Performance Overview - Sweetgreen Inc (NYSE: SG) significantly outperformed the broader market in 2024, delivering a return of over 14% compared to the S&P 500's 8% return [1] Market Comparison - The company's stock performance has been strong, with a notable 14% return since the last article, surpassing the S&P 500's 8% return [1] Analyst Position - The analyst holds a beneficial long position in Sweetgreen through stock ownership, options, or other derivatives [2]

Group 1 - The article presents Sweetgreen (NYSE: SG) as a potentially undervalued stock despite its share price tripling year-to-date, which is atypical for value stocks [1] Group 2 - The author has a beneficial long position in Sweetgreen shares, indicating a personal investment interest in the company [2] - The author has extensive experience in technology and startup sectors, which may provide valuable insights into market trends affecting companies like Sweetgreen [3]

When searching for buying opportunities, investors might immediately look at stocks that have crushed the market and are putting up exceptional recent returns. One particular business has done just that. So far in 2024, this monster restaurant stock has skyrocketed 236%, substantially outperforming the broader S&P 500 by an incredibly wide margin. Does this strong momentum mean the company should be in your portfolio right now? Here's what investors need to know.Healthy eatingI'm not talking about Chipotle ...

Sweetgreen (NYSE: SG ) is not just another fast-casual salad chain. The recent launch of Caramelized Garlic Steak was just the beginning of a series of innovations 'outside the bowl' that are I'm an Equity Analyst and Accountant specializing in restaurant stocks, with a strong foundation in Business Administration and Accounting, complemented by an MBA in Forensic Accounting and Controllership. As the founder of Goulart's Restaurant Stocks, I lead a company focused on analyzing restaurant stocks in the U.S. ...

Financial Data and Key Metrics - Q3 2024 revenue was $173 4 million, up 13% YoY [7] - Same-store sales grew 6%, with 4% from menu price increases and 2% from positive traffic and mix [8] - Restaurant-level margin expanded by over 100 basis points to 20 2% [9] - Adjusted EBITDA for the quarter was $6 8 million [9] - Net loss improved to $20 8 million from $25 1 million in Q3 2023 [34] - Year-to-date adjusted EBITDA was $19 3 million, compared to a $1 million loss in the same period last year [35] - Cash balance at the end of Q3 was $235 million, with positive operating cash flow of $37 million for the first nine months of 2024 [36] Business Line Data and Key Metrics - Five new restaurants were opened in Q3, bringing the total to 236 [7] - Three of the new restaurants are powered by the Infinite Kitchen [10] - The Infinite Kitchen has led to a 700 basis point labor savings at the Penn Plaza location [16] - Turnover for Infinite Kitchen locations was lower than the fleet average in September [16] - The company plans to open at least 40 new restaurants in fiscal 2025, with approximately half powered by the Infinite Kitchen [13] Market Data and Key Metrics - Emerging markets, including the Midwest, Texas, and the Southeast, saw double-digit same-store sales growth [8] - The average unit volume (AUV) in Q3 was $2 9 million [29] - The Penn Plaza Infinite Kitchen retrofit has resulted in faster order fulfillment and increased guest frequency [15] Company Strategy and Industry Competition - The company is focused on broadening its menu beyond salads, with new protein plates and seasonal offerings driving dinner and weekend sales [18] - Sweetgreen is testing new menu items like ripple fries and exploring opportunities in desserts and handheld options [20] - The company is rolling out an AI-driven labor scheduling system to improve team member experience and operational efficiency [23] - Sweetgreen aims to redefine fast food through a focus on culinary and technology innovation, with a goal of 15% to 20% unit growth annually [38] Management Commentary on Operating Environment and Future Outlook - Management highlighted the success of the Infinite Kitchen in improving guest experience and operational efficiency [14] - The company is optimistic about the potential for menu innovation and digital sales growth, particularly with the upcoming loyalty program launch in 2025 [16] - Sweetgreen raised its 2024 guidance, expecting revenue between $675 million and $680 million, same-store sales growth of 6% to 7%, and adjusted EBITDA of $18 million to $20 million [37] Other Important Information - The company is retrofitting two high-volume restaurants, Willis Tower in Chicago and Wall Street in New York, with the Infinite Kitchen, expected to be completed by the end of Q4 2024 [17] - Sweetgreen is simplifying back-of-house operations to reduce complexity and improve throughput [21] - The company is investing in leadership training and career development for team members, with a focus on promoting from within [25] Q&A Session Summary Question: Brand awareness and broadening appeal - Sweetgreen is focused on expanding its menu to attract a wider demographic, with protein plates and new menu items driving dinner and weekend sales [42][43][44] - The company is testing ripple fries and exploring opportunities in desserts and handheld options [46][47] Question: In-store productivity improvements - Sweetgreen is simplifying prep processes and reducing operational complexity to create room for menu innovation [49][50] - The company expects iterative improvements in prep, quality, and labor savings [52] Question: Same-store sales trends and marketing approach - September was the strongest month in Q3, with momentum carrying into October [55] - Sweetgreen is evolving its marketing approach, focusing on a full-funnel strategy and community engagement [56][57] Question: Infinite Kitchen retrofits - The company is prioritizing retrofits based on AUVs and labor market challenges [61][62] - Labor savings from Infinite Kitchen retrofits are expected to improve over time [63] Question: AUVs at Infinite Kitchen stores - Sweetgreen expects AUVs to grow over time at Infinite Kitchen locations due to faster throughput and higher customer satisfaction [66][67] Question: Labor optimization and inflation - Labor optimization has driven year-over-year favorability, with further improvements expected from AI scheduling tools [69][70] - Food and labor inflation was approximately 2% in Q3 [70] Question: Reinvesting labor savings - Near-term labor savings from Infinite Kitchen will drop to the company's margin [75] - The new AI labor tool aims to improve both customer and team member experience [76][77] Question: Menu expansion and operational complexity - Sweetgreen is focused on simplifying operations to make room for new menu items [78][79] Question: Same-store sales in mature markets - The company does not break out same-store sales by market but reported a 6% comp overall [83] Question: Cost of Infinite Kitchen retrofits - Retrofits typically take six to seven weeks, with costs varying by store [85] Question: Impact of steak on COGS - Steak has a higher COGS but did not significantly impact overall COGS in Q3 [86] Question: Infinite Kitchen manufacturing costs - Sweetgreen expects to see manufacturing cost savings as it scales Infinite Kitchen production [88][89] Question: Sales trends in September and October - Sales accelerated in September and October, driven by seasonal menu items and emerging markets [93][95] Question: New unit economics - Infinite Kitchen units have higher build-out costs but offer a 700 basis point margin improvement [97] Question: Margin expansion outlook - Sweetgreen is not providing 2025 margin guidance at this time but expects to do so in the next earnings call [103]

Key TakeawaysSweetgreen reported a wider-than-expected loss for the third quarter as costs rose.The company spent more as it expanded its locations, and also faced higher labor expenses.Shares tumbled Friday, though even with Friday's drop, they've more than tripled in value since the start of the year. Shares of Sweetgreen (SG) tumbled in Friday afternoon trading after the salad restaurant chain reported a wider-than-anticipated loss as costs rose. Sweetgreen posted a third-quarter loss of 18 cents per sh ...

Sweetgreen, Inc. (SG) reported third-quarter fiscal 2024 results, with earnings and revenues missing the Zacks Consensus Estimate. The top and bottom lines increased on a year-over-year basis.Stay up-to-date with all quarterly releases: See Zacks Earnings Calendar.SG’s Q3 Earnings & Revenue DiscussionIn the fiscal third quarter, Sweetgreen recorded an adjusted loss per share of 18 cents, wider than the Zacks Consensus Estimate of a loss of 16 cents. The company reported an adjusted loss per share of 22 cent ...

U.S. stock futures were slightly lower this morning, with the Nasdaq futures falling around 0.2% on Friday.Shares of Sweetgreen, Inc. SG fell sharply in today's pre-market trading after the company reported worse-than-expected quarterly financial results.Sweetgreen reported a quarterly loss of 18 cents per share, compared to market expectations for a loss of 16 cents per share. The company reported quarterly sales of $173.400 million which missed the analyst consensus estimate of $175.533 million.Sweetgreen ...

[Glossary](index=4&type=section&id=Glossary) [Key Definitions](index=4&type=section&id=Glossary_Definitions) This section defines key terms, sales channels, and performance metrics including AUV, Same-Store Sales Change, Restaurant-Level Profit, and Adjusted EBITDA - The company defines its 'Comparable Restaurant Base' as all restaurants that have operated for at least twelve full months, excluding those with material temporary closures (no operations for a consecutive 30-day period)[10](index=10&type=chunk) - Sales channels are categorized into five types: In-Store, Marketplace (third-party), Native Delivery (own app/website), Outpost and Catering, and Pick-Up. 'Owned Digital Channels' include Pick-Up, Native Delivery, and Outpost/Catering[11](index=11&type=chunk)[15](index=15&type=chunk) - Key performance metrics include Net New Restaurant Openings, Average Unit Volume (AUV), Same-Store Sales Change, Total Digital Revenue Percentage, and Owned Digital Revenue Percentage. Non-GAAP measures used are Restaurant-Level Profit, Restaurant-Level Profit Margin, Adjusted EBITDA, and Adjusted EBITDA Margin[17](index=17&type=chunk) [Part I Financial Information](index=6&type=section&id=Part%20I%20Financial%20Information) [Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents Sweetgreen, Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, and cash flows, for the periods ended September 29, 2024 [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets slightly increased to **$858.0 million**, while total liabilities rose to **$394.7 million**, and stockholders' equity decreased to **$463.3 million** due to accumulated deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Sept 29, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $234,623 | $257,230 | | Total current assets | $255,304 | $276,111 | | Property and equipment, net | $285,279 | $266,902 | | Total assets | $857,981 | $856,557 | | **Liabilities & Equity** | | | | Total current liabilities | $98,522 | $91,579 | | Total liabilities | $394,677 | $373,960 | | Accumulated deficit | ($846,328) | ($784,985) | | Total stockholders' equity | $463,304 | $482,597 | | **Total liabilities and stockholders' equity** | **$857,981** | **$856,557** | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Revenue grew **20%** to **$515.9 million** for the thirty-nine weeks ended September 29, 2024, with net loss improving to **$(61.3) million** or **$(0.54) per share** Statement of Operations Summary (in thousands, except per share data) | Metric | Thirty-nine weeks ended Sep 29, 2024 | Thirty-nine weeks ended Sep 24, 2023 | | :--- | :--- | :--- | | Revenue | $515,922 | $431,015 | | Total restaurant operating costs | $410,925 | $353,876 | | Loss from operations | $(64,274) | $(93,055) | | Net loss | $(61,343) | $(85,970) | | Net loss per share | $(0.54) | $(0.77) | [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Net cash provided by operating activities significantly improved to **$37.3 million**, while net cash used in investing activities decreased to **$(63.2) million**, resulting in a **$20.1 million** decrease in cash and cash equivalents Cash Flow Summary (in thousands) | Activity | Thirty-nine weeks ended Sep 29, 2024 | Thirty-nine weeks ended Sep 24, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $37,271 | $17,556 | | Net cash used in investing activities | $(63,199) | $(79,372) | | Net cash provided by financing activities | $5,836 | $4,945 | | **Net decrease in cash** | **$(20,092)** | **$(56,871)** | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) The notes detail accounting policies, revenue disaggregation, fair value measurements, and lease obligations, noting **236** restaurants operated and **15** Net New Restaurant Openings year-to-date - As of September 29, 2024, the company owned and operated **236** restaurants in 22 states and Washington, D.C. It had **5** Net New Restaurant Openings in Q3 2024 and **15** year-to-date[28](index=28&type=chunk) Revenue by Channel (in thousands) | Channel | Thirty-nine weeks ended Sep 29, 2024 | Thirty-nine weeks ended Sep 24, 2023 | | :--- | :--- | :--- | | Owned Digital Channels | $158,727 | $161,347 | | In-Store Channel (Non-Digital) | $224,540 | $177,205 | | Marketplace Channel | $132,655 | $92,463 | | **Total Revenue** | **$515,922** | **$431,015** | - The fair value of the contingent consideration liability related to the Spyce acquisition increased to **$13.6 million** as of September 29, 2024, from **$8.4 million** at year-end 2023[39](index=39&type=chunk)[42](index=42&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=27&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial performance, highlighting revenue growth, a **7%** same-store sales increase, improved profitability with narrowed net loss, positive Adjusted EBITDA, and liquidity [Factors Affecting Our Business](index=27&type=section&id=MD%26A_Factors_Affecting_Business) Business performance is influenced by restaurant footprint expansion, macroeconomic conditions, seasonality, and sales channel mix, particularly the impact of delivery fees on margins - Expanding the restaurant footprint is a key driver of revenue growth. The company had **15** Net New Restaurant Openings in the first thirty-nine weeks of 2024, bringing the total to **236** restaurants[91](index=91&type=chunk) - Macroeconomic conditions and inflation pose risks, as consumers may reduce spending on premium fast-casual options. While the company has historically offset cost increases with price adjustments, future increases could negatively impact sales[93](index=93&type=chunk)[94](index=94&type=chunk) - Revenue is subject to seasonality, typically lower in Q1 and Q4. The sales channel mix also affects profitability, as delivery channels (Native and Marketplace) incur third-party fees that can negatively impact margins[97](index=97&type=chunk)[98](index=98&type=chunk) [Key Performance Metrics and Non-GAAP Financial Measures](index=28&type=section&id=MD%26A_Key_Metrics) Key performance metrics include a **7%** Same-Store Sales Change and **$2.9 million** AUV, with non-GAAP measures showing **$105.0 million** Restaurant-Level Profit and **$19.3 million** Adjusted EBITDA Key Performance Metrics | Metric | Thirty-nine weeks ended Sep 29, 2024 | Thirty-nine weeks ended Sep 24, 2023 | | :--- | :--- | :--- | | Net New Restaurant Openings | 15 | 34 | | Average Unit Volume (AUV) | $2,907k | $2,905k | | Same-Store Sales Change (%) | 7% | 4% | | Total Digital Revenue Percentage | 56% | 59% | | Owned Digital Revenue Percentage | 31% | 37% | Reconciliation to Restaurant-Level Profit (in thousands) | Metric | Thirty-nine weeks ended Sep 29, 2024 | Thirty-nine weeks ended Sep 24, 2023 | | :--- | :--- | :--- | | Loss from operations | $(64,274) | $(93,055) | | **Restaurant-Level Profit** | **$104,997** | **$77,139** | | Restaurant-Level Profit Margin | 20% | 18% | Reconciliation to Adjusted EBITDA (in thousands) | Metric | Thirty-nine weeks ended Sep 29, 2024 | Thirty-nine weeks ended Sep 24, 2023 | | :--- | :--- | :--- | | Net loss | $(61,343) | $(85,970) | | **Adjusted EBITDA** | **$19,281** | **$(946)** | | Adjusted EBITDA Margin | 4% | 0% | [Results of Operations](index=36&type=section&id=MD%26A_Results_of_Operations) Revenue increased **20%** to **$515.9 million** driven by new restaurants and a **7%** same-store sales increase, leading to a narrowed net loss of **$(61.3) million** Revenue Performance | Metric | Thirty-nine weeks ended Sep 29, 2024 | Thirty-nine weeks ended Sep 24, 2023 | | :--- | :--- | :--- | | Revenue | $515,922k | $431,015k | | Same-Store Sales Change | 7% | 4% | - The increase in revenue for the 39-week period was primarily due to **$51.7 million** from **50** Net New Restaurant Openings and **$28.9 million** from a **7%** increase in Comparable Restaurant Base revenue[135](index=135&type=chunk)[136](index=136&type=chunk) - Labor and related expenses decreased to **28%** of revenue from **29%** in the prior year period, driven by higher revenue, improved labor optimization, and a **$1.8 million** ERC benefit, which offset wage rate increases[140](index=140&type=chunk)[141](index=141&type=chunk)[143](index=143&type=chunk) - Pre-opening costs decreased by **48%** to **$4.3 million** due to opening only **15** new restaurants in the period compared to **37** in the prior-year period[156](index=156&type=chunk)[158](index=158&type=chunk) [Liquidity and Capital Resources](index=45&type=section&id=MD%26A_Liquidity_and_Capital_Resources) The company holds **$234.6 million** in cash and equivalents and a **$43.1 million** revolving credit facility, with cash from operations increasing to **$37.3 million** and investing activities decreasing to **$(63.2) million** - The company holds **$234.6 million** in cash and cash equivalents and has access to a **$43.1 million** revolver, which management believes is sufficient for the next 12 months[170](index=170&type=chunk) Cash Flow Summary (in thousands) | Activity | Thirty-nine weeks ended Sep 29, 2024 | Thirty-nine weeks ended Sep 24, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $37,271 | $17,556 | | Net cash used in investing activities | $(63,199) | $(79,372) | | Net cash provided by financing activities | $5,836 | $4,945 | - The **$16.2 million** decrease in cash used for investing activities was primarily due to lower capital expenditures on property and equipment, reflecting **15** gross new restaurant openings in the period versus **37** in the prior year[180](index=180&type=chunk)[181](index=181&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=48&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) No material changes to market risk exposure have occurred since December 31, 2023, with primary risks remaining commodity prices, interest rates, inflation, and macroeconomic factors - There have been no material changes to the company's market risk exposure, which includes commodity prices, interest rates, inflation, and macroeconomic risks[185](index=185&type=chunk) [Controls and Procedures](index=48&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of September 29, 2024, with no material changes to internal control over financial reporting during the quarter - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[186](index=186&type=chunk)[187](index=187&type=chunk) - There were no material changes to the company's internal control over financial reporting during the fiscal quarter ended September 29, 2024[189](index=189&type=chunk) [Part II Other Information](index=51&type=section&id=Part%20II%20Other%20Information) [Legal Proceedings](index=51&type=section&id=Item%201.%20Legal%20Proceedings) The company is subject to ordinary course legal proceedings, which management does not expect to materially affect its financial position or operations - The company does not expect that the resolution of any current legal proceedings will have a material effect on its financial position, operations, or capital resources[191](index=191&type=chunk) [Risk Factors](index=51&type=section&id=Item%201A.%20Risk%20Factors) No material changes have been reported to the risk factors previously disclosed in the 2023 Annual Report on Form 10-K - No material changes have been made to the risk factors disclosed in the 2023 Annual Report on Form 10-K[192](index=192&type=chunk) [Other Information](index=51&type=section&id=Item%205.%20Other%20Information) A director and the CFO adopted Rule 10b5-1 trading plans for the potential sale of Class A common stock during the last fiscal quarter - Director Julie Bornstein and CFO Mitch Reback adopted Rule 10b5-1 trading plans for the sale of company securities[193](index=193&type=chunk) [Exhibits](index=52&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including corporate documents, officer certifications, and XBRL data files - The filing includes officer certifications as required by Sections 302 and 906 of the Sarbanes-Oxley Act and Inline XBRL documents[195](index=195&type=chunk)

Core Viewpoint - Sweetgreen, Inc. reported a quarterly loss of $0.18 per share, slightly worse than the Zacks Consensus Estimate of a loss of $0.16, but an improvement from a loss of $0.22 per share a year ago [1][2] Financial Performance - The company posted revenues of $173.43 million for the quarter ended September 2024, missing the Zacks Consensus Estimate by 0.14%, but showing an increase from $153.43 million year-over-year [2] - Sweetgreen has not surpassed consensus EPS estimates over the last four quarters, with a recent earnings surprise of -12.50% [1][2] Stock Performance - Sweetgreen shares have increased approximately 268.5% since the beginning of the year, significantly outperforming the S&P 500's gain of 24.3% [3] Future Outlook - The company's earnings outlook will be crucial for determining the stock's immediate price movement, with current consensus EPS estimates at -$0.24 for the coming quarter and -$0.75 for the current fiscal year [4][7] - The estimate revisions trend for Sweetgreen is currently mixed, resulting in a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Retail - Restaurants industry, to which Sweetgreen belongs, is currently in the top 29% of over 250 Zacks industries, suggesting a favorable outlook compared to lower-ranked industries [8]