Core Insights - Sweetgreen, Inc. reported revenue of $172.39 million for the quarter ended September 2025, reflecting a year-over-year decline of 0.6% [1] - The company's EPS was -$0.27, compared to -$0.18 a year ago, indicating a deterioration in earnings performance [1] - Revenue fell short of the Zacks Consensus Estimate of $180.01 million, resulting in a surprise of -4.23% [1] - The EPS surprise was -50%, with the consensus EPS estimate being -$0.18 [1] Financial Performance Metrics - Same-store sales decreased by 9.5%, which was worse than the average estimate of -6.4% based on five analysts [4] - The number of ending restaurants was 266, slightly below the average estimate of 267 based on five analysts [4] - New restaurant openings totaled 6, compared to the average estimate of 7 based on four analysts [4] Stock Performance - Sweetgreen's shares have returned -16.7% over the past month, contrasting with the Zacks S&P 500 composite's increase of +1.3% [3] - The stock currently holds a Zacks Rank 4 (Sell), suggesting potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Sweetgreen, Inc. reported a quarterly loss of $0.27 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.18, marking a 50% earnings surprise to the downside [1] - The company has consistently missed consensus EPS estimates over the last four quarters [2] Financial Performance - Sweetgreen's revenues for the quarter ended September 2025 were $172.39 million, falling short of the Zacks Consensus Estimate by 4.23% and down from $173.43 million year-over-year [2] - The company has only surpassed consensus revenue estimates once in the last four quarters [2] Stock Performance - Sweetgreen shares have declined approximately 79.8% since the beginning of the year, contrasting sharply with the S&P 500's gain of 15.6% [3] Future Outlook - The company's earnings outlook is critical for assessing future stock performance, with current consensus EPS estimates at -$0.23 for the upcoming quarter and -$0.74 for the current fiscal year [4][7] - The Zacks Rank for Sweetgreen is currently 4 (Sell), indicating expectations of underperformance in the near future [6] Industry Context - The Retail - Restaurants industry, to which Sweetgreen belongs, is currently ranked in the bottom 12% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates that the top 50% of Zacks-ranked industries outperform the bottom 50% by more than a factor of 2 to 1 [8]

Financial Data and Key Metrics Changes - For the third quarter, the company reported sales of $172.4 million, a slight decrease from $173.4 million last year, with a same-store sales decline of 9.5% [22][24] - Restaurant-level margin was 13.1%, down from 20.1% a year ago, and adjusted EBITDA was a loss of $4.4 million compared to positive $6.8 million last year [22][25] - The net loss for the third quarter was $36.1 million, compared to a net loss of $20.8 million last year, primarily due to a decrease in restaurant-level profit and increased impairment charges [25] Business Line Data and Key Metrics Changes - Performance was impacted by softer sales trends in the Northeast and Los Angeles markets, which together represent about 60% of the company's comp base [4] - The company experienced an 11.7% decrease in traffic, partially offset by a 2.2% benefit from menu price increases [22][23] Market Data and Key Metrics Changes - The 25 to 35 age group, which over-indexes for the company, showed lighter spending, contributing to the overall sales decline [4] - The Northeast and LA markets contributed approximately 800 basis points of negative comp compared to the rest of the fleet [34] Company Strategy and Development Direction - The company is implementing the "Sweet Growth Transformation Plan," focusing on operational excellence, brand relevance, food quality and menu innovation, personalized digital experience, and disciplined, profitable investment [5][14] - The company plans to open 17 new restaurants in Q4 and enter three new markets, with a total of 40 new restaurants expected to be completed by the end of 2025 [13][28] - A strategic decision was made to sell the Spice business unit to Wonder, expected to infuse the balance sheet with approximately $100 million in liquidity [16][26] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the headwinds from the current operating environment and emphasized the need for agility and focus in operations [4] - The company expects to see improvements in restaurant-level performance as turnover and retention continue to improve [8] - Management remains confident in the brand's resonance across markets and demographics, with a focus on combining creativity with greater discipline [18][19] Other Important Information - The company has launched a new protein-focused campaign to highlight the quality of its ingredients and is introducing a macros calculator in its digital experience [9][10] - The company is reviewing its menu and pricing architecture to strengthen its value proposition and create clear entry prices [11][30] Q&A Session Summary Question: Scope of menu and pricing architecture review - The company is evaluating pricing ladders and new entry points, with opportunities for different price points and better communication of value [30][31] Question: Current environment and consumer demand - The company has seen a step down in sales, particularly among the 25 to 35 age group, with declines noted in dinner sales [34] Question: Impact of the infinite kitchen agreement - The agreement with Wonder is expected to reduce G&A by about $8 million and allow the company to focus on customer experience while maintaining technology costs [35] Question: Net cash proceeds from the Spice sale - The company is still assessing the tax implications but does not expect material tax costs from the sale [40] Question: Update on loyalty program - The loyalty program has seen continued activations and frequency increases, with plans to leverage data for personalized offers [45] Question: Drivers of restaurant-level margin decline - The decline is attributed to sales deleverage and increased protein costs, with plans to offset these through supply chain initiatives [46]

Core Insights - Sweetgreen missed Wall Street's revenue expectations in Q3 CY2025, reporting flat year-on-year sales of $172.4 million, which was a 3.1% miss compared to analyst estimates of $177.9 million [7][8] - The company's full-year revenue guidance was lowered to $685 million at the midpoint, which is 2.5% below analysts' estimates and represents a 3.2% decrease from the previous guidance of $707.5 million [8] - Sweetgreen's GAAP loss of $0.31 per share was significantly below analysts' consensus estimates, missing by 76.2% [8] Company Overview - Founded in 2007 by three Georgetown University alumni, Sweetgreen is a casual quick service chain known for its healthy salads and bowls [3] Revenue Performance - Sweetgreen's revenue over the past 12 months stands at $685.2 million, indicating it is a small restaurant chain that faces disadvantages compared to larger competitors but has potential for faster growth due to more opportunities for new restaurant openings [5] - The company experienced a 17% compounded annual growth rate in sales over the last six years, normalizing for COVID-19 impacts, driven by new restaurant openings and increased sales at established locations [6] - In Q3 CY2025, Sweetgreen reported a 0.6% year-on-year revenue decline, with same-store sales falling 9.5% compared to a 6% decline in the same quarter last year [7][8] Financial Metrics - Adjusted EBITDA for the quarter was -$4.36 million, significantly missing analyst estimates of $3.99 million, resulting in a -2.5% margin [8] - The operating margin for the quarter was -21%, down from -12.2% in the same quarter last year [8] - Market capitalization is reported at $764.8 million [8] Future Outlook - Sell-side analysts project revenue growth of 16% over the next 12 months, which aligns with Sweetgreen's historical growth rate despite the recent slowdown [9]

Financial Performance - Total revenue for Q3 2025 was $172.4 million, a decrease of 0.6% compared to Q3 2024[5] - Net loss for Q3 2025 was $(36.1) million, compared to $(20.8) million in the prior year, with a net loss margin of (21.0)%[9] - Adjusted EBITDA was $(4.4) million, a decline from $6.8 million in the prior year, with an Adjusted EBITDA Margin of (2.5)%[10] - For the thirty-nine weeks ended September 28, 2025, revenue increased to $524.3 million, up 1.5% from $515.9 million in the same period of 2024[35] - Net loss for the thirty-nine weeks ended September 28, 2025, was $84,343,000, compared to a net loss of $61,343,000 for the same period in 2024, representing a 37.5% increase in losses[37] Sales and Traffic - Same-Store Sales Change was (9.5)%, down from a positive 5.6% in the prior year period, reflecting an 11.7% decrease in traffic[6] - Same-Store Sales Change for the thirteen weeks ended September 28, 2025, was -9.5%, compared to a positive change of 5.6% in the same period of 2024[39] Profitability Metrics - Restaurant-Level Profit was $22.5 million, with a margin of 13.1%, down from $34.9 million and 20.1% in the prior year[5] - Restaurant-Level Profit for the thirty-nine weeks ended September 28, 2025, was $87,326,000, down from $104,997,000 in the same period of 2024, reflecting a decrease of 16.9%[40] - Loss from operations for the thirteen weeks ended September 28, 2025, was $(36,274,000), compared to $(21,175,000) for the same period in 2024, marking a 71.5% increase in operational losses[40] Expenses - General and administrative expenses were $30.9 million, or 17.9% of revenue, down from $36.8 million, or 21.2% of revenue in the prior year[8] - Total restaurant operating costs for the same period were $149.9 million, representing 86.9% of revenue, up from 79.9% in the prior year[32] - The total operating expenses for the thirty-nine weeks ended September 28, 2025, were $178.6 million, which is 34.1% of revenue, compared to 32.8% in the prior year[35] Digital Revenue - Total Digital Revenue Percentage increased to 61.8%, with Owned Digital Revenue Percentage at 35.3%, up from 55.1% and 29.2% respectively in the prior year[5] - Total Digital Revenue Percentage increased to 61.8% for the thirteen weeks ended September 28, 2025, up from 55.1% in the same period of 2024[39] Future Plans - The company plans to open 15-20 new restaurants in fiscal year 2026, with about half featuring Infinite Kitchen units[11] - The company opened 20 new restaurants in the thirty-nine weeks ended September 28, 2025, compared to 15 new openings in the same period of 2024, reflecting a 33.3% increase in expansion[39] Cash Flow and Assets - Cash and cash equivalents decreased to $130.0 million as of September 28, 2025, from $214.8 million at the end of 2024[30] - The company had total assets of $824.8 million as of September 28, 2025, down from $856.8 million at the end of 2024[30] - Net cash used in operating activities for the thirty-nine weeks ended September 28, 2025, was $(4,042,000), a significant decline from $37,271,000 provided in the same period of 2024[37] - Net cash used in investing activities for the thirty-nine weeks ended September 28, 2025, was $(82,033,000), compared to $(63,199,000) in the same period of 2024, indicating a 29.8% increase in cash outflow[37] Company Position - Sweetgreen's accumulated deficit increased to $959.7 million as of September 28, 2025, compared to $875.4 million at the end of 2024[30] - Sweetgreen's restaurant-level profit margin and adjusted EBITDA are not directly indicative of overall company performance due to various exclusions in their calculations[27] - The company continues to focus on building a transparent supply chain and investing in local farmers to enhance community engagement and operational efficiency[26]

Core Insights - Sweetgreen is selling its automated kitchen technology, Spyce, to Wonder for $186.4 million to address significant consumer pullback and financial losses [3][8] - The company reported a loss of $36 million in Q3, with negative margins of 21%, indicating a decline in same-store sales over the past three quarters [3][8] - The sale will allow Sweetgreen to continue using the Infinite Kitchen technology in its restaurants, which is crucial for its growth strategy [6][8] Financial Performance - Sweetgreen experienced a significant contraction in same-store sales in Q2 and Q3, leading to a total loss of $36 million in Q3 [3][8] - The company aims to reinvest the proceeds from the sale of Spyce to focus on growth and profitability after three consecutive quarters of declining sales [8] Strategic Moves - To mitigate financial challenges, Sweetgreen has reduced its workforce by 10% and discontinued the operationally complex Ripple Fries [4] - The Infinite Kitchen technology, acquired from Spyce for approximately $70 million in 2021, has been a key part of Sweetgreen's strategy for over four years [4][5] - Sweetgreen has established supply and licensing agreements with Spyce to ensure continued deployment of Infinite Kitchens across its restaurants [6] Industry Context - Wonder, the acquiring company, is rapidly scaling its operations and has made significant acquisitions, including Grubhub for $650 million and Blue Apron [7] - Wonder's strategy positions it as a tech-driven food platform, integrating robotics and infrastructure to enhance its service offerings [7]

Core Viewpoint - Sweetgreen's shares experienced a significant decline of 21.2% last month, driven by negative consumer sentiment and disappointing reports from industry peers like Chipotle Mexican Grill [2][6]. Company Performance - Sweetgreen's stock approached its all-time low of $6.10, previously reached in March 2023, amid a broader bear market following the pandemic [3]. - The stock's decline was exacerbated by Bank of America's downgrade from buy to neutral, with a revised price target lowered from $18 to $9.50, leading to a 3.8% drop on October 6 [4]. - Following a brief recovery on October 21, the stock fell again by 4% on October 28 due to consumer confidence hitting a six-month low, and by 9% on October 30 after Chipotle reported flat comparable-store sales [5]. Industry Context - The fast-casual dining sector is facing challenges as consumer spending among low-wage earners weakens, impacting chains like Sweetgreen that rely on younger office workers [4]. - The upcoming earnings report on November 6 is expected to show only a 2.5% revenue increase to $177.8 million, with adjusted losses per share projected to widen from $0.07 to $0.10 [8].

Core Insights - A potential restaurant recession is emerging, particularly affecting fast-casual dining, which has been popular among younger consumers [1][3] Industry Trends - Fast-casual chains, which offer higher-priced meals compared to fast food, are experiencing a decline in patronage from younger customers who are opting to eat at home more frequently [1][3][4] - Executives from major chains like Chipotle and Sweetgreen are reporting concerns over declining margins and weak traffic, indicating a broader trend affecting the industry [2][3] Consumer Behavior - Younger consumers are facing financial pressures, leading to reduced frequency of dining out, with many indicating plans to cut restaurant spending in the near future [3][4] - A survey revealed that over half of Gen Z respondents intend to decrease their restaurant expenditures over the next six months [4] Economic Context - The current economic climate is characterized by a weakening job market and increasing loan delinquencies, which are impacting consumer spending habits [3] - Lower-income consumers are also reducing their visits to restaurants, as evidenced by McDonald's reporting double-digit declines in visits from this demographic [6]

Core Viewpoint - Sweetgreen has faced significant challenges in 2023, with its stock down 77% amid broader market growth, particularly in AI stocks [1] Company Performance - Comparable sales for Sweetgreen have turned negative in the first half of 2023, impacted by wildfires in Los Angeles, a downturn in restaurant spending, and a transition in its loyalty program [2] - The company remains unprofitable, with second-quarter same-store sales falling 7.6%, compared to a 9.3% growth in the same quarter the previous year, and revenue increased only 0.5% to $185.6 million [3] - For the full year, Sweetgreen anticipates same-store sales to decline by 4% to 6% and adjusted EBITDA to be between $10 million and $15 million [4] Industry Context - The fast-casual sector is experiencing slower sales across the board, with other companies like Chipotle and Cava Group also reporting declines [5] - Inflation and a weak job market are leading consumers to reduce discretionary spending, including dining out [6] Loyalty Program Changes - Sweetgreen's switch from a tiered loyalty program to a points-based system has resulted in a 250-basis-point revenue headwind from high-frequency users of the old program, although early signs from the new program are described as "encouraging" [7] Pricing and Cost Control - The company faces pressure to lower prices and better manage costs due to frequent complaints about high price points [8] Market Position and Future Outlook - Sweetgreen's market cap has fallen to under $1 billion, with a price-to-sales ratio of 1.4, suggesting potential for significant returns if the company can achieve its growth targets [9][10] - The company aims to reach 1,000 restaurants by 2032, but must first return to same-store sales growth and improve profitability [10] - Upcoming third-quarter earnings report on November 6 could indicate signs of recovery, with easier comparisons in the second half of the year [11]

Company Performance - Sweetgreen, Inc. (SG) closed at $7.90, reflecting a -2.71% change from the previous day, underperforming the S&P 500's loss of 0.53% [1] - The stock has decreased by 2.64% over the past month, while the Retail-Wholesale sector has lost 2.98%, contrasting with the S&P 500's gain of 1.13% [1] Upcoming Earnings Report - Sweetgreen is set to release its earnings on November 6, 2025, with an expected EPS of -$0.18, indicating no change from the same quarter last year [2] - Revenue is projected to be $183.39 million, representing a 5.74% increase compared to the previous year [2] Annual Estimates - For the annual period, the Zacks Consensus Estimates predict an EPS of -$0.74 and revenue of $712.1 million, reflecting increases of +6.33% and +5.21% respectively from last year [3] - Recent changes to analyst estimates suggest a correlation with short-term business trends, with positive revisions indicating analyst optimism [3] Zacks Rank and Industry Performance - The Zacks Rank system, which evaluates estimate changes, currently assigns Sweetgreen a rank of 5 (Strong Sell), with the consensus EPS estimate having decreased by 7.86% in the past month [5] - The Retail - Restaurants industry, part of the Retail-Wholesale sector, holds a Zacks Industry Rank of 221, placing it in the bottom 11% of over 250 industries [6]