following a rigorous stage gate process that validated both the consumer opportunity and our ability to execute in restaurant. Test results were strong, driving incremental traffic from new and returning guests while expanding our ability to serve more occasions.
Now turning to results. For the first quarter of fiscal 2026, revenue was $161.5 million with comparable sales down 12.8%. We opened 4 net new restaurants including 3 Infinite Kitchens. Restaurant-level margin was 10%, and adjusted EBITDA was a loss of $8.1 million.
As we moved into April, traffic trends improved, supported by stronger execution in our restaurants the performance of our Chicken Sesame Crunch Bowl and early contribution from Wraps in test markets, which ran in about 1/4 of our restaurants, including New York, our largest market. This reflects a deliberate sequencing, strengthening operations first to build a more consistent foundation and then layering in menu innovation to drive more durable traffic.
New York is an important example of the progress we are beginning to see. Given its significance to our footprint, it has been a key focus as we strengthen leadership, improved head coach stability and drove more consistent execution through Project One Best Way. While we still have work to do, transaction trends improved in April, supported by better operations in the Wraps test. We view the progress in New York as an early signal of how the broader system can respond as we continue to execute through the Wraps launch and beyond.
We know there is more work ahead of us, and we remain focused on executing against the five strategic priorities under our Sweet Growth Transformation Plan: one, operational excellence; two, food quality and menu innovation; three, personalized experience; four, brand relevance; and five, disciplined profitable investment.
Starting with operational excellence, which remains the foundation of our ability to deliver a consistent, high-quality and hospitable experience for our guests. We continue to strengthen consistency across the system through Project One Best Way, which defines what great looks like at Sweetgreen across craveable food, hospitality, operational flow and people culture. The program is grounded in both customer and restaurant-level performance data and is focused on building scalable systems and routines that allow every restaurant to execute at a high level, not just the best ones.
Work like this takes time to translate into results, but we are beginning to see improvement in several key operational metrics, including throughput during peak periods, ingredient availability and fewer quality complaints, reflecting stronger operational readiness across the fleet. At the same time, we recognize there is still meaningful opportunity ahead and we will continue raising the bar as performance improves.
That stronger foundation has been critical as we move into the national rollout of Wraps. We have taken a disciplined stage gate approach to get here with team spending months in development and testing, including extensive work in restaurants to build capability, train teams and ensure operational readiness. One of the core principles for our Wraps experience is that the first bite should be the best bite.
To deliver on that consistently, we refined our preparation process through multiple rounds of testing and iteration, including in-restaurant [ shake down ] to validate equipment, positioning and workflows. This work ensured we can deliver on quality while maintaining throughput at peak. We then validated the concept through a multi-month market test across approximately 70 restaurants where we saw strong guest response alongside solid execution in the field. The energy in the field is strong, and we are encouraged by how teams are performing out of the gate.
Our focus remains on execution, ensuring every wrap is made right, throughput is strong and the guest experience is consistent from day 1. This quarter, we brought our New York market head coaches together for an impact day focused on reconnecting our restaurant leaders to the guest experience through culture and hospitality. Two weeks ago, we also brought our area leaders together for a 2-day summit to reinforce consistent execution across markets.
The focus was on three major themes: strengthening head coach performance, building a culture of hospitality where speed and service work together and delivering consistent food quality that drives repeat visits. Together, these sessions are helping create greater alignment on the experience we want to deliver and the standards required to deliver it every day. To continue this focus, we will bring our head coaches together for impact days across our remaining regions in the coming weeks.
What stood out most to me from impact day and the area leader summit was the importance of the connection between our restaurant support center and our field teams. Delivering a better guest experience starts with strong alignment between the teams closest to our guests and those supporting them. Our head coaches and area leaders are closest to day-to-day operations and their input is critical in helping us refine how we deliver on our standards across food, hospitality and operations. The best ideas come from our restaurants.
Building on that operational foundation, one of our key priorities this year is menu innovation, led by the national launch of our Wraps platform. This represents our most significant menu expansion in several years, designed to expand occasions and introduce a more accessible entry point into the brand. We launched Wraps with a core lineup of craveable flavors including the Classic Chicken Caesar, Chicken Jalapeno Ranch and Cali Chicken Club, along with the limited time K-BBQ Chicken.
We started with our food ethos, delivering flavors through ingredients that don't just taste good but also make you feel good. That means preparing seasonal ingredients from scratch every day, cooking our grains, vegetables and antibiotic-free proteins without seed oils and using no artificial flavors, colors or dyes.
We were intentional about every component of the wrap, starting with the tortilla. Early in development, we were unable to find a tortilla in the food service market that met our standards. So we partnered to create one made with only four ingredients: extra-virgin olive oil, unbleached and unenriched wheat flower, sea salt and water with no preservatives. Guests can taste and feel the difference with social reviews consistently highlighting the quality and flavor of the tortilla.
The energy around the test leading into yesterday's launch has been incredible. Wraps are already appearing in a meaningful share of social content tagging Sweetgreen with positive sentiment of around 85%. Guests are responding to the value with entry price points starting at $10.45 and ranging up to $14.95. This launch is supported by one of our largest social marketing campaigns to date, partnering with hundreds of micro and scaled creators who authentically represent culture to drive awareness and engagement across a range of diverse communities.
Our confidence in Wraps is based on the results we saw in testing. Over a multi-month period across approximately 70 restaurants in New York, the Midwest and Los Angeles, Wraps drove incremental traffic from new and returning guests, helps reengage lapsed customers and showed strong repeat behavior. We are pleased with the combination of incremental traffic and improved customer retention, reflecting its strength as a new platform and expanding how guests engage with the brand. Importantly, execution remains strong with throughput maintained and lower-than-average guest complaints.
Taken together, these results give us confidence in both the strength of the Wraps platform and our ability to scale it nationally.
We are also continuing to innovate and strengthen our core menu. The Chicken Sesame Crunch Bowl, which launched in March, is already our second highest mixing salad and contributed to improving trends as the quarter progressed. It is now a permanent menu item, reflecting strong guest response. At the same time, we have rebuilt our pipeline of both core and seasonal innovation for the balance of the year, including summer and fall menu updates, new core offerings, continued expansion of the Wraps platform and upcoming collaborations with leading chefs, bringing distinctive chef-driven flavors into the menu that reflect the core of our brand. This approach allows us to stay relevant with our existing guests while continuing to bring new guests into the brand.
I'm encouraged by the product innovation we're bringing this year as well as the progress we're making to elevate the quality and consistency of our core menu. We've continued to see an increase in salmon entree sales following our internal Miso My Salmon campaign, which was designed to sharpen execution and elevate quality across the system. We've taken the same approach to our other core menu ingredients. For example, we've refined our measurement of protein cook cycles and hold times to ensure dishes are served at peak freshness and have elevated seven of our core ingredients like romaine, quinoa, carrots, napa cabbage slaw and breadcrumbs. This remains an area of focus as we continue to drive greater consistency across the fleet.
Looking ahead, we will begin testing a rearchitected pricing ladder in late June. Central to this work is the introduction of clear entry price points and a new Create Your Own construct that is designed to deliver greater price clarity and a more intuitive ordering experience. Together, these efforts will make pricing clear and make it easier for guests to choose and order, supporting incremental transactions across price points. We are pacing these initiatives deliberately, using disciplined reads on guest response and P&L impact to guide rollout decisions with a focus on bringing more guests into the brand and increasing frequency over time.
Turning to our personalized digital experience. Our strategy focuses on deepening our connection with customers, driving engagement and increasing customer lifetime value through more targeted one-to-one interaction. At the center of this strategy is our SG Rewards loyalty program, which enables us to deliver personalized offers, incentives and experiences that make it easier for customers to engage with the brand while driving frequency and spend.
At the beginning of the year, we introduced our Craving of the Month program, a key pillar within SG Rewards and a loyalty exclusive limited-time offer available through the Sweetgreen app at a compelling value. The retention and incremental spend signals are encouraging. Of guests who were deemed a Craving of the Month offer, we see higher frequency and higher net average revenue per user. We also see that this program draws in at-risk and lapsed customers while driving incremental visits with lighter frequency cohorts. While still nascent, this exclusive platform within our loyalty program is helping us win back customers, drive incremental transactions and incremental spend.
Later in the second quarter, we will introduce lower redemption thresholds to our loyalty program designed be achievable in fewer visits, making the program more accessible and engaging for a broader set of customers. These new redemption thresholds will include a $3 credit at 700 points, a $5 credit at 1,200 points and a free wrap reward at 2,000 points. Based on the current customer redemption behavior, we expect these changes to drive increased loyalty engagement and higher visit frequency, especially in our lower frequency customer cohorts.
Before I close, we are excited to welcome Ryan Slemons as our new Chief Development Officer. Ryan brings deep experience across real estate design, construction and portfolio management with a strong track record of scaling high-quality growth across leading retail and restaurant concept, His focus on thoughtful design and site selection will be critical as we expand our footprint, reimagine our spaces and create better experiences for our guests and team members. He will also reinforce discipline around build-out costs and capital allocation, supporting consistent high-return unit growth.
To close, while the quarter was pressured, we are still in the early innings of our transformation, and we are beginning to see signs that the actions we are putting in place are gaining traction. We are seeing improvement in execution across our restaurants, greater consistency in the guest experience and stronger alignment across our teams. The progress through the quarter and into April, along with the energy in the field, reinforces that we are focused on the right operational priorities and building a stronger foundation for Sweetgreen.
I want to thank our restaurant teams for leaning in and embracing the higher bar we are setting on hospitality and execution, especially as we build momentum coming out of our recent area leader summit. At the same time, we are operating with greater focus as we rebuild the top line. The national launch of Wraps is an important step forward and a clear example of how we are approaching innovation differently. We took the time to test, learn and ensure we could execute at a high level, and the early response gives us confidence in the opportunity to drive incremental traffic and expand into new occasions.
As we move through the year, we will continue to build on this foundation by improving execution, refining our menu and pricing architecture, strengthening the guest experience and driving greater discipline in our investments. As these actions take hold, we expect to see stronger restaurant-level performance over time. We are confident in the path we are on and in our ability to build a more consistent, profitable and durable Sweetgreen brand.
With that, I'll turn it over to Jamie.
Thank you, Jonathan, and good afternoon, everyone. First quarter results were below our expectations with comparable sales down 12.8%. As Jonathan outlined, we saw improvement as the quarter progressed with trends continuing to improve into April. Sales in the quarter were $161.5 million compared to $166.3 million a year ago. The decline in comparable sales were driven by an 11.2% decrease in traffic and a 2.3% decline in mix, partially offset by approximately 70 basis points of menu price.
Traffic was impacted by weather and a difficult comparison to the prior year Ripple Fries launch, which created a headwind to both traffic and mix. Mix declined in the quarter, reflecting strategic promotional offers to reengage guests as well as the transition to SG Rewards. Traffic improved sequentially through the quarter, supported by menu innovation and targeted loyalty offers with improvement continuing into April. As we look ahead, we expect comparable sales trends to improve as we continue to execute our transformation plan with Wraps now launched nationally. The comparisons also become easier as we move through the year.
Restaurant-level margin was 10%, down from 17.9% last year. Food, beverage and packaging costs in the quarter were 29% of revenue, an increase of 250 basis points year-over-year. The increase was primarily driven by higher ingredient usage, portion investments and targeted pricing and promotional investments, partially offset by supply chain saving initiatives. Ingredient usage was a headwind of approximately 140 basis points year-over-year.
We have taken initial steps to improve visibility into these drivers for our field teams, which is helping us better identify and prioritize the opportunities across the system. Our focus is on improving the flow of food in our restaurants from receiving orders to inventory management, prep and ensuring accuracy at the point of sale. While we are still early, we see this as a meaningful opportunity to improve consistency and reduce variability over time.
We are taking a disciplined approach. While we have made progress on visibility, there is more work to do to strengthen the tools and processes that support the field. This requires alignment between the systems and how our restaurants operate. So we are being thoughtful about how we evolve and roll this out to ensure it works effectively in our restaurant and deliver consistent results.
For the second quarter, we expect food, beverage and packaging costs to be in line with the first quarter with pressure from weather-related produce costs as well as fuel surcharges. We expect the produce-related pressure to be transitory and largely concentrated in the quarter.
First quarter labor and related expenses were 31.4% of revenue, an increase of 250 basis points year-over-year. This was primarily driven by sales deleverage and wage inflation. In our restaurants, we are focused on getting the right labor in the right place, at the right time with work underway across staffing and scheduling to better align labor to demand throughout the day, particularly during peak hours, where better coverage supports throughput and the customer experience. For the second quarter, we expect labor cost to be in the low 29% range, reflecting low single-digit wage inflation.
Other operating expenses for the quarter were 18.5% of revenue, an increase of 110 basis points year-over-year, driven primarily by sales deleverage.
G&A expense in the quarter was $29.3 million, a decrease of $9.1 million year-over-year. The improvement was primarily driven by lower stock-based compensation and reduced salary and benefits following our 2025 headcount reduction initiatives. Underlying support center costs excluding stock-based compensation and onetime expenses was $23.2 million, a decrease of $4.5 million year-over-year. We are maintaining discipline in support center spending while continuing to invest in the capabilities that matter most of the transformation.
Net income for the quarter was $125.8 million compared to a net loss of $25 million in the prior year. This was primarily driven by a one-time gain from the sale of Spyce, which closed during the first quarter of 2026. Adjusted EBITDA was a loss of $8.1 million compared to a gain of $285,000 last year, driven primarily by lower restaurant-level profit. We ended the quarter with $156.8 million in cash.
During the quarter, we opened 4 net new restaurants and ended the quarter with 285 restaurants, of which 33 restaurants are powered by the Infinite Kitchen.
Now turning to fiscal year 2026 guidance. We are reiterating our same-store sales guidance. With Wraps now in Sweetgreen restaurants nationwide and comparisons easing, we expect same-store sales to be a decline in the range of negative 4% to negative 2%. We expect restaurant-level margin to range from 14.2% to 14.7% and adjusted EBITDA to range between $1 million and $6 million.
On unit growth, we now expect to open approximately 13 net new restaurants this year, reflecting 18 openings and a handful of lease-related closures, where we mostly see an opportunity to strengthen nearby locations. Our development pipeline is equally weighted this year and nearly half of our openings will feature the Infinite kitchen.
To close, we are still early in our transformation work, but we are beginning to see progress from the actions we have taken. As execution improves and we bring more discipline to how we operate and invest, we expect to see more consistent performance over time, supported by initiatives like the national launch of Wraps as we rebuild top line momentum and improve restaurant level economics.
Our focus remains on strengthening execution in our restaurants, restoring traffic and managing cost and capital discipline. With that approach, we are focused on building a more consistent and profitable Sweetgreen over time.
And now we're happy to take your questions.
[Operator Instructions] Our first question comes from the line of Jeff Bernstein with Barclays.
2. Question Answer
This is Pratik on for Jeff. Very encouraging to hear the April traffic trends improving. And in the release, you referred to the momentum you have. Could you just level set with us what degree of improvement you've been seeing. It'd just be helpful to get kind of an embedded assumption from you for how you see the rest of the quarter playing out, even if you're not explicitly guiding to a comp number in the second quarter.
Yes. So we saw January and February -- starting with Q1, we saw some pressure with the weather. But as we moved into March, we saw about 100 basis improvement in transactions. We also have price fully rolling off and we had some mixed headwinds due to some of the promotional activities and as we launched SG Rewards. And in April, we improved about a decline of negative 8%. And we just launched Wraps, and so we're excited about our launch from all the results that we saw in the testing, and we expect that Q2 will land around negative 4%.
Your next question comes from the line of Brian Bittner with Oppenheimer & Company.
This is [ Mike Tamas ] on for Brian. You talked about the improving operations and also like the incrementality from Wraps. So I guess, can you maybe just Help us understand what that incrementality look like from the Wraps? And then as the year unfolds, you're talking about doing more menu innovation, but also having all of these improvement in operations that you've done so far and more to come. So what guardrails are you putting in place sort of make sure that the operations don't deteriorate as you step up that amount of menu innovation?
Sure. Thanks for the question. So as it relates to Wraps, as I mentioned in the prepared remarks, we took a very disciplined approach starting with an ops shakedown, a rapid ops test in 8 stores and then a multi-month stage gate process in 3 separate markets. And we were able to both understand the operational impacts as well as the customer behavior.
While I'm not going to guide to an exact number on incrementality, I'll say that we were very encouraged. It mixed in really well. We saw really high return rates of the Wraps. I think most importantly, customers were really delighted with the quality as well as the price. The Chicken Ceasar Wraps, it starts at $10.45 in certain markets, and no wrap in any market is about $15. So I think both from a quality, craveability and price value, we are really delivering and customers are noticing it. So it definitely is incremental.
And that was all before media. So typically, we do see a pretty nice lift once we advertise things. And we have a really -- one of probably our largest social first campaign going live right now, getting much more awareness in trial. So it's still very early, we launched yesterday, but very encouraged by how it's mixing in the response and the comeback rate on Wraps.
As it relates to operations and menu innovation, we really spent last year instituting Project One Best Way, really building the operational foundation with a focus on people, food, feel and flow. And we've gotten much, much better. We've seen our quality complaints come down significantly. We've seen our in-stock percentages, so like our [indiscernible] go down significantly, so much more in stock. So we feel good about how we're operating there.
And the focus has really moved more towards culture within our restaurants and the hospitality and as well as continuing to elevate the quality and consistency of what we do. Given the stage gate process we have, everything that we're putting out from a menu innovation perspective both has to meet our ops sandbox requirements in terms of complexity, number of ingredients and any incremental labor hours, but also has to go through a stage gate process and make sure it doesn't disrupt our core operation.
I think if I can leave you with anything, the most important thing we are focused on right now is the fundamentals of delivering an excellent customer experience. And the menu innovation is all layered on top of that. And that's what gives us confidence with Wraps and future menu innovation is, we believe we've laid the operational foundation to continue to innovate. We have a robust innovation calendar coming for the rest of the year but done in a way which really limits the complexity for our store teams and should be something that really customers love.
So very encouraged by the recent momentum. But as I mentioned, we're still early in the transformation and a lot of work to do.
Your next question comes from the line of Sara Senatore with Bank of America.
[ Azer Austin ] on for Sarah. Just in the line of menu additions, it kind of seemed like protein plates were an important driver back in 2024 but kind of faded moving into 2025. Are there any learnings on how you guys will manage that with Wraps on the menu now just going through the remainder of the year?
Yes. Good question. One of the learnings is to consistently bring new news to a category. So what you'll see us do with Wraps is not only the launch of Wraps is compelling, but continuing to support it with media but also new news and new wrap builds.
So today, we have 3 core Wraps, 1 LTO. We have a couple of planned incremental Wraps that we will introduce throughout the year, whether that be core or LTO. Today, for signature Wraps, all can be modified. We know customers eventually want a build-their-own wrap, which is something that we're looking at.
And plates have been successful. They've helped us grow our dinner. Some of those plates do exceptionally well, like our Miso Salmon plate. And so we do expect to continue innovating on the plates category. So expect some more innovation on plates. It's something that we know our customers love.
Next question comes from the line of Sharon Zackfia with William Blair.
You've done so much work over the last year and different efforts to improve your value perception, and I'm curious if you have any kind of quantifiable research on how the consumer has recognized that. Do you think you're getting credit for all of the efforts you've done? And what have you done that really landed well and [ where maybe you ] a bit more disappointed and something that you rearchitected that the customer just didn't really appreciate?
Thank you, Sharon. So as you mentioned, we have been working on value perceptions through a number of different initiatives. I think first and foremost, we are proud of the food we serve, and we believe when we execute on our core fundamentals and deliver a great customer experience, that given all that we do from a sourcing and scratch cooking perspective, that we offer tremendous value. Having said that, we do see opportunities to offer more entry-level pricing and kind of a different pricing ladder for different consumers to drive acquisition and repeat behavior.
So a few of the things that we've done that we believe are resonating. One is Wraps. If you look at the social commentary on Wraps, some of the lower pricing is really resonating, and we are seeing the comeback rate or the return rate of many of those customers as an encouraging sign. Two, we're getting more juice out of our loyalty program, both the core program as well as our Cravings of the Month. We're seeing high adoption of that. And as I mentioned on the call, we're seeing the average revenue of those users be incremental. So it's a good activation of both new customers and lapsed customers.
But those customers stick with us. We do not plan on continuing the promo and discount at this level. We do expect to really wean off of this. Also the biggest price moves we're going to make, we're going to go into test in about a month or so on a whole kind of pricing architecture change, which I described in the prepared remarks both on our Build Your Own framework as well as testing some more entry-level pricing.
As it relates to data, to quantifiable research, we have now done a baseline on price value, and over coming quarters, we'll share more on how that has changed. But to leave you anything, really, the focus is delivering on the fundamentals and delivering a great customer experience. And when we do that, what we offer is really worth the money and we're proud of that.
The next question comes from the line of Jon Tower with Citi.
Yes. Just maybe you can help us think through, there's a lot of moving parts on the business right now. And whether it's Wraps or changing the pricing architecture in the future, like how you're thinking about incremental flow-through going forward for the business? And specifically, with focusing on lower price points, I would assume that check is going to be a little bit lower. Can you help us think through that?
Yes. So we saw flow through to be around the 40% range. And what we are seeing with Wraps is there is some check dilution, but we are getting the incremental transactions. And what we're also seeing is the prep for the produce that goes into the Wraps is less and also the waste is less. So we're actually seeing favorable cost of goods sold on our Wraps even with the lower price point.
And so as we test, when we look at the menu price architecture, that's something that we're going to be very careful and sequenced about, and that's why we've paced every kind of discount and promotion that we've done because we want to measure the results and making sure that we get the return. So same with the price architecture, we're going to be disciplined about that approach and make sure that it's working.
Your next question comes from the line of Andrew Charles with TD Cowen.
Great. This is [ Zack ] on for Andrew. So for the full year restaurant-level margin guidance, it does imply about 100 basis points, maybe a little bit more in the second half of the year in terms of leverage. So can you talk about the drivers that will get you back to that margin leverage? And then maybe talk about any pricing plans as a part of that.
Yes. So when you look at our margins for the quarter, about half of it is sales deleverage and then we also have wage inflation of about 40 bps, but the remainder is really within our control. And so there's a lot of work being done behind the scenes, especially as it relates to cost of goods sold.
And so we have just introduced visibility to the field on the waste by the different categories, but there's still a lot more work to be done to make sure that they're ordering the correct amount, they're prepping the right amount and that we're giving them the tools to be successful to properly do this. So we've just unlocked the visibility, but we plan to unlock the tools through the back half of the year. But we are seeing quarter-over-quarter improvements.
And also within labor, we have a labor study going on right now. And so we are looking at our labor as well and making sure that we have the right people staffed during the peak hours to drive the throughput and make sure that we're getting sales leverage on those transactions. So a lot of work being done behind the scenes on the margin.
Your next question comes from the line of Rahul Krotthapalli with JPMorgan.
Can you update us on where you are in the efforts around reestablishing like the coolness factor, if you will, as you continue to be a premium and aspirational brand while also being affordable and making progress in democratizing wellness and mindful eating? And I have a follow-up.
Thanks, Rahul. Yes, One thing I'll just point to but broadly is last year, we really rebuilt our leadership team and underneath Zip, our Chief Commercial Officer, have rebuilt much of our marketing and brand team. So we are taking a new approach to how we invest in the brand and leaning more into the lifestyle elements.
The first thing that I think builds the brand, and our team hears me all the time, is word of mouth on delivering a great experience in our restaurants. So first and foremost,is just executing on excellent customer experience and living up to our promise around consistency, quality and hospitality. But we're also leaning into some new things. For example, with our Wraps launch, you'll see a different kind of launch with us or a bottoms-up approach with social-first content really and other moves getting into culture.
As you move into the summer, you'll see us do some really cool things leaning into some collaborations in both culture broadly as well as chefs, something that we've done in the past that definitely resonates with our guests. And you're also seeing us do a lot more kind of events in real life. Even tonight, we're celebrating our Wraps launch with an awesome event here in Los Angeles at our Silver Lake restaurant. So much more with creators, influencers, storytelling and leaning into the lifestyle elements of the brand. So expect to see more as the year continues.
And then the follow-up is on the owned digital customers. Like approaching 40% is good to see. Any insights you can share around the frequency of these customers? I know we spoke about the monthly active users in the past. How is this cohort interacting with the brand actionably?
Yes. So I would say there's a lot of work being done on our loyalty channel. So that's why we're beginning to see some momentum there, especially within our native channel. And so with the Craving of the Month and then the targeted loyalty actions. We are seeing some improvements in our own channel. And we're actually also seeing increases of loyalty users signing with us month after month.
Yes. The other thing where you're seeing the other change in the owned digital is we've continued to see really nice momentum on people using loyalty in restaurants from a scan-to-pay perspective. The scan-to-pay has reached about 20% of in-store transactions. And that's a positive signal because once we get them into our digital ecosystem, we love them ordering in restaurant, but that gives us the benefit of ordering in restaurant and having a connection digitally, where we can market to them directly. So some nice encouraging signs around their frequency, but a lot more work to do.
And congrats on the Wraps launch. The K-BBQ is my favorite and it's fire.
Great to hear. Thank you, Rahul.
Our next question comes from the line of Kelly Merrill with Morgan Stanley.
I just wanted to continue on with the digital conversation and see if you had anything else to add as percentage of revenue and owned digital revenue saw a nice tick up sequentially and year-over-year. And then just one more I want to ask, what trends have you been seeing on third-party delivery as of late?
Sure. So I mean just to reiterate what I said before, we've continued to invest in our digital ecosystem. I think it's somewhere where, we're probably best-in-class and around the digital experience in our restaurants, not only what we do within our app, but how we support it within our restaurants. So we've been very intentional about how to build an omnichannel restaurant where we don't disrupt the in-store experience for those digital customers.
And we've done a lot of work on, call it, the back end, whether it'd be our throttle management and working on things like accuracy on time and on-time rates so people can trust those digital channels. We continue to AB test features. We've continued to come out with a number of new features within our app, and we have a robust road map across the rest of this year. We actually have accelerated our digital road map. Especially given the advent of AI, we can move faster on a lot of those things. So customers really love and trust our digital experience.
Remind me the second part of your question?
Just on trends in third-party delivery recently.
Yes. So trends in our third-party delivery, that is a channel that we're very focused on right now. So there's a number of work streams under place to, one, make sure that we're delivering a great experience. We're not missing items or inaccurate. So we've been working on that also with our kind of our time to order and pick up. And so there's a lot of work being done behind the scenes. We've seen some good improvement on our native channel. And marketplace is starting to improve. We're seeing the trends improve into April.
Yes. Marketplace, we've seen a huge improvement into April. I think we optimized both the paid side of the marketplace. but also, as Jamie mentioned, the organic side. There's a lot we can do to show up higher in the algorithm, especially around wait times order readiness and even little things around, call it, SEO management on the marketplace. So getting smarter and sharper there, and we expect marketplace to be a strong growth channel for us as we look throughout the rest of the year.
Your next question comes from the line of Brian Mullan with Piper Sandler.
Just a question on development specific to next year. Not looking for precise guidance but really just trying to understand your current appetite to build new restaurants beyond projects that are already underway during the time period that you're going through the Sweet Transformation Plan Process. So just how you're thinking about development right now.
Yes. I say we're taking right now a very disciplined approach, really focused on high return on invested capital, restaurants that we have a high level of confidence in. I'd say we don't expect an acceleration in development until we start to see the flywheel working here, comps improving significantly and feel much better about the core operation.
But we will continue to develop new restaurants. We're continuing to work on both the design and prototype of those new restaurants. We're really excited to welcome our new Chief Development Officer, Ryan. So expect a tempered year of development, and we'll come back with more as the year progresses.
And our final question comes from the line of Dennis Geiger with UBS.
Great. This is Paul on with Dennis. My first part is just encouraging to see the improvement in April so far, and I appreciate the color that you provided on transactions and pricing. Just wondering if you [ noticed ] shift in consumer behavior during the past few months. And then the second part was just following up on the development pipeline question, particularly over the longer term. What is the future opening mix between entering new markets and penetrating further in existing markets?
Yes. In terms of consumer behavior, we are seeing some improvements in our younger cohort. So the 18 to 35 has really started to pick up, which is good to see. In March, we launched our Chicken Sesame Crunch Salad. That was a huge hit. And then now we have now launched Wraps. So we're hoping to continue to see momentum. And then in terms of development pipeline, I don't know, if there's anything else you want to add.
As a related development pipeline, we're really focused on building out a lot of the newer markets where we have seen success. One of the bright spots in development recently has been a number of those new markets. For example, we entered Phoenix last year. We're seeing about $3.2 million AUVs in that market. We're in Sacramento with about $3 million AUVs. So some really bright spots in some of these new markets.
But we still have a number of new markets where we're very lightly penetrated and have a lot of room to grow. So probably not a whole lot of net like totally greenfield markets and more building out those lightly penetrated markets so we can get the efficiencies around supply chain, operations and brand.
There are no further questions at this time. This concludes today's call. Thank you for attending. You may disconnect.
Sweetgreen — Q1 2026 Earnings Call
Sweetgreen's Q1 2026 shows revenue pressure as it pushes Wraps and transformation forward.
📊 Quarter at a Glance
- Revenue: $161.5M (vs $166.3M prior year)
- Comparable sales: -12.8% YoY
- Openings: 4 net new restaurants (incl. 3 Infinite Kitchens)
- Restaurant‑level margin: 10%
- Adjusted EBITDA: -$8.1M (vs +$0.3M prior year)
🎯 What Management Says
- Wraps rollout: National launch after disciplined testing; early results show incremental traffic and strong guest response.
- Transformation priorities: Five strategic priorities—operational excellence, menu innovation, personalized experience, brand relevance, and disciplined investments—driving a durable turnaround.
- Pricing & loyalty: Clear pricing ladder and Create Your Own construct; Craving of the Month boosts engagement and spend; upcoming lower redemption thresholds to broaden access.
🔭 Outlook & Guidance
- Same-store sales: Decline of about 4% to 2% for the year, with Wraps nationwide and easier comparisons later in the year.
- Restaurant‑level margin: 14.2%–14.7%
- Adjusted EBITDA: $1M–$6M
- Development: About 13 net new restaurants in 2026; ~18 openings; nearly half of openings to feature the Infinite Kitchen format.
❓ Analyst Q&A
- Wraps incrementality & guardrails: Management cited disciplined testing (eight-store shakeout, multi-market stage gates); no exact incrementality guidance but positive mix and anticipated media lift.
- Pricing architecture: Plans to test Build Your Own and entry‑level pricing; mindful pacing to preserve returns; 40% flow‑through noted in discussion.
- Margins & cost controls: Emphasis on reducing waste, improved labor alignment, and better COGS visibility; expect 2H deliverables as tools roll out.
⚡ Bottom Line
Near‑term results are pressured as transformation advances, but April momentum and Wraps progress support a path to stronger execution, higher guest traffic and improved margins over time.
Sweetgreen — J.P. Morgan Gaming
1. Question Answer
Good afternoon, everyone. It's a pleasure to host Sweetgreens Co-Founder and CEO, Jonathan Neman; and CFO, Jamie McConnell for our last session for this afternoon and also for the conference.
Jonathan, there's been a lot going on with the company right now. I'd like to start off with the Sweet Growth Transformation Plan. What are the top priorities this year? And as both customers and investors, like what should we be looking forward to?
Rahul, great to see you. Great to be here. So as we mentioned, we're going through our Sweet Growth Transformation Plan. We're about a quarter in, and we're focused on a few critical things. First, it's around menu innovation around this idea of expanding occasions and broadening our demographics around people who we want to welcome into the brand. The main focus there is our launch of wraps.
So we know that there's a huge addressable market that is looking for more portable options, something hearty, delicious and still nutritious. And so it's something we've been working on for a couple of years now. We've now entered our final stage of the stage gate where we are in 68 restaurants across the country, and we're seeing some really encouraging results.
We -- one of the things we are trying to address with wraps not only is new occasions, but is also around price value and entry points into the brand. So the wraps start below $11. All wraps are sub-$15. We're testing 3 wraps right now. We may go to market with more than that. We're -- but wraps, again, huge focus. We're seeing really good success so far. We're seeing incidents grow almost every day. We're seeing some growth in incidents, amazing organic customer feedback, very little marketing done, but overall, very pleased, and we think that will be a big sales catalyst for us.
Second major focus area is on price value and architecture. How do we -- and there's a lot in there. We've done a lot over the past year to give customers more around food, whether it be more protein portion and communicating more around what we do that is different, whether that be our scratch cooking or our local sourcing. But there's a lot of opportunity we have in our pricing architecture. So there's a few areas that we're focused there. One is our create-your-own bowls pricing architecture, which today makes up about 25% of our menu. We are going to be testing a simplified pricing structure, kind of more an all-in pricing model for that, which will go into test later this year through our stage-gating process.
The second opportunity that we're going to exploring there is more around a barbell pricing strategy. What we've seen is there's many customers who are want to spend more at Sweetgreen, but we're missing that entry point insight into the brand. And we see many customers when they enter the brand spending sub-$15, their retention is very, very high. So we see a huge opportunity and more of that barbell pricing on our core menu. So look forward to testing that, tweaking it and rolling it out later this year.
Third major priority is around operational excellence. A few things underneath that. One is what we call Rush Ready Before Peak for throughput. We have a lot of opportunities to continue to improve our throughput. That means being rush ready with mise en place, staffed properly, but also moving from our one-to-one service model to our assembly line service model, which we've seen does increase throughput.
Second thing underneath that is around food quality. It's really so much of what the Sweetgreen brand is built off of. So we're really kind of looking at the entire system and how we can make the food really -- whether a lot of it is from a supply chain perspective, but most of it happens within the 4 walls of when we cook things and really making sure we're prepping less more often so the food is fresh.
And then the last piece around the operational excellence is around hospitality. We really want the Sweetgreen experience within the 4 walls to have what we call the sweet touch, that feeling you walk away that creates that word of mouth where you tell your friends and you come back, and we have really good ways of measuring that today. So that's the third focus.
The fourth major part of our -- of the transformation plan is going to be a lot more investment in the brand. Sweetgreen from the very early days was not just a restaurant company, but a lifestyle company, one that spoke and resonated in culture, community, lifestyle, whether it be through collaborations with chefs, fitness, music.
And I'd say over the past few years, we've been very -- we've moved most of the marketing to be more kind of conversion growth, lower funnel marketing. So we're resetting our media mix, focusing more on upper funnel brand awareness and really kind of positioning Sweetgreen in the hearts of minds of our consumers as this category of one lifestyle brand.
So, so far, as many of you know, we've changed a lot of our leadership team last year. We have some awesome new leaders that have joined us, including Jamie, and we're very excited about this transformation plan taking place.
That's a great summary. I want to dig in a few of those places. One of the big challenges for any company, younger or even older companies to retain -- like younger companies to attract and then retain is the talent. And it starts at C-suite going all the way down to like store managers, head coaches to staff. How is the environment and how is the brand able to attract, retain and train these people? And where is the biggest opportunity today to invest? And when it comes to like employees, what are their biggest like asks, like what do they want more of or less of?
Yes, absolutely. So all of us in the restaurant industry, we know we're more of a people business than a food business, and people are our most important ingredient. And so we are very, very focused on people and culture. I'd say in terms of what -- why people come to Sweetgreen over competitors, first and foremost, it's our mission. They really believe in the brand and the mission that they're coming to Sweetgreen for.
Two is we have competitive wages. So whether it be at the head coach level, both competitive wages and bonus, head coaches make -- easily make 6 figures with bonus. And all of our head coaches have equity. So that's another piece of it. As you go throughout the rest of the organization and our team members, not only do we offer competitive wages, eligibility for tips and compelling benefit package, but most importantly, it's a pathway to growth. So very focused on internally developing talent.
We were able to develop talent in under 3 years from a team member to a head coach. Our best head coaches are developed internally. As we all know, a stable head coach and a great head coach is really what drives performance. So really focused on that pathway of moving more team members up through head coach, area leader and beyond.
Where are some of the opportunities I see. I'd say probably the biggest opportunity for us is to continue to invest in leadership development. I think we've gotten quite good at the technical side of training team members, but I think there's more we can do around teaching them to be great leaders. We're going to -- we're continuing to simplify how we run restaurants, giving them really wonderful systems and tools.
But -- and we know we bring -- we really look for rock talent, people that care in the mission are genuinely enthusiastic, are service-oriented, are resilient and then we give them the tools. And so we're investing more and more into the leadership development of our teams, and we think that will be an accelerator of our growth. And we've really started to marry our growth with our people -- our store growth with our people growth much more tightly aligned, and we have a really nice robust pipeline of leaders as we continue to grow.
Perfect. The company has embarked on a big supply chain efficiency exercise that was never probably done at this level of granularity in the past many years. What are some of the addressable low-hanging opportunities? And what are being prioritized this year, if you could share some examples?
So as you mentioned, we did a distribution consolidation last year where we consolidated our -- really no changes to our supply network, more in terms of how we actually distribute and move our product. So we consolidated it from separate distributors from a grocery and produce into a single distributor. It simplifies the workflow inside of the restaurant, so only a single delivery. It also helps us save a lot of money as we scale and will help us bring down our logistics costs over time. So that's been a huge focus.
There is a lot we're doing also as it relates to the supply side and making sure we're finding partners that can continue to grow and scale with us and where we can continue to elevate the quality of our food while bringing down the cost, especially as we build out regions. As you all know, much of our supply network is built out regionally. So we do see economies of scale, both nationally but also regionally. So as we continue to build smaller markets that go from 1 or 2 stores to 5 or 6, we see a lot of efficiencies there in bringing down cost of goods.
Perfect. Last week when we discussed, there was a number like around 800 to 1,000 bps of store prep in the labor line. And is that still the case today? Or has it already come down with some of the upstreaming and other efficiencies you have been looking at over time? And what are the top focus areas on this for this year?
Yes. So we've been on a multiyear process really to simplify the experience for our team members in the restaurant, kind of make it so that their work is focused on the most value-add components in the restaurant, things that really matter as it relates to food quality or hospitality. Given what our brand stands for in the quality and freshness, we have to be very, very careful not to take away any of the things that could impact food quality. So we're very disciplined on not all of a sudden having everything come in from a commissary. We do not -- we actually don't have commissaries.
However, to your point, there's a lot of opportunity for us to work with value-added partners and bring -- and commercialize more things where we can actually maintain or elevate the quality and create more consistency while removing some of the complexity in the restaurant. So there's a number of things we've done over the past few years, whether that be things like de-stemmed kale or commercialized dressings. There's a lot more to do.
So we have a multiyear road map in front of us, whether it be more commercialized dressings, premarinated proteins -- chicken and proteins and a few other things that we're considering. I'll give you just like a little example. Sweet potatoes come in whole, right? So come in whole have to be peeled, chopped and then roasted. There's no quality degradation by actually having them come in peeled and cubed and then roasted in the kitchen. So we will never have them roasted offsite, but we'll have them -- have parts of the prep be simplified. So when it comes in the store, they only focus on the parts that actually really matter from a quality perspective.
So again, very, very disciplined, careful. We will test these things carefully. We are currently in the middle of a very intensive labor study to identify where the biggest opportunities are. So we can elevate the quality of our food, move more of our labor towards productive labor and serving the guests and hopefully end up with a better unit economic model with less labor on things that aren't value add while elevating the quality that we do and making it so that it is totally scalable.
Perfect. One of the big challenges during the turnaround is trying to focus on more things, but I think you guys have pretty much streamlined on where the areas will be in this year. When it comes to the menu side of things, there is at the core and then the excitement creating like the LTOs like whatnot.
We have heard that the secret is apparently not a secret, like Brinker has just done like a fantastic job in the past 3 years and the focus on the fundamentals and then the core has been like overemphasized and for the right reasons. How are you balancing while going through this exercise that your core is elevated, but at the same time, you're also creating that excitement for the brand and everything else?
Absolutely. We believe that great companies are end companies. We need to continue to invest and elevate the core, the core quality and execution as well as just the core menu and how we can continue to innovate that, but also want to reach more customers and create new occasions. So we built the structure and system to really kind of dual process, parallel path those things. And you'll see this year probably an equal balance of investments in our core as well as attacking some of these new opportunities.
I'd say, as it relates to innovation on our menu, this year and next year, you will see a lot of innovation as we, what I call, complete the concept. It's almost a revolution than an evolution around the menu. So a lot of newness coming. We've never had a more robust menu innovation pipeline, but doing so in a very disciplined way with a very robust stage-gating process, making sure that it does not detract from us delivering on our core from an execution perspective and have a very clear idea of what our -- what we call our op sandboxes to make sure anything that we are doing, again, does not deteriorate our overall operation.
The other thing we've learned from our guests is they love newness from us. They love our seasonal menu. It drives retention. They love just -- in this noisy media environment, newness really works. So we've actually picked up our pace of newness, but we figured out ways to do it without a lot of complexity.
And I'll just give you one example. This year, we started the year with our collaboration with Function Health and Mark Hyman, created a menu, kind of a new year menu around Function Health. But all that menu was all done with existing ingredients. So from a store perspective, there was no new -- there was nothing really new the team had to do, but all of a sudden, you had this new menu and this big media marketing campaign around this new menu. So there's a lot we can do around creating newness without a lot of complexity. And you'll expect to see a lot more moments of newness, which we've seen help us drive transactions and acquire new customers.
Perfect. It's been almost a year with the new loyalty program, a lot of evolution expected there as well as you continue to redefine the brand value proposition. How are you thinking about like using the new food formats like the wraps, for example, to revisit the menu architecture in conjunction with some of the innovation you have coming in?
Yes. So as you mentioned, we're about a year into loyalty, have learned a ton. Overall, we're pleased with the program, but see a lot of opportunities to continue to optimize it. A few of the areas that we're looking at, one is lower redemption tiers. So right now, it takes quite a lot of points to get a free item. So we're looking at how we can engage guests earlier in their journey. So that's one.
Two is we've seen a lot of excitement around what we call our GOAT status, greatest of all time, kind of like our higher tier loyalty today. It's a secret tier. There's no clear way to earn into it. It's something we're evaluating where tiers make sense.
Third is actually how we leverage -- how we bring more sophistication to our CRM and the gamification within loyalty. So with the advances in AI, you'll see our CRM move into more of a truly personalized agentic AI-driven CRM. So instead of having kind of cohorts, it really truly becomes one-to-one marketing, not waiting until a customer churns until you're doing something, but being able to predict right before churn and how we can find what the next best action is to prevent that churn, understanding kind of the LTV of our guests.
You talked about how menu can help us. For example, wraps is the type of item given the price that can be a lower redemption tier. The last thing, and it speaks to kind of the brand, Sweetgreen, we see ourselves as a lifestyle brand. And there's more we can do to leverage loyalty from a lifestyle and community perspective. So that's things like in real-life events.
Last week, we hosted run clubs all over the country for our loyalty members as an example. There's a lot of other ways we can kind of do more storytelling and community-driven things within our loyalty program. And just one more thing that I forgot, there is more around the experience around loyalty from a product perspective. So one thing we've been piloting is what we call the craving of the month, which is a gated menu for loyalty members.
So we now have -- we're on our second month or the third iteration of it, where it's a lower-priced menu item, so something between $10 and $12 only for loyalty members, which are bringing -- which are really helping us both on acquisition and from our lapsed customers coming back. Expect us to do more there, not just price and value driven, but also just exclusive products that only are available to loyalty members.
The other thing that is helping us on loyalty is in-store, we've enabled scan-to-pay. And so we've seen scan-to-pay double in terms of incidence. So we went from about 10% to 20% of our in-store transactions now being scan to pay. Our loyalty members are 2x more valuable than our non-loyalty members. So being able to convert our in-store guests to loyalty and allowing them to scan and pay in store is a huge lever for us as well.
Perfect. Just going back to the operations and then the stage-gating process, which you have perfected like for the past few quarters, discuss the learnings on what -- how the wrap test like initially started off in L.A.? What were the bottlenecks and what were the pleasant surprises like surprise on both the sides, better and worse? And then like how was the rollout planned for the current like 68 store test? And how do you plan to go from there?
Sure. So we started this exploration really understanding what the customer wants, both from a product perspective and then all the details around it. So a couple of examples within that.
When we were testing the product with customers, we learned that the product was much better if you mixed before you wrapped. It was also much better if you cut the wrap before you serve it. So it sounds like small things, but they really impact the overall experience. So those are things that we had to really try to figure out, can we do those things that the customer really valued without impacting the operation or throughput.
So we ran a few week test in a couple of stores we call wrap-a-palooza, where it was rapid iteration and testing, learning about where we should put the tortilla press, where the mise en place for everything goes. Do you steam the tortilla before you wrap -- before, after all the little details that perfected. The good news is the wraps work perfectly in our workflow and a lot of people ask, do they work in Infinite Kitchens, they do. So the Infinite Kitchen is also -- wraps are enabled by the Infinite Kitchen.
Step 2 was moving it to a rapid ops test where we took 8 stores in our home market in Los Angeles, and we ran it for a few months, really to work out all the kinks. And again, it passed that stage. We've now moved into the next stage where we're in a handful of markets and almost 70 restaurants. Now we're really seeing what happens when you go from a really closely watched test in 8 stores to about 1/4 of the fleet. And now we're looking at what does incidents look like, what does incrementality look like? And what does it actually do when you -- to our operation as we expand the test?
So far, we've been very pleased. We're getting a lot of positive reaction from consumers. We're seeing the return rate of wraps -- encouraging. The incidence has grown significantly from launch. So just like almost every day, we're seeing incidents improve, and we're seeing a lot of organic social on it, which is an encouraging sign. So still very early, but encouraging that the stage-gate process is working and this innovation muscle that we're building, really learning from both past success and failures has made the company much stronger. And again, got us to a place where we feel very confident in that menu innovation muscle, and we'll be continuing to innovate our menu to broaden what Sweetgreen is over the next 2 years.
Perfect. On the real estate strategy, the slowdown is intentional, helps you get a lot of things right before you reaccelerate back. currently, 20-ish gross stores, 15 to 16 net with closures. Next year, probably start like rebuilding the pipeline depending on how the progress on the Sweet Growth Transformation comes across. How important is it for the company to focus on free cash flow inflecting closer to positive before you reaccelerate like back to the algo?
Yes. So very important. We have to obviously earn the right to grow. So there's so much going on behind the scenes to make sure that our economic model is working. So Jonathan talked about this suite growth transformation plan. So we have ops. So we have to make sure you have best-in-class ops, best-in-class experience every single time you go into the restaurant. And then that price value, so that barbell strategy, having that entry price in and that more premium price, right, and then wraps the new occasion in the menu. So all of this should be growing the top line.
And so keep in mind, we're 1 quarter into the transformation plan. So all the foundation is getting built. So I'm excited to see what happens there. But then also on the cost side, we need to make sure that every dollar is working hard for us. So we have the sales leverage piece, but then we're also looking at the cost of goods sold.
So we're looking at every single category and making sure we have the best prices, but also within the restaurant, how do we make sure the ordering tool is optimized. So they're ordering the right amount. So they're ordering not too little or not too much, right? So we're optimizing those tools. And then as Jonathan said, we have that labor study going on. So all of these things as they come after -- come together will help us earn that right to grow.
Perfect. On the G&A side, a lot of areas, marketing, and we'll talk about that separately and then excluding marketing, you have given some guidance post the Spyce sale. How do we think about this on the longer term areas to focus on investing outside of marketing versus where you can get leverage faster?
Yes. So that was one of the first things I did when I came on is really looking at our G&A structure. And so this year, our underlying G&A is going down about 2%, and that's not from the Spyce transaction because once you add on bonus. So it's really looking across the model and seeing if there's any redundancies and making sure that over time, we obviously want to invest in growth, but we need to make sure we're leveraging our G&A. So that's a big focus of ours.
Yes. We've been able to reduce G&A almost every year over the past 5 years. And so it shows that the discipline is there. The goal going forward is to continue to leverage it. And as Jamie said, move more dollars to things that will be driving transactions, things that consumer can feel or telling our story more from a brand and marketing and really leveraging the rest. And I think given the foundation infrastructure we built, both from a systems, technology and talent perspective, we're -- the G&A is highly leverageable.
You have mentioned marketing and branding as one of the priorities at the beginning. I mean, as a percentage of sales, it continues to grow. But as we look at like the Sweet Growth Transformation Plan, how are you measuring the entire marketing dollar spend, especially when you look at '25, like what has worked, what has not worked? And talk about like revisiting even the social media strategy, for example, how should we think about this?
When I think about marketing, I think about the art and science framework. And if you go back to the Sweetgreen's history, we were very good at the art. It was all brand marketing. It was community. It was music festival and events and really a lot of storytelling partnerships and collaboration. As the company scaled, we moved more towards the science, right, more bottom funnel, growth marketing, conversion, things that were actually really measurable.
And I think the answer is actually more of a balanced approach of both. As a lifestyle brand and one that's trying to create this new category, we need to invest more top of funnel, tell stories, partnerships, collaborations, events that does a lot to create this brand awareness and brand affinity in the hearts and minds of our consumers while still maintaining the bottom funnel tactics.
We have changed -- we brought in a new media agency, changed a lot of our media approach, and we're seeing some really good success. So we have a new Chief Commercial Officer, Zip, that is just awesome, gets the art and science. And so you'll see us do some wild stuff that's hard to measure that just is great from a brand perspective and is, call it, brand over time as well as the marketing stuff that is sales overnight. So just a really balanced approach around that, but expect this year to see more of a shift towards the brand marketing. And to that point, more on social, more on influencers, more on content, really meeting the consumer where they are.
Perfect. On delivery is like a very important channel for you guys, like 20% to 25% of sales, maybe more in some of the markets like New York, for example. How important is it for the brand to communicate and importantly improve the value proposition on this channel? And what is being done to address? There has been a lot of discussion across the industry and how you want to balance the pricing architecture on the third-party channels and the fees and then also the promotions. Can you discuss like what is happening behind the scenes or anything that you could like to share?
We're in the middle of a strategic review of our marketplace -- all of our marketplace experiences and looking at all of those things, whether it be our price markup on the marketplaces, which the original approach was more around protect margin, but there are certain tests around less of a price premium to drive transactions, but we really want to understand the elasticity there. There's also a lot of work being done in terms of the spend on marketplaces and how we can get a lot smarter about our spend, whether it be sponsored listings or promo spend on that.
And so we've actually seen some encouraging results in the past couple of weeks around some of the work we've done around the marketplaces. Each one operates a little bit differently. There's also a lot around the organic algorithm, whether it be things like our operational metrics of order times, order readiness, order accuracy that helps in terms of the -- naturally showing up higher in the algorithm.
But we're very strong on delivery. The brand very well suited for that off-premise channel, and we're going to continue to optimize it. Do see that as a growth channel for us as we continue to grow. I mean you see all the data that's come out actually some today, like our consumer is definitely there. And so we've always believed meet the consumer where they are and make sure we have a product, price offering that makes sense for that channel.
And the only thing that is that outside of the core delivery marketplace, we have also been investing a lot in our catering. We've seen amazing growth in catering. It's not only a great sales and margin driver, but can be a great customer acquisition tool. This year, we launched large-format catering, which is about 75% of the catering market is large format versus single bowl. So we've seen some awesome growth and early green shoots on that channel, and we will expect that to continue to be a growth driver for us.
Perfect. Now to our favorite topic, Jonathan, on technology side. You have always been forefront in terms of digital, in terms of automating like many clients and things like that. World has been changing pretty rapidly in the past couple of years. And can we talk about like -- let's like -- I want to break this down into 2 sections. The first, the software side and then the agentic AI side where how the search is evolving and how to stay relevant in a post-LLM search world?
And then also how you are leveraging internally through your office functions and IT teams, like how is the adoption curve has been -- have been seeing like where it has to start from the top not from the bottom? So let's talk about that. And then separately, autonomous delivery has been getting a little more traction. We have been seeing more pilots by some of your peers outside. There's also like the whole drone delivery thing like which we have been like talking about. You can answer like -- that after this.
Sure. So I'll start with the first part, which is around agentic ordering and what we call GEO search, so generative engine optimization. So we've done a lot of work in terms of GEO already to make sure that we are well positioned around how we show up in an LLM. And our -- while we haven't launched ordering through LLM are very well positioned to do so given the tech and data infrastructure that we have in place. So that's one.
We do also have certain tests coming around agentic AI, one, which I mentioned earlier around CRM. Another is we've been using AI for CX for quite a while now, one of the earliest customers with Sierra and have seen some great success. Where that is probably going is not just a CX agent, but potentially an ordering agent. So again, really well positioned for when the consumer is ready for that. We will be very well positioned to take advantage of that.
Secondly, you talked about efficiencies within the organization. We've been very early first movers around leveraging AI inside of the organization. I'm a big user myself, so is our whole leadership team. And we have AI champions across the organization, really going through all of our different processes and workflows and where we can have agents and AI help us move faster, save costs and really do things better.
Even just the past 2 months, everyone watching the news, it's been transformational, watching a lot of the improvements that we've seen. First thing I do in the morning, I wake up and I kind of have 5 agents go do some stuff for me and come back. So I'm just really, really excited. I think it's really -- it's still very early, but the company, given our innovation mindset and our technical infrastructure, are really well positioned to take advantage of this.
Last piece, you talked about...
Autonomous delivery.
Autonomous delivery. So it's something that we've talked to all the players. We think there's -- over time, that could be very interesting. It's not a huge focus area for us right now. It's something very easy to turn on through our marketplaces. If the consumer wants it or there's economic benefits to doing it, we're there. We do -- we are planning eventually a pilot with Zipline, which we announced a long time ago. When the time is right, we think that could be really interesting around drone delivery. But overall, I'd say autonomous delivery is not a major focus for us, at least this year.
And then one thing to add on the tone at the top. We have an AI club and Jonathan is the most active in that AI club, but it's really cool because it gamifies it and you can see everybody and like what did they do and they're sharing it. So I would say high buy-in on the AI side.
Yes. We built skills. We built a whole skill category. I mean the most important thing just to leverage it properly is having the data infrastructure in a really good place. So you want -- we -- given how technology forward we've been, we have data all the way from our oven data of how often we cook things, to our [indiscernible] of how often we prep things, to all of our people data, all of our customer level data, all of our sales data, all of it built in.
So I can kind of go on and ask for correlations between fresh -- store performance and how many times they cook -- how often they're cooking chicken and start to understand. So it's uncovering a ton of really -- a lot of great insights. And I think the -- for right now, the biggest thing that's unlocked is a lot -- this data insight action loop moving much faster, things that would have taken weeks or months to go from like, hey, I have this hypothesis, where is the data? What's the insight, like what do I do about it? That loop has turned into like a 24-hour loop. Like it's like now you can literally do it in like in the same day and put out tests.
That's awesome. Just one last topic before we close off here. New York market, it's been pretty challenging for a lot of brands, a lot of competition. What is the big like solution in your mind, like if not like we'll expect to see it soon on how to revive that market and get back to performance levels where you can? Is it like the pricing? Or is it like some of the older stores that can like use some elevation in wipes? Like any thoughts you could share there?
Sure. New York is a critical market for us. It's still a very strong market. It definitely has been under pressure. But there's a lot we're doing there. One, first and most importantly, it's the actual experience in the restaurants. And we've elevated -- we brought in a new RVP to run the region. She's done an amazing job elevating that team, putting the right leaders in place, both at the area manager and the head coach level. And we've been investing a lot in that leadership development and hospitality training that I've talked about. So that's part one is just the overall experience.
There is some work being done in terms of the actual fleet itself. So whether it be stores that are up for lease that we will relocate, renovate or close, we are looking at -- there's a lot of portfolio work being done across the region. And then the rest is really work that's happening across the enterprise that will definitely help New York. Things like wraps and broadening the menu -- so the menu innovation work, things like the price value work and the brand work, those all obviously have an outsized impact on New York.
Perfect. Thank you. Thanks a lot for joining us here, Jonathan and Jamie. Wishing you the very best throughout the transformation. Thank you, everyone, for joining us this year on the conference. Looking forward to seeing you guys next year at the same venue. Thank you.
Thank you.
Sweetgreen — J.P. Morgan Gaming
🎯 Key Message
- Overview Sweetgreen is pursuing the Sweet Growth Transformation Plan to lift growth through new formats (wraps) and a higher-value pricing architecture, while strengthening operations, brand-building, loyalty, and leadership development. The strategy pairs core execution with new occasions, supported by a disciplined stage-gate for menu innovation, supply-chain efficiency, and data-driven cost controls.
🧭 Strategic Highlights
- Wrap rollout 68-store national test; wraps priced below $15 (some under $11); testing 3 variants; early results show stronger demand and throughput fit.
- Pricing & ops simplify core pricing, test barbell entry points, and raise throughput via Rush Ready Before Peak and assembly-line service.
- Brand & loyalty rebalance marketing toward upper-funnel, deploy AI-driven CRM, explore GOAT tier, and expand loyalty-driven events and catering.
🆕 New Information
- Details Wraps expanding to ~70 restaurants via stage-gate rollout; no commissaries, but more value-added prep and a single distributor; faster data-driven decision making through AI and tech investments; loyalty enhancements include craving-of-the-month and scan-to-pay growth; large-format catering expansion.
❓ Analyst Q&A
- Wraps & rollout Tests progressed from 8 LA stores to ~68; learnings on prep steps, throughput, and operation; consumer response remains positive and incidents rising.
- Real estate & cash flow Focus on earning the right to grow; free cash flow inflection before reaccelerating; 2% G&A reduction; cost optimization in COGS and labor.
- Marketing & NY Balanced art and science; more brand spend; new CCO Zip; leadership changes in New York; wraps and pricing to support market.
⚡ Bottom Line
Sweetgreen frames the call as a disciplined, multi-year transformation aimed at stronger unit economics through new formats, pricing, and brand investment. Progress on wraps, efficiency, and loyalty is encouraging, but timing and execution risk remain as the company works toward positive cash flow before reaccelerating store growth.
Sweetgreen — Q4 2025 Earnings Call
1. Management Discussion
Thank you for standing by. At this time, I would like to welcome everyone to the Sweetgreen, Inc. Fourth Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Rebecca Nounou, VP, Head of Investor Relations. You may begin.
Thank you, and good afternoon, everyone. Speaking on today's call will be Jonathan Neman, Co-Founder and Chief Executive Officer; and Jamie McConnell, Chief Financial Officer. Both will be available for questions during the Q&A session following the prepared remarks.
Today's call is being webcast live and recorded for replay. The earnings release is available on the Investor Relations section of Sweetgreen website at investor.sweetgreen.com.
I'd like to remind everyone that the information under the heading Forward-Looking Statements included in our earnings release also applies to our comments made during the call. These forward-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward-looking statements.
We also direct you to our earnings release for additional information regarding our use of non-GAAP financial measures, including reconciliations of our non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. Our earnings release can be found on our investor website.
And now I'll turn the call over to Jonathan to kick things off.
Thank you, Rebecca, and thank you to everyone joining us this afternoon. Our team members are our most important ingredient, they are the heart behind every meal we serve from the people leading our restaurants and serving guests every day to the teams in our support center. Every team member plays a role in bringing our mission of connecting people to real food to life. I want to thank our teams for staying disciplined and focused on the fundamentals during what has been a challenging operating environment.
In that spirit, I want to recognize my co-founder and long-time partner at Nathaniel Ru. From our first day at Georgetown to building Sweetgreen together, Nate has been a defining force behind our culture, our creativity and our belief that the smallest details are what make a brand truly special. While Nate has stepped back from his day-to-day role, I'm grateful he'll continue to support us from the Board as we build what's next for Sweetgreen.
Nate, Nick and I are all confident that the team we have in place today is set up to navigate Sweetgreen through this moment and lead us into our next phase of growth.
Our full year results make it clear there is more work to do as we position the business for the future. For fiscal year 2025, revenue was $679.5 million. We continue to experience traffic pressure. Comparable sales for the year declined 7.9%. We opened 35 net new restaurants, ending the year with 281 locations. Restaurant-level margin was 15.2%, and adjusted EBITDA was a loss of $11 million.
I'll start with an update on our Sweet Growth Transformation plan, and Jamie will walk through the financials in more detail.
We are executing with urgency across the business and are 1 quarter into our transformation plan, which is focused on five strategic priorities: one, operational excellence; two, food quality and menu innovation; three, personalized experience; four, brand relevance; and five, disciplined profitable investments. While the financial impact will take time to materialize, we are strengthening the foundation of the company. We are improving operations, elevating food quality, accelerating menu innovation and strengthening our value proposition. All guided by clear return thresholds. We are staying relentlessly focused on our guests and acting on what matters most to them.
As I walk through our strategic priorities, I'll share a few encouraging signs where the foundational work is beginning to show up in the business.
Starting with operational excellence, which remains the foundation of our ability to win with guests. We are building the systems and discipline required to deliver consistent high-quality execution across every restaurant every day.
Let me share where we are. Over the summer, we implemented Project One Best Way, our system-wide effort to elevate operational excellence through clear standards, performance-based leadership and measured execution.
Today, approximately 2/3 of our restaurants are hitting our great bar based on our internal operational audit. What's most encouraging is the shift in the distribution this quarter with more restaurants exceeding standard and fewer falling below, reflecting improved consistency across the fleet.
Importantly, great is not a static benchmark. As performance improves, we continue to raise the bar by increasing both the standard score and our expectations for what constitutes great. Throughput is where operational discipline translates into results. In any great kitchen, mise en place means having everything in its place before the rush. That same principle drives our Rush Ready Before Peak Initiative. Ensuring the right team members are in position, up is complete and stations are set before peak volume hits.
We've just started to introduce real-time throughput visibility to our field teams giving them the ability to see performance and adjust in the moment. We know that speed and accuracy during peak periods are what drive both guest satisfaction and team confidence, and we're building the muscle memory across the system to deliver consistently.
We've also strengthened how we measure and drive performance. The restaurant scorecard we introduced last quarter gives teams clear visibility into a focused set of metrics, sales, throughput, customer satisfaction, labor, food quality and people. So they know exactly where we're winning and where we need to improve.
During my restaurant visits, I review scorecards with our teams and walked the Sweet Path, a framework that breaks each restaurant into clear zones with simple, consistent standards for how we show up every day. We're encouraged by the progress we're seeing, but we know there's more work to do.
We're still seeing inconsistencies in areas like ingredient availability and ordering as well as team scheduling, and we're addressing them directly improving our tools, retraining teams, system-wide and realigning quarterly bonus incentives around the financial and operational metrics that matter most.
Our goal is to equip restaurant leaders with clear data and streamlined systems so they can think and act like owners accountable for sales, margins and the guest experience.
Food quality and menu innovation are at the heart of who we are. Our menu sets us apart, built on real culinary credibility and made from scratch with ingredients from farmers and partners we know and trust.
Delivering delicious food executed consistently is nonnegotiable. It's how we compete, and it's how we win. A recent example is our internal Miso My Salmon campaign launched in December to sharpen execution and elevate salmon quality across the system. We extended marinade times to deepen the flavor and refined cooking and presentation, serving the fat side up for better caramelization and a more vibrant appearance.
We took the same disciplined approach with chicken, updating our recipe for a juicy results alongside upgrades to our golden quinoa, white rice and napa cabbage slaw that you can try in our restaurants today. This is our culture of culinary technique and practice, constantly refining how we prep, cook and present our food.
Menu innovation when supported by strong operational execution can be a key driver of comp growth. Our stage gate process implemented in 2025 guides this innovation by ensuring we test and learn while maintaining operational excellence in our restaurants. Today, we have the most robust innovation pipeline in Sweetgreen's history designed to diversify menu occasions, expand categories, attract new customers and drive frequency with existing ones.
We kicked off 2026 with two limited-time-only menus. The first was a collaboration with Function Health and their Co-Founder and Chief Medical Officer, Dr. Mark Hyman. Built entirely from existing ingredients, the menu was operationally simple to execute while reinforcing the quality and integrity of our offerings. And demonstrated how we can deliver credible wellness forward innovation without adding complexity in our restaurants.
Our second limited time menu launched February 3 with the Winter Harvest Bowl, a seasonal take on our best-selling bowl featuring Maple-Glazed Squash and the vegetable of the Year, Charred Balsamic Cabbage. At the same time, we brought back feta cheese to our core lineup, a frequently requested ingredient by loyal customers and brand fans.
Taken together with our innovation pipeline, the menu calendar reflects our focus on creating newness on the menu and bringing customers fresh, seasonal ingredients and with compelling sourcing stories throughout the year.
Our biggest menu expansion planned for 2026 is the launch of Wraps, which began innovation testing in eight restaurants in the Los Angeles market in January. As part of our stage gate process, we're learning how to execute Wraps at scale while protecting throughput. Operational details like tortilla-pressed placement have been key focus areas in our eight restaurant tests and we're actively iterating based on those insights.
Building on those learnings, we expanded Wraps to a broader market pilot last week across select locations in Manhattan, the Midwest and Los Angeles. The lineup, Classic Chicken Caesar, Chicken Salad Baking Club and Chicken Jalapeño Ranch starts at $10.95 at select locations in New York City, and the full lineup is priced below $15 across all markets for in-store and pickup orders.
The early feedback is encouraging, and if performance meets our stage-gate criteria for customer acquisition and retention, we expect to expand the platform in mid-2026.
Improving value perception remains one of our highest priorities. With guests increasingly focused on value and quality while pulling back on overall restaurant spending, we know Sweetgreen must deliver on both dimensions without compromising the experience that defines our brand.
In 2025, we took important steps forward, including increasing protein portions, reintroducing lower-priced seasonal offerings launching 12 daily greens and leaning into the $10 'Tis the Season Harvest Bowl to meet guests where they are. While these actions strengthen our value positioning, we recognize there is more work to do.
Following the comprehensive review of our menu and pricing architecture, we have identified a focused set of initiatives to simplify and strengthen the overall experience. Testing is underway, beginning with wrap's pricing and loyalty entry price drops. We will also test a re-architected Create Your Own platform designed to deliver greater price clarity and a more intuitive ordering experience alongside clearly defined entry price entrees across our core menu categories later this year as we pace and sequence these moves over the next several quarters.
Together, these initiatives are designed to create a more transparent value ladder, giving guests confidence in what they are paying while supporting incremental traffic and transactions across a broader range of price points.
At Sweetgreen, value has never been just about price. It's rooted in the farmers we source from, the quality of their ingredients, scratch cooking, generous portions and a consistent experience. Our 2026 initiatives are focused on making that value clearer and easier to access at every touch point.
Our personalized digital experience strategy is built to increase customer frequency and spend through one-to-one messages and incentives. The $10 'Tis the Season Harvest Bowl promotion in December was a strong proof point for our loyalty-first approach to value and guest engagement.
By making the offer exclusive to loyalty members via the Sweetgreen app, we brought both new and reactivated guests directly into our ecosystem. It was our highest performing reactivation promotion to date.
We are listening to customers and follow this up with a $10 Chicken Avocado Ranch offer on February 9. This continued to build momentum with the playbook we call Craving of The Month, a loyalty exclusive limited time offer featuring a craveable menu items available only through the Sweetgreen app, designed to give members a compelling reason to engage with the brand every month.
Scan-to-pay now represents approximately 20% of frontline transactions bringing in-store guests into our loyalty ecosystem and giving us full visibility into their Sweetgreen behavior and preferences. The impact is tangible, loyalty members who transact both digitally and in-store visit is at nearly 2x more frequently than digital-only customers. We believe this is a key lever to drive higher frequency omnichannel behavior and ultimately, the flywheel that builds lasting lifetime value among our most valuable guests.
At our best, our brand creates culture and makes the spaces we occupy more real, vibrant and connected. In the fourth quarter, our protein-focused campaign resonated with guests seeking more filling, satisfying meals. Built on the insight that protein stopped being about food, we cut through the noise with the launch of the Power Max Protein Plate, delivering over 100 grams of protein from real ingredients like quinoa and chicken with no fillers and generated strong social buzz and brand relevance.
In February, we launched our expanded catering platform, including the Build Your Own Sweetgreen Bar and are seeing strong early traction. Anchored by our Here For The Bowl campaign and a big game activation at San Francisco's Ferry Building Farmers Market, the platform extends Sweetgreen into group occasions and serves as a meaningful new customer acquisition channel.
Shifting to our last pillar, which is a disciplined profitable investment. In the fourth quarter, we opened 15 net new restaurants, including eight Infinity Kitchens. We also entered three new markets during the fourth quarter. Cincinnati, Sacramento with two Infinite Kitchen restaurants and Arkansas. We opened our Bentonville restaurant in Q4 and our Fayetteville restaurant in Q1 2026. We also expanded our presence in Arizona with the second location during the fourth quarter.
On the Infinite Kitchen front, the technology continues to deliver on its promise, faster throughput, improved order accuracy and elevated food quality, all while creating a better experience for both guests and team members.
In the quarter, established Infinity Kitchens delivered higher AUVs and labor savings of more than 700 basis points compared to their classic counterparts of similar age. In November, we opened our first Infinity Kitchen Sweetgreen location in Costa Mesa, California, expanding this technology into a new format designed to serve suburban markets and capture drive-through occasions. The location is performing well, and we are excited to grow this format further. We ended the year with 30 Infinity Kitchen locations.
With Spyce team now part of Wonder, we remain confident in the continuity and trajectory of the platform. The partnership is working. Since the transition, we have successfully opened two new Infinity Kitchen locations in the first quarter, Long Beach and are first in the DMV market at Pike 7. We continue to roll out software improvements, including new capabilities around green portioning precision, demonstrating that development and deployment momentum remains firmly intact.
Over the past year, we strengthened the foundation of Sweetgreen by putting the guests at the center of every decision. We've rebuilt discipline around the fundamentals that matter most: great food, speed, genuine hospitality and clear restaurant-level ownership and accountability. Maintaining that standard consistently across the system remains a top priority because delivering on these basics is what earns trust and keeps guests coming back.
At the same time, we are leaning into what makes Sweetgreen different. We are strengthening our core menu, delivering innovation in a disciplined way building a more connected digital ecosystem and investing in a brand rooted in the Sweetgreen lifestyle our guests choose to live every day.
Looking ahead, the work we need to do is clear, execute with discipline to improve performance quarter-by-quarter and build a stronger, more durable business. While there is still work to do, we're seeing encouraging signs that our efforts are taking hold. I want to thank our team for navigating a challenging year and positioning Sweetgreen for more consistent performance ahead. Now I'll turn over the call to Jamie to review our financial results in detail.
Thank you, Jonathan, and good afternoon, everyone. As Jonathan outlined, the past year was challenging, but it brought clarity on our priorities and the path forward under the Sweet Growth Transformation Plan.
While we are still early, the actions we've taken and continue to take give us confidence in the opportunity ahead.
Our objective is to build a more resilient operating model that supports consistent long-term financial performance. In my experience sustained results come from staying relentlessly focused on the guests, empowering and holding our teams accountable strengthening operational execution and managing costs with discipline. These principles underpin our strategic priorities when those fundamentals are in place, growth, margin expansion and cash flow follow.
Across the P&L, we are taking a comprehensive end-to-end approach to improve efficiency and ensure every dollar is working harder. This includes reducing complexity and reinforcing clear ownership and accountability throughout the organization.
As Jonathan mentioned, we have updated our field bonus plan to align incentives directly with restaurant level performance, encouraging our leaders to think and act like owners with full accountability for sales and margin.
Turning to our fourth quarter results. Sales were $155.2 million compared to $160.9 million a year ago with comparable sales down 11.5%. Restaurant-level margin was 10.4%, down from 17.4% last year, during the quarter, we opened 15 net new restaurants, including eight Infinite Kitchens and ended the year with 281 restaurants. The comparable sales decline was driven by a 13.3% decrease in traffic and mix, partially offset by a 1.8% benefit from menu price increases.
The decline also reflects the transition from Sweetpass+ to our new SG Rewards program, which eliminated subscription revenue and introduced a loyalty deferral.
We expect the first quarter to be the most challenging of the year. January same-store sales declined 11.8% impacted by severe weather. In March, we will be lapping the launch of Ripple Fries. The first quarter includes 70 basis points of price. 2025 carryover price fully rolled off in the middle of February.
Fourth quarter food, beverage and packaging costs were 29.2% of revenue, an increase of 180 basis points year-over-year. The increase was primarily driven by higher ingredient usage and waste, including increased protein portions. These impacts were partially offset by menu pricing and mix.
Tariffs impacted the quarter by 20 basis points. Fourth quarter labor and related expenses were 30.5% of revenue, an increase of 200 basis points year-over-year. This was primarily driven by deleverage from lower sales volumes and wage inflation, partially offset by menu price increases and lower bonus expense.
Other operating expenses were 19.1% of revenue, an increase of 170 basis points year-over-year driven primarily by deleverage from lower sales volumes, higher marketing spend and increased repairs and maintenance.
G&A expense was $39.7 million in the quarter, an increase of $2.6 million year-over-year, primarily related to onetime stock-based compensation modifications made during the quarter. For 2026, we expect underlying support center costs, excluding stock-based compensation and onetime expenses to be approximately 13% of revenue down from 15.3% in 2025 as we streamline the organization and drive greater cost discipline.
Fourth quarter net loss was $49.7 million compared to a net loss of $29 million last year, reflecting the decline in restaurant-level profit. Adjusted EBITDA was a loss of $13.3 million compared to a loss of $600,000 last year, also driven primarily by lower restaurant-level profit.
We ended the quarter with $89.2 million in cash at the beginning of fiscal year 2026, we closed the sale of Spyce, receiving $100 million in cash proceeds.
Now turning to fiscal year 2026 guidance. We expect same-store sales to be a decline in the range of negative 4% to negative 2%. As comparisons ease, we expect same-store sales trends to improve throughout the year. We expect restaurant level margin to range from 14.2% to 14.7% and adjusted EBITDA to range between $1 million and $6 million.
On unit growth, we expect to open about 15 net new restaurants with nearly half featuring Infinite Kitchen technology. We also plan to enter two new markets, Nashville and Salt Lake City.
Our development pipeline is weighted toward the back half of the year. This is inclusive of a handful of closures at the end of their lease term where we see the opportunity to strengthen nearby locations.
To close, the opportunity in front of us remains significant. We are rebuilding the fundamentals, strengthening operations, elevating the guest experience and improving restaurant level economics. We are committed to building a stronger, more profitable Sweetgreen over the long term. With that, I'll turn the call over to the operator to begin Q&A. Operator?
[Operator Instructions] And your first question comes from the line of Jon Tower with Citi.
2. Question Answer
I guess maybe thinking through the comp guidance that you offered, it sounds like you're not going to be taking much price on the year, if any at all. But can you help us think through the puts and takes with respect to comp growth? I know you provided the cadence, but what you're expecting for timing, say, of Wraps if they make it through the stage gate process in terms of when they may come through the year? And any other drivers to the top line as you're thinking through the business for '26 and beyond.
Yes. Jon, this is Jamie. We expect, like you said, guidance between negative 4% and negative 2%. And so we've had a really choppy beginning of the year with the storms January and February. However, we have seen a couple of really good weeks. We're being conservative given the economic backdrop, but we're excited about all the things that we have in place. And then we're also excited if reps do well in test, which is looking great that they do launch in Q2.
Okay. And in terms of pricing, do you plan on taking any more or taking any during the year?
We're being cautious given the consumer backdrop, but we'll reevaluate throughout the year. But that's not in our guide.
Okay. And then just last one. in terms of thinking about the building blocks to returning store margins to kind of that high teens, low 20s rate, obviously, sales are going to be a key component in it. But can you speak to any specific cost levers that you have already pulled or plan to pull in '26 to kind of work with you guys as the sales begin to improve?
Yes. So there's a lot of things that we're working on for margins. So sales leverage is obviously going to be the biggest piece. But there's also some operational inefficiencies that we're working on. And one example would be around optimizing our order system for our team members to make sure they're ordering the right items, and we're taking the guesswork out of it. So we're looking to streamline that tool and making sure we get rid of all those manual inputs, so we're ordering correctly. So we do see some opportunity there. We also see opportunity within our supply chain, streamlining and doing some supplier diversification.
Yes. And Jon, the only thing I'll add to that is we've continued to see encouraging signs around our ability -- our head coach stability and reducing turnover. And we know when we get stable head coaches and reduce turnover, we have more productive teams which also leads to higher margins. So obviously, sales leverage will be the biggest component, but there's a number of operational moves that we're putting in place that with -- even without any sales leverage, we do have some margin gains to go forward.
Your next question comes from the line of Rahul Kro with JPMorgan.
Can you discuss how the rollout of the Project One Way, maybe the first titration, understanding this is an ongoing process is progressing. And specifically, can you share some metrics maybe on store performances for the cohort of stores where the rollout has been the earliest and a margin side or anything else to give us more confidence that we are at the inflection is closer to the inflection? And I have a follow-up.
So we're very encouraged by the work we're doing from an operational excellence perspective and a huge shout out to our operations team and our field leadership. We've instituted Project One Best Way. And over 2 quarters, you've seen the restaurants that have been scored great through our internal audits double just in 2 quarters. We do see better comps and better return rates of customers in those stores as they better -- as they perform better on those operational metrics.
And those operational metrics are everything from our standards and process, but a lot in terms of hospitality and food quality as well. So they're very in-depth studies.
We're going to continue pushing on that with a huge focus as we look forward, not only on throughput, but on hospitality and continuing to elevate our food quality.
One thing that we talked -- I mentioned earlier in the prepared remarks was around a lot of the moves we made around the quality of many of our core items. So we talked about the salmon where we've increased -- we've elevated the quality of the salmon through some of our culinary techniques. And we've seen salmon, as an example, increase its velocity by almost 20% as we've done that.
Similarly, we've upgraded how we season the rice. It's much more delicious. If you haven't tried it, I highly recommend. And we've upgraded our quinoa from a -- kind of a classic plain quinoa to a golden quinoa and even changed how we cook our chicken in terms of the cycle time of how often we cook it and the way in which we cook it to be juicier. So a huge focus on the guest and the product and elevating that. And we know when we do that, customers are more -- become more loyal and stay with us longer.
And then reducing complexity is something you mentioned again in the prepared remarks, can you revisit this topic on what the top priority areas here in the store for 2026 and what kind of changes or impact we should see?
In terms of what we actually do in the restaurant?
Yes, on the completed detection.
Yes, we're constantly looking at tools and processes as well as what we do in restaurant and where we can leverage value-added partners to make it -- make the work easier in our restaurants. And again, given our food ethos and focus on made from scratch, we're very, very careful on this. So one of the big rollouts last year was around de-stemmed kale as an example. That's going to -- we're going to -- we should see continued efficiencies from that. There's a number of other opportunities, whether it be how we cook our steak is one thing that we're looking at. Chicken protein marination is another one we're looking at, and we're constantly looking at which dressings and sauces could be upstreamed as long as they can be upstreamed in line with our values.
So we've really built this commercialization muscle over the past couple of years, and we will continue to lean into that to make it easier for our team members to work in store, lower those prep hours and move more of the hours to focus on hospitality and the guest experience.
Your next question comes from the line of Brian Bittner with Oppenheimer.
As it relates to the trends in the business, I realize the storms have had a huge impact, obviously, on the first quarter for the industry and particularly you given where your store base is. But have you attempted to perhaps strip out that headwind and think about the underlying trends and what those look like? Or do you have an estimate perhaps of how big the impact from the storms could be for the first quarter so we can try to better think about the trends in the business?
Yes. So January and February are choppy. The impact of the storms to date is about 320 basis points, but that does not include this latest storm where we have a little over 100 restaurants, so it's really hard to read the first quarter. What I can tell you, given our Northeast densification, but what I can tell you is the weeks where we're not seeing any weather, we are seeing some momentum in the business. So that's been great to see.
Okay. That's helpful. And just my follow-up question is related to the restaurant margin guidance for 2026. Maybe you can help unpack how to think about maybe the COGS and labor line items. They've obviously been large sources of deleverage looking backwards. But I think in order to get to the guidance for '26, we need much more stable performance in those two line items, but you're not taking much price and you anticipating comps to be down 2% to 4%. Can you maybe shape expectations for the building blocks of that restaurant margin guidance?
Yes, absolutely. So about half of it is -- a little over half of it is sales deleverage, but then we do see opportunities when it comes to making that protein portion and that's through supplier diversification and some refinements that we're doing in the supply chain while making sure we keep the quality in our delicious ingredients.
And then also, a lot of it is related to these operational inefficiencies. Jason is doing an awesome job with the team. But what we're realizing as we go out into these restaurants is that we're making things complicated for our team members. So it's really been a focus of getting into the restaurants and seeing how we can make their life easier. And so one of them was that predictive ordering tool that we're implementing, and optimizing. So I think that's probably going to be the other half is more of the supply chain initiatives and EBT.
Yes. If I could just add one thing. We did put in a new labor management tool last year, our new workforce management, and we're continuing to optimize that and make sure we have the right labor at the right time in order to capture sales, but also really just not wasting labor, reducing over time. And so a number of levers for us to pull around operational efficiencies.
Your next question comes from the line of Brian Mullan with Piper Sandler.
A question on the Wrap. I think this is something you've been contemplating for a long time. Is there a way to maybe frame up how big of an opportunity this could be even qualitatively, including as a customer acquisition tool, if you get the product and the operations right. And then separately, are you viewing this as a digital-only offering? Or is this something you could envision walking the line and be able to order as well?
Absolutely. So we're very excited about Wraps. It's something we've been working on for a very, very long time, probably 2 years of product development, getting everything perfected. Both the flavors getting the supply chain ready to have a really clean Wrap and, of course, perfecting the operation.
We went -- instituting our new stage gate process. We went into our rapid ops test in January in eight stores in Los Angeles. The main question we had was how is it going to impact's our restaurants operationally, specifically any impact to throughput. I'm very confident that it will not be a drag on throughput, and that was a big question.
We've now moved on to a market test with about 68 restaurants, featuring Wraps started about a week ago. Results have been really encouraging. We have seen incidents tick up almost every day since launch. The feedback we've gotten from guests is phenomenal. It is really hitting a new occasion and in many ways, a new customer.
If you look at the addressable market, Wraps handheld, there's a huge segment of the population with being a bowl-only concept that we were not capturing. So this opens up the aperture a lot for the type of customers and occasions the type of customers and occasions that we can see.
The last thing I'll say is that we have -- we talked about it in the prepared remarks, but Wraps will all be sub-$15 starting at $10.95. So I think really disruptive from a price perspective. And the other thing we see is when people are coming in at those lower prices, their second order rates are significantly higher. So we expect to see the -- the lifetime value or the annual spend of guests increase as we do that.
So overall, very encouraging still perfecting things getting ready for a midyear launch as long as it passes stage gate, but we do expect Wraps to be a really big moment for us. We will put significant marketing around it. And I'll say I think it's going to be a huge moment for the brand. I didn't answer your question -- your last part of it was, will it be digital only? No, it will be available on all channels. So today, even in test, I encourage everyone to go try them, and please share your feedback. We have three Wraps. Today, we may expand the lineup, but they're available across all owned channels eventually will be available on all channels, including marketplace. But for right now, they're available both in-store on pickup and through our pickup channel.
Okay. That is exciting. And then a follow-up, just a question on development. Maybe you could just talk about what the team is focused on beyond this year. I know given the lead times, you'd normally be focused on '27, '28, maybe you don't want to sign as many leases as you normally would right now. So just talk about how you're managing striking the right balance of slowing down now, but not having a gap later in the pipeline if you want to accelerate.
Yes, that's pretty -- I mean you kind of nailed the approach. It's making sure we have a healthy pipeline, so we have the optionality to speed up as comps improve, and we feel good about the unit economics. However, keeping it not necessarily committing to too much to make sure we're disciplined from a cash perspective.
We've learned a lot about where Sweetgreen really works. We do have a really, really solid pipeline. We feel very confident about for this year and do have a really solid pipeline built for '27. But really kind of taking a wait-and-see approach in terms of signing too many deals as we really perfect the unit economics in the business.
Once we do see comps start turn positive and the flywheel starts going, we do expect to begin to accelerate development back to our previous algorithm.
Your next question comes from the line of Dennis Geiger with UBS.
I wanted to touch on loyalty a little more, if you could share a bit more on what you saw in the quarter, including the impact to the comp in the quarter first. And then just anything else on the customer observation, including most frequent guests, how they're using the program and where they are right now versus the old program? Have any updates on that front?
Yes, absolutely. So overall, the program is doing well. We're continuing to see weekly year-over-year growth with the new members signing up to the program. We do see loyalty members on an annual spend at more than 2x non-loyalty members. So it is definitely working. However, we also see a lot of opportunities.
So as a lot of you will see kind of a re-envisioning or an optimization of the program later this year, things like improving perks, adding tiers, boosting benefits of the program, for example, that we need more options at lower tiers.
And then we also are seeing a lot of opportunities in how we can leverage AI and personalization around offers and communications, which we think will improve our targeting and continue to drive frequency.
So overall, feeling pretty good about the program, but more optimizations coming to really make it a best-in-class program. The best thing about this versus the Sweetpass+ is much more broadly appealing.
The last thing I'll say is we introduced scan-to-pay in our restaurants last year. And I think we may be one of the -- maybe the only restaurant that allows you to scan and pay with a single transaction. And that percentage inside of our restaurants has doubled over the past 2 quarters. So we're now seeing about 20% of in-store transactions. Being a scan-to-pay transaction. And again, that's -- those are more customers that we can target with communications and offers.
Great. And then just if I may, one more on IK. Just as it relates to the higher AUVs that you called out. Any additional comments there, high-level quantification or perhaps anything on throughput metrics, et cetera, on the IK side of things.
Yes. IK continues to be encouraging. We're seeing similar results that we've talked about in the past, at least 700 basis points of leverage. We did introduce our newer formats with the IK, much better from a customer experience perspective and from an operations perspective. And so -- we're going to continue to have that as a huge part of our toolkit. We opened two more stores with Infinite Kitchens this year in Q1. So we're up to 32 stores featuring the Infinite Kitchen. We continue to see the benefits around throughput, accuracy, wait times. And over time, we think that also gives us a lot of pricing power. So very encouraged by the IK and continue to use it, especially in our more high-volume locations.
Your next question comes from the line of Sara Senatore with Bank of America.
I guess maybe just two follow-ups. One is on the Wraps. What is the implication for maybe operational complexity? I think to your point about bowls, even the Protein Plates probably looked kind of similar in terms of the build or how they went down the make line. But is this going to add complexity. And I guess it sounds like probably not something that you can use the Infinite Kitchen for. So as you're stage gating, I assume you're looking at the operational implications, but just -- anything you can say on that?
Absolutely. So that was the major focus of our testing. So even before our rapid ops testing, we did a lot of testing in single restaurants where we brought team members together, worked together to co-create the operation, things like where does tortilla placement go? How does the food move down the line. One of the things that we heard from customers and a lot of our surveys and focus groups, the product is better when the ingredients are mixed before wrapped and the product is better when the Wrap is cut.
And so those were things that we wanted to ensure we brought to market. And luckily, we do a lot of hard work from our operations team, those are things that we were able -- we've enabled and are not seeing any slowdown on throughput. We do not expect any additional labor needs in order to do it, it really works beautifully within our current workflows. And it actually does work with the IK. The Infinite Kitchen does put together all of the ingredients and our team members Wrap things up on the finishing station. So it actually works beautifully in those locations as well.
Okay. That's good to hear. And I guess then the second question was about some of your comments about marketing and value. And I guess you did invest in value in the fourth quarter. And I think you saw -- you said you saw some initial good reaction. But then obviously, I think the quarter didn't end up where you had hoped. So is there an opportunity here to not just maybe improve the value proposition, but improve how you communicate it. I don't know if it's something beyond what you do with the loyalty program or the in-app marketing or just anything you have in terms of thinking about whether the communication maybe could be more effective as well as just the more like introductory price points?
Yes. So we see a lot of opportunities there, and we ran a lot of tests and pilots over the past 6 months to better understand the price value equation, how that resonates with customers. So one was our case $10 'Tis the Season Harvest Bowl where we saw incredible reactivation rates, great customer acquisition and interestingly the reorder rate holding those customers was really high. So very encouraging is that brought people into the brand, and then they stayed with us past that promo.
We followed that up this year with what we're calling our Craving of The Month, which is it's a value offering only for loyalty members. So it really works in that loyalty flywheel of bringing people on the brand. And again, what we're seeing is not only are they coming -- many people are reactivating or lapsed customers are reactivating or new customers are joining with it. But again, they're not just ordering there. They're sticking with us. But there's a lot more work we're doing on value.
Wrap is something we've talked about with the anchor pricing on Wrap. But in the prepared remarks, I mentioned a lot of the overall price value architecture work that we're doing. We are going to test a new pricing structure for our Make Your Own Bowls. And we are also looking at our pricing ladders and where we have opportunities for more entry-level pricing. Of course, we want to be very careful not to dilute our margins as we do this. But what we've seen is having different options for different groups of consumers, ultimately, Sweetgreen mission of connecting people to real food, we wanted to democratize real food and make it accessible to all. And so these pricing ladders give options for all different types of consumers, and you'll see a lot more work on the price side.
At the same time, you're going to see a lot more work on offering more value. Last year, we increased our protein portion. We've upgraded a number of our ingredients, and we're improving the experience in our restaurants. So the combination of those together, I think, will really start to get that flywheel of growth going for us, and we've seen some really, really encouraging early signs.
Okay. And then just the marketing question was sort of more -- it sounds like you have a lot of initiative. Is there -- do you think about a contemplation of maybe marketing outside of GM more broadly, maybe to your -- the more infrequent customers or people -- I don't know if it's a point of purchase or how you do that. I know you're relatively small, but just I guess my question was more, you have good value. Is there a way to communicate it more broadly?
Yes. Yes. I think you'll see more of that from us across many of our channels. I think you'll also see we've reevaluated our marketing mix we're spending a lot of our money lower funnel. And I think you'll start to see more top of funnel brand awareness. We know as we do that as we create more brand salience, it actually improves our return on ad spend lower in the funnel. .
And if you go back to kind of what made Sweetgreen, going back to our roots, it was really a lot of that brand marketing and storytelling. So I think you'll see a healthy balance of the brand marketing top-of-funnel brand awareness. Things like collaborations and ways we play into culture as well as getting really efficient and optimized bottom funnel, whether that be whether that be our media spend and/or what we can do through our own channels and our loyalty program.
So kudos to our marketing team really reinventing how we go to market and speak to more guests and I think you'll only see that improve throughout the next couple of quarters.
Your next question comes from the line of Brian Harbour with Morgan Stanley.
Are you doing IK retrofits at this point? I guess I'm just curious, because that's clearly something that kind of reduces complexity or is that not a focus at this point?
It's not a huge focus for us. We have done a handful of them. I think we will continue to look at them as leases come up when we're doing full renovations or relocations. So for example, in the past few months, we did relocate two stores, one being our Union Square restaurant that lease was up. We moved to a better location on the avenue and opened with an IK.
Similarly, our first New York store at the Nomad, moved across the street and opened it with an IK. So you'll see it being done selectively, but the retrofit is not a huge focus for us right now.
Okay. Got it. And just the slight change to store openings this year, are those just getting delayed or you haven't sort of signed some of those leases anywhere. I guess like the broader question is, are you sort of -- you sort of have different views about where it makes sense to open at this point?
I think we've seen a lot of success in our new and emerging markets. I think, which proves the TAM question this year. In the past couple of quarters, we opened new markets such as Arkansas, Phoenix, which is doing incredibly well and even a place like Cincinnati. So you continue to go where we know it works. We're really trying to open really places where we have a high degree of confidence where we can both have the right real estate, have the people leadership there, support it from a supply chain perspective.
And so we have a high degree of confidence in the pipeline for this year, and we've gotten a lot just a lot smarter about where to put new locations in what format. I also had it in the prepared remarks, but we have seen a lot of success with our Sweetlane. The most -- we have our first one in Schaumburg, we opened another one in Costa Mesa. We have another one coming very soon. And obviously, those are harder to find, but it's a really great format for us that we're continuing to lean into.
Your next question comes from the line of Andrew Charles with TD Cowen.
Jonathan, with your greater focus on protein and fiber as part of the marketing efforts. Is there any evidence that your efforts are resonating with GLP users via your loyalty program or any other data you can collect on this? And then I have a follow-up.
It's hard to say because our users don't tell us that they're on GLP-1s. So it's hard to say, but clearly, many people are. What I can tell you is I do think we would be -- we would long term as GLP-1 adoption increases, we will be a beneficiary from all of our research as people get on GLP-1s they want more protein dense, they want fresher food. And I think William Blair put out a study a couple of years ago about actually studying which brands -- what customers want to eat once on GLP-1. And I think we were the only one where actually frequency increased. So overall, I do -- we do see it as a tailwind, but we have no real evidence of it in our current data.
Okay. And then, Jamie, I know in 2025, the brand closed three restaurants that were near the end of their lease and I'm curious if you had enough time in your role to review the portfolio to identify stores where it might make sense to be closed stores permanently before their new lease term as a way to improve same-store sales, margins and free cash flow as a way to help accelerate the turnaround.
Yes. No, we definitely are looking at that, and there was one that was closed in Q4, and we have a handful that are closing this year, but those are all near the lease term, but absolutely, we're looking at the whole portfolio and the ones that are not cash flow positive, we're taking a hard look at.
Your next question comes from the line of Chris Carril with KeyBanc Capital Markets.
So can you maybe talk to the digital mix growth that you're seeing more recently, both across total and owned channels? Is that a function of increasing loyalty engagement or scan-to-pay? Or is it maybe driven by non-digital customers reducing frequency? And if it is that latter guest, how do you plan to reengage those non-digital guests?
Yes. So I will say that we're seeing some healthy pickup in our native business, our first-party channel, and I think that's part of some of the loyalty promotions that we're doing. .
Last year in marketplace, it was a tough environment. There is a lot of value going on, but I think we intentionally put them through our own channels. And like Jonathan said, we're seeing the stickiness of those transactions in that second order rate increase. But however, we do see tremendous opportunity in the marketplace area and to grow our third party as well. So that's all things -- that's all work that's under -- being underway.
Yes. And on your question around the -- I think you're referring to our in-store business. It's, in some ways, our most important channel. It's where we acquire so many of our guests. It's where you in the food quality, you're eating it fresh. You're getting that hospitality experience, you're learning about the brand. And so really focused on that, really from a hospitality perspective and a throughput perspective. And we've gotten very clear on how to measure the right metrics to show that we're on the right track.
Really, there's so much around that second order rate of how do we how do we incentivize teams around giving us such a great experience where those customers come back within 30 days. When you have that customer come back within 30 days, their annual spend is significantly higher when they don't.
We know Sweetgreen as a frequency and loyalty, like it's a habitual play. And so that in-store experience is a really important channel that we're highly focused on this year.
Got it. And then I guess as my follow-up, can you maybe comment on any differences you're seeing in sales trends across geographic regions, if any? Curious specifically if you're seeing any material differences between your legacy markets versus newer markets?
Yes. So I'd say Northeast is still under pressure, but I will tell you, when I started in September, that was the first market that we visited as a management team. And there is a lot of work that's being done by Jason and team and they hired a new RGM. And so we went back just this month, and it was encouraging to see all the work that's getting done and how delicious our food is and how operations is turning around. So that's been promising as kind of the hope and future ahead. But one thing that's been great to see is our California market. That market has been under pressure. If you think about last year, we had the fires and different things, but we are seeing some nice momentum in our business in California.
Your next question comes from the line of Jeffrey Bernstein with Barclays.
Great. Thank you very much. Jonathan, it seems like over the past couple of quarters, there were lots of talk of trends by income, age, ethnicity, but it does seem like, at least in recent months, perhaps there's some talking about maybe less bifurcation between those buckets and maybe less of a concern. Just wondering if there's any update in terms of your trends by any of those cohorts? And if there is an income concern when I see you talking more about value.
Like how do you measure your value perception, maybe where do you score you're willing to reset the margin target to be more aggressive pushing value? And then I had one follow-up.
So in terms of our cohorts, we're seeing similar data -- up for Q4, we did see a slight decline in all cohorts, but we are seeing a little bit of pickup in Q1, which is great to see, and then I'll let you comment on the value piece.
Yes. I think the goal here is, obviously, anything we do from a value perspective, we have to make up in transactions. So we don't see the margin deleverage. And so that's why we're looking very carefully at the price architecture. It's not a wholesale price decrease. It's more of a value ladder to have more options in. And we know as we do that, we see more frequency. So we're trying to both protect the margin as we offer more price value.
Yes. And we're definitely going to test every price move that we do to make sure we're getting those incremental transactions.
Got you. And then my follow-up, Jamie, you talked about for 2026 G&A reduction. I know you never know when best to temper spend versus reinvest more I think some were thinking maybe you'd see an uptick in spend to reinforce the brand positioning and the store level support. So just wondering how you guys think about it as a management team which direction to go within G&A? And maybe can you share the largest buckets that are actually driving that reduction in spend in '26?
Yes. So we've done a lot of work around G&A, and we will continue to lever that. But what is most importantly is we're investing in things that are driving returns. So we're super focused on our suite growth transformation plan. So when it comes to marketing and now having sit on board, we're really focused on that return and driving that value. So I would say you're going to see us investing heavily when there's a return, but you are going to see us reduce vendor spend in areas that are not creating returns and are not focused on our growth plan. So it's really just cutting the dollars that we're not creating returns and then focus on the dollars that are creating returns for us.
But there's a lot of opportunity. I mean, yes, a lot of opportunity ahead, I would say, to lever that further.
Your next question comes from the line of Sharon Zackfia with William Blair.
I guess, Jonathan, I'm intrigued by the idea of simplifying the pricing architecture, particularly for the Create your Own. Can you remind us kind of what percent of your sales are to create your own at this point? And kind of how simple can you make it? It does feel like sometimes I need a quantum physics degree to figure out what my bowl might cost before I order it.
Yes, we hear you on that. So it's about 1/4 of our business in terms of the Make your Own there's obviously many more people are ordering signatures and modifying them. But in the True Make your Own, it's about 1/4 of our business. So it's a very important segment for us. .
It's a little early to say exactly what we're doing, but it will be radically simplified and I think better for the guest.
Today, to your point, it does maybe feel like you're getting nickel and dime down the line. So we want to make it where you kind of know what you're getting for a very simple price and making sure that is really competitive in the marketplace. So more to come on that, that will be thoroughly tested through our stage gate process. But I do think that will be a major lever for us as we simplify our pricing structure and offer better price value.
Is it fair to think that, that would be anchored around the proteins on the pricing? And then would you -- it seems like you would give some margin up by doing that. Would that be kind of, I guess, derailing some of that kind of clawback of the protein reinvestment or the increased portion sizes that you did last summer?
Yes. So I would say that we're looking at it in a couple of pieces, we will be looking at those value ladders, but then we'll also be looking at the elasticity of other items to sort of offset that benefit, but all of these will be carefully tested.
Your next question comes from the line of Logan Reich with RBC Capital Markets.
I was just wondering if you could give an update on how the new store productivity is have been tracking through the year and for the Q4 openings?
Yes. So I would say for the Q4 openings, it's hard to tell, right? There's been a deceleration in the business. So I would say it's something that we're continuing to monitor and we're looking forward to make sure in 2026, we're only getting the best sites, and we're working on all the things under the growth plan. So I would say it's too early to comment on the 2025 productivity. But we are seeing some great things when you look at areas, some of the new markets like Arizona that haven't been impacted by weather, very promising results there.
There are no further questions at this time. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.
Sweetgreen — Q3 2025 Earnings Call
1. Management Discussion
Thank you for standing by. My name is Joe, and I'll be your conference operator today. At this time, I would like to welcome everyone to the Sweetgreen, Inc. Third Quarter 2025 Earnings Call. [Operator Instructions] I would now like to turn the call over to Rebecca Nounou, Head of Investor Relations. You may begin.
Thank you, and good afternoon, everyone. Speaking on today's call will be Jonathan Neman, Co-Founder and Chief Executive Officer; and Jamie McConnell, Chief Financial Officer. Both will be available for questions during the Q&A session following the prepared remarks. Today's call is being webcast live and recorded for replay. The earnings release and today's announcement regarding the sale of Spyce are available on the Investor Relations section of Sweetgreen's website at investor.sweetgreen.com.
I'd like to remind everyone that the information under the heading Forward-Looking Statements included in our earnings release and Spyce announcement also applies to our comments made during the call. These forward-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward-looking statements.
We also direct you to our earnings release for additional information regarding our use of non-GAAP financial measures, including reconciliations of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. Our earnings release can be found on our investor website.
And now I'll turn the call over to Jonathan to kick things off.
Thank you, Rebecca, and thank you all for joining us this afternoon. We are addressing the headwinds from the current operating environment with agility and focus. We are tightening operations, accelerating menu innovation, and deepening guest engagement. The team is focused on delivering an exceptional guest experience, improving operational execution and serving delicious, high-quality food in every restaurant. The actions we're taking are designed to expand our value proposition, strengthen transactions, enhance restaurant performance and position Sweetgreen for a return to profitable growth.
For the third quarter, we reported sales of $172.4 million and a same-store sales decline of 9.5%. Restaurant level margin was 13.1% and adjusted EBITDA was a loss of $4.4 million. Performance was impacted by softer sales trends in our Northeast and Los Angeles markets, which together represent about 60% of our comp base. This was coupled with lighter spending among younger guests, particularly the 25- to 35-year-old age group where we over-indexed.
As we look to Q4 and beyond, our new leadership team has taken the learnings from the year and focused our actions around 5 key strategies to transform our business. We're calling it the Sweet Growth Transformation Plan. Our strategies are: one, operational excellence; two, brand relevance; three, food quality and menu innovation; four, personalized digital experience; and five, disciplined profitable investment.
Now let me share some of the work being done under each of these strategic priorities, starting with operational excellence. Since joining earlier this year, our COO, Jason Cochran, has been instrumental in leading the work to strengthen operational execution. He has brought greater accountability and a new culture to how we run our restaurants.
Building on the foundation we introduced last quarter, Jason and his team are continuing to deploy Project One Best Way, our system-wide effort to elevate operational excellence through clear operating standards, performance-based leadership and measured execution. As part of this project, we launched Sweetpass, a framework that helps every team member understand what running a great restaurant looks like at Sweetgreen. The Sweetpass breaks each restaurant into clear zones from the front line to the back of house with simple, consistent behaviors and standards for how we show up every day.
Jason also introduced a new restaurant scorecard this quarter. It gives our teams greater visibility into performance across a streamlined set of metrics -- sales, throughput, customer satisfaction, food quality and labor performance that helps our team celebrate wins, bought opportunities and focus on what drives results.
In mid-September, we kicked off a new throughput initiative that defines what it means to be ready for peak lunch and ties progress directly to the scorecard. Early results are encouraging, showing improved peak hour throughput and building momentum towards the operational excellence we expect from ourselves.
To improve throughput further, our technology team has begun rolling out Scan to Pay for a faster and simpler frontline checkout experience. With a single app scan, guests can pay, earn and redeem rewards instantly using saved payment methods, including credit cards, Sweetgreen credits and gift cards. These disciplined system-level changes under Project One Best Way will take time to mature, but they're already building the structure and habits that will define how we operate going forward.
As we shared last quarter, about 1/3 of our restaurants met or exceeded our internal operational standards. Today, that number is approximately 60%, an important step forward. Additionally, turnover and retention continue to improve, and we expect this progress to translate into stronger restaurant-level performance over the year ahead.
Now turning to brand relevance. I'm excited to welcome Zipporah Allen, our Chief Commercial Officer, who leads marketing, menu innovation and the overall customer experience. In her first 2 months, Zipporah has brought new energy and focus to our marketing team, shaping a strategy that positions Sweetgreen as a lifestyle brand with a focus on acquiring and inviting more customers to live the Sweet Life. In the near term, we have redirected marketing to support New York, our most challenged market. We are optimizing our media investments to drive new guest acquisition and expand our share of voice. In the long term, we are focused on creating culture through distinct brand moments.
This will include a more structured approach to engagement with content creators that have an authentic connection with Sweetgreen, as well as brand partnerships that will broaden awareness with new audiences.
For our food quality and menu innovation pillar, we are focusing our attention on driving awareness around the quality of our ingredients. Next week, we're launching a protein-focused campaign, highlighting the real fuel that our customers get when they choose 1 of our 9 chef-curated menu items with more than 30 grams of protein. We are also introducing a new macros calculator in our digital experience. This protein campaign gives us a great opportunity to educate customers about our larger protein portions and is the first step to broadly communicating the key differentiators that make our menu distinct in the market. You'll see us continue to message our high-quality ingredients into next year, claims that differentiate us from our competition such as made from scratch, chicken, steak and salmon raised responsibly with no antibiotics ever, seed oil-free proteins, grains and roasted vegetables, no artificial flavors, colors or dyes and sourcing organic and local produce from farmers and partners we know and trust. These will take a more prominent role in our messaging going forward.
Additionally, in 2 weeks, we will launch a new steak bowl and steak plate to strengthen variety and value.
We continue to strengthen our menu innovation muscle with a pipeline of menu items entering our new stage-gate process in Q4. This is a cross-functional testing process that we will use for every menu item going forward. This will give us more precision and predictability in the results that we can expect from our menu development efforts.
We continue to leverage seasonal menus to drive frequency with our existing customers, and we have rightsized our marketing investment to reflect the role that these menu items play on our menu. At the same time, we are expanding our core menu offering to be relevant for more occasions and consumer needs through our pipeline test.
Our new handheld product will go into market test in early 2026. In Q4 and heading into Q1, we are also reviewing our menu and pricing architecture as we continue to strengthen our value proposition. We know that we can do a better job of creating clear entry prices and logical trade-up opportunities across our create-your-own and chef-curated menu options so that our customers understand the value across every menu tier. When guests know what they're getting and feel good about it, it builds trust and drives loyalty over time.
Now turning to personalized digital experience. Earlier this year, we launched SG Rewards to create a platform for a more personalized experience powered by enhanced customer data. We just reached the 6-month mark of this program and are continuing to see positive trends on frequency among our most loyal guests. The program unlocks the ability to leverage the data to drive frequency and retention through our CRM efforts. And during the fourth quarter, you will see us leverage this channel to invest more in targeted discounts and promotions to improve value perceptions and drive increased frequency with lighter users.
Shifting to our last pillar, which is disciplined profitable investment. In the third quarter, we opened 8 restaurants, including 6 Infinite Kitchen. We also entered a new market, Arizona, with our Scottsdale location, delivering the second strongest opening of the year. Following the quarter, we added a second Arizona location, further deepening our presence. The continued success of these openings reinforces our confidence in the white space opportunity ahead.
In the fourth quarter, we will open 17 new restaurants and enter 3 new markets: Sacramento, Cincinnati and Northwest Arkansas. Our Q4 openings include our first Sweetgreen featuring the Infinite Kitchen in Costa Mesa. Altogether, we expect to complete construction of 40 new restaurants this year, ending 2025 with 37 net openings. This reflects the closures of our Bleecker and Astor Place restaurants in the third quarter. It also includes shifting 2 restaurant openings into early 2026 to ensure the best possible experience for our guests and team members, though construction will be completed this year.
We expect to open our relocated Nomad restaurant in December and Union Square in January. Both locations are being relocated to stronger sites and will include Infinite Kitchen.
We're prioritizing the strength of our financial position by improving cash flow and maintaining greater discipline in how we invest, which will include a slowdown of new restaurant openings.
Looking ahead to 2026, we plan to open 15 to 20 net new restaurants with about half featuring Infinite Kitchen technology and enter 2 to 3 new markets, including Salt Lake City. We believe this strikes the right balance between growth and financial discipline as we focus on lowering capital expenditures and driving strong returns. We remain focused on quality growth and continue to target cash-on-cash returns above 40%.
As announced today, we've made the strategic decision to sell Spyce, our business unit responsible for developing the Infinite Kitchen to Wonder. This will allow us to unlock greater scale, lower operating costs and strengthen our financial foundation for the future. First and foremost, the Infinite Kitchen remains central to Sweetgreen's future. The technology has consistently proven its ability to deliver faster throughput, improved accuracy and consistency and elevated food quality. In the third quarter, the Infinite Kitchen restaurants continue to realize approximately 700 basis points of labor savings and nearly 100 basis points of COGS improvement compared to restaurants of similar age and volume.
Under our agreement with Wonder, Sweetgreen will continue to utilize and expand Infinite Kitchen technology across our restaurants. Partnering with Wonder enables us to leverage their manufacturing scale, R&D investments and shared innovation, accelerating the refinement and rollout of additional IK units. This transaction also allows us to sharpen our focus on our core restaurant business, allocating more of our talent and financial resources toward accelerating growth and achieving profitability. The $186.4 million sale is expected to infuse our balance sheet with approximately $100 million in liquidity, strengthening our financial position and enhancing our flexibility to fund future growth initiatives.
We're incredibly proud of the work the Spyce team has done to develop, scale and commercialize one of the world's most advanced food automation technologies under Sweetgreen. I want to especially thank Spyce co-founders, Michael Farid, Kale Rogers, Brady Knight and Luke Schlueter, for their vision and phenomenal technical execution. We look forward to partnering with you and the Wonder team as we enter this next chapter of innovation together.
From menu development to our app to the Infinite Kitchen, we've always been pioneers in reimagining how real food is sourced, prepared and served. That spirit of innovation is core to our DNA and will continue to guide us.
Before I conclude my prepared remarks, I want to take a moment to recognize Mitch Reback, who retired in September as our CFO, and express my deep gratitude for everything he's done for Sweetgreen. Mitch joined us when we were still a small regional brand over 10 years ago, and has been a driving force behind our growth ever since. He built the financial foundation that supports our business today, guided us through our IPO and has been a true partner, mentor and friend. His impact on Sweetgreen and on all of us personally can't be overstated. We're deeply grateful for his leadership and wish him all the best in his retirement.
We are also excited to welcome Jamie McConnell as our new Chief Financial Officer. In her short time, she's already brought a sharp focus on financial discipline, returns and efficiency. Her background and experience in high-growth, operationally disciplined businesses will be instrumental as we strengthen our operating model and position Sweetgreen for long-term success.
Over the years, Sweetgreen has navigated some of the toughest moments from growing through the Great Recession to leading through COVID. Through it all, I've never wavered in my belief in our vision or the impact we can make. We've proven that our brand resonates across markets and demographics and the opportunity ahead remains significant.
Our focus now is combining the creativity and cultural relevance that makes Sweetgreen unique with greater discipline and a continued focus on the guest.
The Sweetgreen brand remains strong and continues to deeply resonate with our guests. We know the work we need to do to raise our execution and reignite our flywheel to drive traffic and set the stage for long-term profitable growth. We are taking the steps needed to get back on track and position Sweetgreen for long-term success.
I want to thank every Sweetgreen team member for their focus, resilience and commitment to excellence. Together we're positioning Sweetgreen to reach its full potential, all while staying true to our purpose of connecting people to real food.
Now I'll turn over the call to Jamie to review our financial results in detail.
Thank you, Jonathan, and good afternoon, everyone. As a long-time Sweetgreen guest, I could not be more excited to join the team. This is an important time for the brand, and I'm grateful for the trust Jonathan, the Board and the company have placed in me to help shape the next chapter.
Over the past few weeks, I've spent time in our restaurants listening and learning from our teams. What stood out immediately was the care our people bring to the food we serve and the ingredients we source. I met Yuri, who began as a dishwasher 6 years ago and now leads her own restaurant as a head coach. Seeing how she has grown within Sweetgreen and her pride in the restaurant showed me what makes this company so special.
Since stepping into the CFO role a little over 6 weeks ago, I've been focused on gaining a clear understanding of our economic model and the levers that drive our results. It's clear there's meaningful work ahead. I've launched a full review of our restaurant level expenses and G&A structure to ensure we're operating as efficiently as possible, identifying savings, simplifying processes and investing only in what drives the business forward. Over time, this work will drive margin improvement, stronger cash flow and tighter financial discipline across the company to deliver steady, stable results. I will have more to share in future quarters. I'll now walk you through our third quarter results.
Third quarter sales were $172.4 million compared to $173.4 million last year, with same-store sales decline of 9.5%. Restaurant-level margin was 13.1%, down from 20.1% a year ago. Adjusted EBITDA was negative $4.4 million compared to positive $6.8 million last year. The comp decline reflects an 11.7% decrease in traffic and mix, partially offset by a 2.2% benefit from menu price increases. The comp decline reflects softer sales trends and the transition from Sweetpass+ to our new rewards program, which eliminated subscription revenue and includes a loyalty deferral.
Third quarter food, beverage and packaging costs were 30.7% of revenue, a 320 basis point increase year-over-year. The benefit from pricing was more than offset by higher protein costs, reflecting our investment in increased chicken and tofu portions to reinforce the value for our guests and higher ingredient usage. We expect to offset the 140 basis point portion investment through a combination of in-restaurant and supply chain initiatives with savings beginning in 2026, and fully realized in the second half of the year. The quarter also included a 50 basis point impact related to imposed tariffs and duties on our packaging and other menu items. This is a level we expect to continue in the near term. Additionally, the third quarter was impacted by a onetime 60 basis point write-off of discontinued materials.
Third quarter labor and related expenses were 29.1% of revenue, an increase of 170 basis points from last year. The increase was primarily driven by deleverage from lower sales volumes and higher wage rates, partially offset by menu price increases.
Other operating expenses were 17.6% of revenue, an increase of 130 basis points from last year. Third quarter operating support center costs decreased $2.3 million from last year on a dollar basis. As a percent of revenue, operating support center costs improved to 14% from 15.2% last year. The decrease was primarily driven by lower bonus expense due to company performance. As a reminder, we streamlined parts of our organization during the quarter, eliminating roughly 10% of open and existing roles to drive greater focus and efficiency.
Third quarter net loss was $36.1 million compared to a net loss of $20.8 million last year. The higher net loss primarily reflects a $12.4 million decrease in restaurant level profit and increased impairment charges, driven by a $4.3 million impairment charge for 4 underperforming restaurants. This was partially offset by lower stock-based compensation as IPO-related grants continue to roll off.
Adjusted EBITDA was a loss of $4.4 million compared to positive $6.8 million last year. The decline was primarily driven by lower restaurant level profit. During the quarter, we opened 8 restaurants, 6 of which were Infinite Kitchen. We closed 2 restaurants during the quarter, Bleecker and Astor Place for a third quarter net [ interim ] count of 6, and we ended the quarter with 266 restaurants.
We ended the quarter with a cash balance of $130 million. As you heard earlier from Jonathan and read in our release this afternoon, the strategic sale of Spyce to Wonder marks an exciting milestone for Sweetgreen. From a financial standpoint, this transaction reflects a disciplined capital decision that both strengthens our liquidity position and enhances our path to profitability. The sale is expected to infuse our balance sheet with approximately $100 million in cash upon closing. We expect the Spyce sale to close in either the fourth quarter of 2025 or early in the first quarter of 2026.
We also expect to realize approximately $8 million in annualized G&A savings as the Spyce team transitions to Wonder. Together, these actions are being taken to create meaningful leverage in our model and reinforce our focus on balancing growth with disciplined cost management.
Through our ongoing collaboration with Wonder, we have found a way to continue to benefit from the long-term success of the platform while keeping our focus on expanding and enhancing the Sweetgreen experience.
Now turning to guidance. We are updating 2025 guidance to the following: 37 net new restaurant openings, revenue ranging from $682 million to $688 million, negative same-store sales of 8.5% to 7.7%, restaurant level margin of 14.5% to 15%, and adjusted EBITDA between negative $13 million and negative $10 million.
As Jon said, we plan to slow new unit growth next year to approximately 15 to 20 net new restaurants with about half featuring the Infinite Kitchen. We'll continue to evaluate opportunities to increase development as operating cash flow improves.
To close, I came to Sweetgreen because I believe in what we're building and the impact this brand can have. I'm incredibly passionate about our mission and confident in the opportunity ahead.
And now I will turn the call over to the operator to begin Q&A. Operator?
[Operator Instructions] Your first question comes from the line of Brian Mullan of Piper Sandler.
2. Question Answer
In the prepared remarks, you mentioned starting to evaluate Sweetgreen's menu and pricing architecture. I think you said in Q4 and into Q1. So Jonathan, can you just give a sense of the scope of what you're looking at, what you're hoping to accomplish? Maybe you could characterize how difficult you think this will or won't be? And I ask because I know absolute price points, it's only one part of the value equation, but it's an important one. So I would just love to get your thoughts on what you think needs to be done.
Absolutely. Thank you, Brian. So yes, we're looking at menu and pricing architecture, as we mentioned. And I think there's a few ways that we're considering it. First is our pricing ladders and menu -- and new entry points. As you know, in the quarter, we tested a few things around $13 bull drops, we saw -- really to understand the price elasticity, we saw a lot of engagement around it. But given the fact that it was mostly marketed to existing customers, a relative high degree of cannibalization, but it did show us that there is a real opportunity around more entry price points around our menu.
As we look at menu innovation, we also see opportunities to create different price points and again, entry ways into the brand. We've also looked at how we present menu price points on our menu boards, again, to really show the different pricing options we have.
Lastly, I'll just follow up on the things that I talked about in the prepared remarks. We can do a much better job of talking about the value we provide, whether it be made from scratch or our proteins cooked without seed oils or all of our proteins being -- having no antibiotics ever, there's a much better job we can do around really delivering on the value message that we are offering.
Lastly, we have increased our protein portions by about 25%. And we've been relatively quiet on that. But starting next week, we have a big campaign around the increased portioning around protein. And with all the craze around protein, we think that will also do well.
So I'll close with on this is a lot of the pricing work is going into stage gate in the coming months, and we do think that there's going to be a lot of opportunity around these different pricing tiers.
Your next question comes from the line of Jon Tower of Citi.
I guess maybe I'm just looking at the guidance for the balance of the year or the implied guidance for the balance of the year, and it's effectively suggesting the fourth quarter is taking a step down. I don't think that's really too much of a surprise to people on the line. But I'm just curious if you could kind of walk through what you're seeing in the current environment? And specifically, I would think given where your stores are located in the Northeast and what's going on with the government shutdown, if you've seen anything worsen in the most recent months with respect to consumer demand? And frankly, how it's showing up in your business? Are you seeing it specifically during certain parts of the week? Are lunch or dinner getting hit more so than other dayparts and how people are spending at your stores relative to the past?
Jon, yes, you're right, we are seeing a step down. So in July, we saw a slight pickup from Q2, and that was due to the seasonal menu rolling out. However, in August, we saw a step down of about 200 basis points, and then we saw another step down in September of about 200 basis points. October is holding flat to September. So we're running at low negative double digits right now.
I will tell you, you're absolutely right about the consumer. So the 25 to 35 consumer is the most under pressure, and they make up about 30% of our consumer base, and they're down about 15%. And then our Northeast and L.A. markets make up about 60% of our base and the comp -- and they're making up about 800 basis points of negative comp compared to the rest of the fleet. So we're definitely seeing that impact. And then we are seeing some declines in dinner.
Okay. And maybe just in terms of the Infinite Kitchen agreement that you guys made today, can you just walk us through how that's going to impact you going forward? Obviously, it sounds like in a license agreement, but will there be any incremental costs that you'll have to pay going forward like a royalty for the technology into the future?
Yes, Jon, I'll take that. So we think that this strategic agreement with Wonder is really a win-win-win for the business. Not only do we infuse the company with about $100 million in cash and another $86 million in Wonder stock, we also reduced our G&A by about $8 million and allow us to focus more of our time and resources on the customer and really on the food and the experience. Beyond that, around IK going forward, it will continue to be a huge part of our business. Like we said, it's continuing to scale in many of our new stores, and we're pleased with the results. And we've formed a really favorable agreement with Wonder, where we're able to have the units at about -- around cost plus 5% and then maintain the current cost around delivery, install and service. So it's just a huge win for us and able to still use that technology as we continue to scale, but at pretty much the same cost that we've had so far without the financial burden that it was causing.
Your next question comes from the line of Andrew Charles of TD Cowen.
Just first, one quick bookkeeping. On the 15 to 20 net openings for 2026, what's contemplated the number of closures for next year? And then my real question is it's good to hear the handheld is making a reappearance after you first talked about around a year ago. What were the key unlocks in the operational side to get it to the market test where I know you're going to figure out more on the operations side, but what were the key unlocks you did in this planning phase to get it to the market test?
I'll start with the net 15 store openings. So we've identified 2 that are going to close, and then we're also looking at lease expirations and being really diligent on if we should renew those leases. So we still expect about net 15. We've identified 2, but net 15 is our number.
And on the unlocks, I think we're -- we've tested this with consumers. We know we have a really, really killer product. The point of the market test is to make sure that we can operationalize it and really understand any impacts to throughput. So it's a bit early to talk about it, but we've run some internal testing and are very confident that we can come up with something that is accretive and incremental to the business, unlock new dayparts and really be a big acquisition driver for us. So it's something that we've known for a while. Jason, our COO and team are very confident that this is something that we can operationalize.
But as I mentioned in the prepared remarks, the stage-gate process is really critical to getting this right, and that's why we are not rushing this out. We want to make sure both the product, offering and the menu assortment is right, the pricing is right, and most importantly, that we can operationalize this.
Your next question comes from the line of Rahul Kro of JPMorgan.
Firstly, kudos on making the changes to the protein portion increases, Jonathan, they're quite visible and consistently hitting the 100-gram scope. Happy to see that being executed well.
The question is on the net cash proceeds after any tax components associated with the Spyce sale. Given the cost basis and factoring in stock in the initial purchase price of Spyce, can you give us a detail on the actual cash that would be realized on the balance sheet? And also, like does it impact the future IK mix given the hurdle rate, given the cost plus 5% comment you made, Jonathan? Any color on that would be great.
I'll take the second part of the question, and I'll let Jamie take the first. So in terms of the actual cost, I think it's actually a huge benefit to us because today, at our scale, there's only so many -- so much economies of scale we can achieve with the machine at a cost-plus model at just a very small 5%, which would be about $25,000 on the cost of the machine, we benefit from the economies of scale as they begin to scale production and also have access to future technologies. So we actually think this will help us bring the unit cost down, have them invest more in the R&D and innovation of potentially cheaper and more effective automation units. And so overall, a win-win in that scenario.
And then following up on the cash, we're still going through the tax analysis and the valuation. So I don't expect it to be a material amount of tax that we are going to pay. And then we're still going through the tax and legal fees, et cetera, but I don't expect any of them to be material.
Your next question comes from the line of Sara Senatore of Bank of America.
Jamie, I just -- I guess, one confirmation or clarification and then a question. I think you said that dinner is where you're seeing some softness. So I guess, does that mean sort of disproportionate? Some of what I've seen is that your lunch has actually been more vulnerable just because it's something where people can kind of pack and bring from home. So I wanted to understand the daypart impact, if you kind of control for sort of suburban or urban mix.
Yes. Sara, we actually are not seeing a slowdown in our lunch quarter-over-quarter. We're actually seeing a slight decrease. So really, it's the dinner time that we're seeing that decrease.
Okay. And then the question was on just -- again, on the sort of sale. What, I guess, is the impetus to doing that now? I mean, other than perhaps your cash position? I guess I asked because, Jon, to your point about being kind of subscale. My sense is that a lot of restaurants generally will outsource technology unless they're really big. And so I just wanted to understand kind of the thought process of developing tech in-house versus maybe just going forward, just deciding to just to the outsourcing approach.
Yes, absolutely. So when we bought Spyce originally, there was no automation platform that we could have bought from there. And so we took what was a nascent idea, really a prototype in a couple of stores. We perfected it for Sweetgreen. We've commercialized it. We've gotten the manufacturing set up, and we've now scaled it. And it's now in this year, over half of the new NROs, again next year. And we're really at that point where us fully owning it is not needed as long as we have a level of control and license around the technology, and now we can benefit from the economies of scale and future innovation under Wonder. So it not only provides cash and lowers our G&A in this critical moment, it allows us to focus on our business. And we believe over time, it will actually bring the unit cost of the technology down so we can put it in more and more restaurants.
Your next question comes from the line of Logan Reich of RBC Capital Markets.
I just had one on the unit growth guidance for next year and the pipeline. Obviously, pulling back a little bit on unit development here. But I guess like the question is, is there any potential for that number to creep a little bit higher in a scenario where same-store sales gets back to growth and you guys feel comfortable about the operations. Curious if there's any flexibility in the pipeline to maybe scale that number up a little bit higher for next year.
Yes, absolutely, there is. The decision was made, one, from a financial discipline perspective, but also a focus perspective as we really focus on menu innovation and store experience in order to inflect our transaction comp. We do have a very robust pipeline over the next couple of years, and we made the strategic decision to kind of cherry pick the best approximately 20 restaurants, but do have some flexibility depending on how things go to accelerate, and we are planning a reacceleration into 2027, not all the way to the 15% unit growth, but do expect some reasonable step-up from the 20-ish stores in '26 into '27. So if we are able to inflect comp and feel really good about our overall operations and how we're delivering on the experience, we do have the potential to slightly increase next year's unit count.
Your next question comes from the line of Brian Harbour of Morgan Stanley.
This is Kelly Merrill on for Brian. I'm just curious, can we get an update on loyalty and where that stands today? I think on the last call, you noted it as an uplift to the beginning of Q3. So just wondering if that's sustained throughout the quarter or if you're seeing anything different now?
Yes. We've been generally pleased with loyalty. Now we just hit our 6-month mark. We are seeing continued activations at almost 20,000 per week in terms of new customers, and we have seen some frequency increases of those loyalty members. We are right now in the process of really perfecting the different customer journeys and how we can get them to be more personalized and really understanding the different promo levers. One of the things you will see us do, especially in this -- in this kind of cost-conscious environment for consumers is lean a bit more on certain kind of breakthrough promos to drive acquisitions. So you'll see us trying and testing a bunch more things with a lot of discipline, making sure that it can be accretive. But still, I'd say, very early stages of the loyalty program. And over the next 6 months, we expect that to be more of a comp driver for us, especially as some of the overhang from the Sweetpass+ starts to fall off. And then again, it's really about how we leverage that data.
Very excited about Zipporah, we call Zip being here, and her expertise in loyalty and CRM. And again, we see a lot of opportunity to kind of leverage that digital flywheel.
Your next question comes from the line of Jeff Bernstein of Barclays.
This is Anisha on for Jeff. With only 1 quarter remaining in the year, restaurant level margins were cut significantly. Can you break down what's driving that, if it's labor deleverage, commodity inflation or other factors?
Yes. So you're right. It's about half of sales deleverage. And then the next biggest piece is the protein increase. So we have about 140 bps in protein related to the increased portions of chicken and tofu. Those we plan to offset with supply chain initiatives and restaurant initiatives. And then we have tariffs, which we expect to hold at about 50 bps.
Your next question comes from Teddy Farley of Goldman Sachs.
One more on the loyalty program for me. Is the pricing and menu architecture review inclusive of a review of the rewards redemption stack for SG Rewards, just kind of making sure that you're competitive versus peers with value, not only on the core menu, but also with regards to the point redemption opportunities?
Yes, absolutely. It's a really good point. We've gone in with relatively modest programmatic benefits. So it gives us a lot of opportunity to move up and also leverage more on the personalized offers in CRM. So we are evaluating all of it, including the potential for tiers and other benefits for members. So the loyalty program will be a huge lever for us.
The one thing I will add on loyalty, which it was in the prepared remarks, but we recently rolled out the ability to Scan to Pay. And the good thing about that is we're now able -- you're now able to very seamlessly use loyalty in-store. So we're capturing more -- since we've done that, we are seeing a step-up of customers using loyalty in restaurants. It also helps us from a throughput perspective. So a lot more improvements coming on that side. And generally, in our digital experience, we have a lot of exciting things planned over the next 6 to 12 months to continue to drive that digital flywheel.
With no further questions, that concludes our Q&A session and today's conference call. We thank you for your participation. You may now disconnect.
Financial data from Sweetgreen
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 682 682 |
1%
1%
100%
|
|
| - Direct Costs | 532 532 |
7%
7%
78%
|
|
| Gross Profit | 149 149 |
21%
21%
22%
|
|
| - Selling and Administrative Expenses | 208 208 |
4%
4%
30%
|
|
| - Research and Development Expense | - - |
-
-
|
|
| EBITDA | -58 -58 |
114%
114%
-9%
|
|
| - Depreciation and Amortization | 74 74 |
6%
6%
11%
|
|
| EBIT (Operating Income) EBIT | -132 -132 |
37%
37%
-19%
|
|
| Net Profit | 14 14 |
114%
114%
2%
|
|
In millions USD.
Don't miss a Thing! We will send you all news about Sweetgreen directly to your mailbox free of charge.
If you wish, we will send you an e-mail every morning with news on stocks of your portfolios.
Sweetgreen Stock News
Company Profile
Sweetgreen, Inc. owns and operates a chain of salad restaurants. It offers drinks, sides, local bowls, salads, plates, and warm bowls. The company was founded by Nicolas Jammet, Jonathan Neman and Nathaniel E. Ru in November 2006 and is headquartered in Los Angeles, CA.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Neman |
| Employees | 6,486 |
| Founded | 2006 |
| Website | www.sweetgreen.com |


