Core Viewpoint - Sweetgreen's stock has faced significant declines in 2025 due to cooling growth and slipping profitability, making a rapid recovery to previous highs unlikely [2][3]. Financial Performance - Sweetgreen's Q2 revenue increased by only 0.5% year-over-year to $185.6 million, with a same-store sales decline of 7.6% driven by a 10.1% drop in traffic, partially offset by a 2.5% increase in menu pricing [5]. - Average unit volume (AUV) decreased from $2.9 million to $2.8 million [5]. - Restaurant-level profit margin fell to 18.9% from 22.5% year-over-year, and the company reported a net loss of $23.2 million, with adjusted EBITDA of $6.4 million, about half of the previous year's figure [6]. Future Guidance - Management expects fiscal 2025 revenue to be between $700 million and $715 million, a modest increase from approximately $677 million in the previous year [7]. - Full-year adjusted EBITDA is projected to be between $10 million and $15 million, down from $18.7 million in 2024 [8]. Comparison with Nvidia - The comparison to Nvidia is deemed unrealistic as the restaurant industry is capital-intensive and does not benefit from the same high gross margins and network effects seen in the tech sector [9][10]. - Sweetgreen's operating leverage is limited to the restaurant level and is contingent on same-store sales growth, which is currently negative [9]. Operational Challenges - Sweetgreen's automation initiatives, such as the "Infinite Kitchen," focus on cost reduction and throughput improvement rather than achieving software-like economics [10]. - The company faces intense competition in the fast-casual space, limiting its pricing power [10]. Potential Catalysts - Digital initiatives and a refreshed loyalty program may enhance customer visit frequency [11]. - Automation could support labor optimization and consistency, but current metrics indicate negative same-store sales and declining margins [11][12]. - Monitoring key metrics such as same-store sales, restaurant-level margins, and adjusted EBITDA will be crucial for assessing future stock performance [12].

Core Insights - The article does not provide specific company or industry insights, focusing instead on disclosures and disclaimers related to investment positions and advice [1][2] Group 1 - There are no stock, option, or similar derivative positions held by the analyst in any mentioned companies [1] - The article expresses personal opinions and is not compensated beyond Seeking Alpha [1] - The views may not reflect those of Seeking Alpha as a whole, and the analysts may not be licensed or certified [2]

Core Insights - The fast casual dining sector, particularly the "bowl brigade" consisting of Chipotle, Sweetgreen, and CAVA, is experiencing a significant downturn after a pandemic-era boom, with challenges in maintaining customer and investor interest [1][8]. Company Summaries Chipotle - Chipotle's stock has decreased by 27.8% year-to-date, with a 4% decline in same-store sales in Q2, which was worse than Wall Street's expectations, and nearly 5% drop in traffic [3][8]. - CEO Scott Boatwright attributed the decline to "ongoing volatility" in consumer trends and acknowledged that the company's value proposition is not resonating as it did previously. The company is introducing new menu items to regain momentum, but its guidance for the year is now flat [4][8]. Sweetgreen - Sweetgreen's stock has plummeted nearly 69.5% year-to-date, with same-store sales dropping 7.6% in Q2, leading to a second reduction in its full-year outlook [5][8]. - CEO Jonathan Neman highlighted issues with the loyalty program, tariff impacts, and inconsistent store performance, with only one-third of locations meeting targets. The company is implementing an operations overhaul called "Project One Best Way" to address these challenges, but recovery appears difficult [6][8]. CAVA - CAVA's stock has fallen approximately 37.5% year-to-date, with a modest 2.1% increase in same-store sales, which fell short of the 6.25% expected by analysts. The company has also revised its full-year forecast downward [7][8]. - CFO Tricia Tolivar mentioned a "fog for consumers" in the current macroeconomic environment as a key challenge [7][8]. Competitive Landscape - The current competition among these companies revolves around reestablishing value and retaining customer loyalty amid economic challenges. CAVA's slight positive sales growth positions it as the best performer among the three, although this is not a strong advantage given the overall decline in the sector [8].

Core Viewpoint - The recent sell-off in growth stocks presents a timely investment opportunity for long-term investors, despite market volatility [1][2]. Amazon - Amazon's stock dropped 8.5% despite reporting strong second-quarter results for 2025, with sales growth of 13% year over year, reaching $167.7 billion [4][5]. - Operating income surged to $19.2 billion, up from $14.7 billion last year, but the outlook for operating margin fell slightly below expectations, causing market concern [6]. - Amazon Web Services (AWS) sales increased by 17.5% year over year, but growth lagged behind competitors Microsoft Azure and Alphabet [7]. - CEO Andy Jassy indicated challenges in meeting AI demand, which could lead clients to seek alternatives, but high demand could benefit Amazon in the long run [8]. - The stock's decline is viewed as an overcorrection, presenting a buying opportunity as it begins to recover [9]. Dutch Bros - Dutch Bros stock is down 33% from its 52-week high, but the company is positioned for significant growth in the specialty beverage market [10][14]. - Analysts project a compound annual revenue growth rate of 23% over the next few years, supported by ongoing shop openings and sales trends [11]. - The company is outperforming Starbucks, with a focus on internal promotions for shop managers, enhancing consistency across locations [12]. - Dutch Bros is popular among Gen Z, leveraging a fun atmosphere and customer engagement strategies to build loyalty [13]. Sweetgreen - Sweetgreen's stock has declined 77% from its all-time high, with a year-to-date drop of 61%, attributed to broader industry challenges [15]. - The company reported a 3.1% decline in same-store sales and a 5.4% revenue increase in its first quarter, while remaining unprofitable [16]. - Sweetgreen's investment in the Infinite Kitchen program aims to enhance efficiency and sales, potentially leading to long-term profitability [17]. - The company plans to open at least 1,000 stores, indicating a long growth runway ahead, with expectations for improved sales comparisons in the second half of the year [18].

Financial Performance - For the quarter ended June 2025, Sweetgreen, Inc. reported revenue of $185.58 million, which is an increase of 0.5% year-over-year [1] - The earnings per share (EPS) was -$0.20, compared to -$0.13 in the same quarter last year [1] - The reported revenue was a surprise of -3.11% compared to the Zacks Consensus Estimate of $191.54 million [1] - The EPS surprise was -66.67% against the consensus estimate of -$0.12 [1] Key Metrics - Same-store sales decreased by 7.6%, which was worse than the five-analyst average estimate of -5.3% [4] - The number of ending restaurants was 260, slightly above the five-analyst average estimate of 256 [4] - New restaurant openings totaled 9, exceeding the average estimate of 5 based on four analysts [4] Stock Performance - Sweetgreen's shares have returned -7.7% over the past month, while the Zacks S&P 500 composite increased by 1.9% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Core Viewpoint - Sweetgreen reported disappointing earnings, leading to a significant drop in its stock price, as investors reacted negatively to the company's performance and outlook [1][3]. Financial Performance - Same-store sales declined by 7.6% in the quarter, contrasting with a 9.3% increase the previous year [3]. - Overall revenue increased by only 0.5% to $185.6 million, falling short of estimates of $191.8 million [3]. - Adjusted EBITDA decreased from $12.4 million to $6.4 million, while the loss per share widened from $0.13 to $0.20, significantly worse than the expected loss of $0.05 [4]. Management Commentary - CEO Jonathan Niman expressed dissatisfaction with the results but remained optimistic about improvements in the latter half of 2025, citing early positive signs from a new loyalty program and a summer menu designed to attract customers [5]. Future Guidance - Management anticipates a same-store sales decline of 4%-6% for the full year, with projected revenue between $700 million and $715 million, which is below the consensus estimate of $713.8 million and indicates less than 5% growth at the midpoint [5]. - The company plans to open 40 new restaurants this year, but it must enhance profitability and return to comparable sales growth for stock recovery [6].

Core Viewpoint - Sweetgreen's stock price plummeted over 27% to $9.17 following the company's second downward revision of its 2025 performance guidance in less than three months, citing multiple challenges including loyalty program adjustments, weak consumer confidence, tariff impacts, and operational issues [1] Financial Performance - The company now expects 2025 fiscal year revenue to be between $700 million and $715 million, significantly lower than the previous forecast of $740 million to $760 million made in May, and $760 million to $780 million in February [1] - Same-store sales are projected to decline by 4% to 6%, contrasting with earlier expectations of single-digit growth [1] - The restaurant-level profit margin for 2025 is anticipated to be 200 basis points lower than the May forecast, with tariff impacts accounting for approximately 40 basis points [1] Management Commentary - CEO Jonathan Neman described the current quarter as "very, very difficult," attributing poor performance to both external environmental factors and internal execution issues, including cautious consumer spending since April and the high baseline effect from last year's steak product launch [1] - The transformation of the loyalty program at the beginning of the quarter has also contributed to the challenges faced [1]

Core Viewpoint - Sweetgreen's shares fell over 25% after the company revised its 2025 revenue outlook downward for the second consecutive quarter, attributing the decline to issues with its loyalty program, weak consumer sentiment, tariff impacts, and operational challenges [1][2]. Revenue and Sales Outlook - For the full year 2025, Sweetgreen now anticipates revenue between $700 million and $715 million, a decrease from previous estimates of $740 million to $760 million in May and $760 million to $780 million in February [1]. - The company projects negative same-store sales for the year, estimating a decline of 4% to 6%, down from an initial expectation of single-digit growth [2]. Financial Performance - Sweetgreen reported a second-quarter loss of $0.20 per share, worse than the expected loss of $0.12, with revenue of $186 million compared to the estimate of $192 million [2]. - Same-store sales fell by 7.6% in the quarter, contrasting with a 9.3% increase in the same quarter last year, and analysts had anticipated a decline of 5.5% [3]. Loyalty Program Impact - The transition from the Sweetgreen+ subscription to the new SG Rewards program resulted in a 250 basis-point headwind to same-store sales in the second quarter [4]. - The company experienced a revenue decline from a small but frequent cohort of Sweetgreen+ customers, although management believes this impact will be temporary [4]. Operational Focus - Company leadership is prioritizing improvements in customer satisfaction and store operations, with only one-third of restaurants meeting performance standards [5]. - The new COO, Jason Cochran, is expected to lead initiatives aimed at enhancing operational efficiency through a program called Project One Best Way, which focuses on improving speed, food standards, and portion sizes [5]. Consumer Sentiment - Ongoing pressure on consumer spending has been more prolonged than anticipated, contributing to the company's performance challenges [6]. - Management noted that the overall consumer sentiment is not favorable, impacting sales and growth [6].

Part I Financial Information This section presents the company's financial statements, management's discussion, market risks, and internal controls [Item 1. Financial Statements](index=6&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed consolidated financial statements of Sweetgreen, Inc. and its subsidiaries, including the balance sheets, statements of operations, stockholders' (deficit) equity, and cash flows, along with detailed notes explaining the company's business, accounting policies, revenue recognition, fair value measurements, property and equipment, intangible assets, accrued expenses, debt, leases, common stock, stock-based compensation, income taxes, net loss per share, related-party transactions, commitments, contingencies, and reportable segment information [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This statement provides a snapshot of the company's assets, liabilities, and equity at specific points in time Condensed Consolidated Balance Sheets (in thousands) | (in thousands) | As of June 29, 2025 | As of December 29, 2024 | | :--------------------------------- | :-------------------- | :---------------------- | | **ASSETS** | | | | Cash and cash equivalents | $168,452 | $214,789 | | Total current assets | $190,326 | $234,537 | | Total assets | $831,883 | $856,758 | | **LIABILITIES** | | | | Total current liabilities | $104,461 | $115,827 | | Total liabilities | $408,585 | $410,613 | | **STOCKHOLDERS' EQUITY** | | | | Total stockholders' equity | $423,298 | $446,145 | [Condensed Consolidated Statements of Operations](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) This statement details the company's revenues, expenses, and net loss over specific reporting periods Condensed Consolidated Statements of Operations (in thousands, except per share) | (in thousands, except per share) | Thirteen weeks ended June 29, 2025 | Thirteen weeks ended June 30, 2024 | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :------------------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Revenue | $185,583 | $184,641 | $351,887 | $342,491 | | Total restaurant operating costs | $150,458 | $143,122 | $287,075 | $272,435 | | Total operating expenses | $61,548 | $57,703 | $119,772 | $113,155 | | Loss from operations | $(26,423) | $(16,184) | $(54,960) | $(43,099) | | Net loss | $(23,158) | $(14,460) | $(48,197) | $(40,527) | | Net loss per share basic and diluted | $(0.20) | $(0.13) | $(0.41) | $(0.36) | [Condensed Consolidated Statement of Stockholders' (Deficit) Equity](index=8&type=section&id=Condensed%20Consolidated%20Statement%20of%20Stockholders'%20(Deficit)%20Equity) This statement tracks changes in the company's equity, including net loss and stock-based compensation - The company's total stockholders' equity decreased from **$446,145 thousand** as of December 29, 2024, to **$423,298 thousand** as of June 29, 2025, primarily due to a net loss of **$48,197 thousand** during the twenty-six weeks ended June 29, 2025[28](index=28&type=chunk) - Additional paid-in capital increased by **$25,349 thousand** for the twenty-six weeks ended June 29, 2025, driven by stock-based compensation expense (**$18,221 thousand**), exercise of stock options (**$2,678 thousand**), and issuance of common stock related to Spyce milestone achievement (**$4,709 thousand**)[28](index=28&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=10&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This statement summarizes the cash inflows and outflows from operating, investing, and financing activities Condensed Consolidated Statements of Cash Flows (in thousands) | (in thousands) | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | | Net cash (used in) provided by operating activities | $(2,665) | $22,542 | | Net cash used in investing activities | $(44,533) | $(36,275) | | Net cash provided by financing activities | $2,420 | $1,536 | | Net decrease in cash and cash equivalents and restricted cash | $(44,778) | $(12,197) | [Notes to the Condensed Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed explanations and disclosures supporting the condensed consolidated financial statements [1. Description of Business and Summary of Significant Accounting Policies](index=11&type=section&id=1.%20DESCRIPTION%20OF%20BUSINESS%20AND%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This note describes the company's operations and outlines the key accounting principles applied in its financial reporting - Sweetgreen, Inc. operates **260 restaurants** in 22 states and Washington, D.C. as of June 29, 2025, with **9 and 14 Net New Restaurant Openings** during the thirteen and twenty-six weeks ended June 29, 2025, respectively[32](index=32&type=chunk) Cash, Cash Equivalents and Restricted Cash Reconciliation (dollar amounts in thousands) | (dollar amounts in thousands) | As of June 29, 2025 | As of December 29, 2024 | | :---------------------------------------------------------------- | :------------------ | :---------------------- | | Cash and cash equivalents | $168,452 | $214,789 | | Restricted cash, noncurrent | $4,199 | $2,640 | | Total cash, cash equivalents and restricted cash shown on statement of cash flows | $172,651 | $217,429 | - The company is evaluating the impact of new accounting pronouncements: ASU No. 2023-09 (Income Tax Disclosures, effective after Dec 15, 2024) and ASU No. 2024-03 (Disaggregation of Income Statement Expenses, effective after Dec 15, 2026)[41](index=41&type=chunk)[42](index=42&type=chunk) [2. Revenue Recognition](index=12&type=section&id=2.%20REVENUE%20RECOGNITION) This note details the company's policies for recognizing revenue from various channels and loyalty programs Revenue by Channel (dollar amounts in thousands) | (dollar amounts in thousands) | Thirteen weeks ended June 29, 2025 | Thirteen weeks ended June 30, 2024 | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :-------------------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Owned Digital Channels | $62,053 | $56,348 | $115,037 | $108,160 | | In-Store Channel (Non-Digital component) | $72,823 | $81,760 | $139,529 | $146,687 | | Marketplace Channel | $50,707 | $46,533 | $97,321 | $87,644 | | Total Revenue | $185,583 | $184,641 | $351,887 | $342,491 | - The company launched its new SG Rewards loyalty program nationwide in Q2 fiscal 2025, allowing customers to earn points for digital and in-store purchases, which can be redeemed for free or discounted menu items[45](index=45&type=chunk) Gift Card and Loyalty Liability (dollar amounts in thousands) | (dollar amounts in thousands) | As of June 29, 2025 | As of December 29, 2024 | | :-------------------- | :------------------ | :---------------------- | | Gift Card Liability | $5,012 | $4,385 | | Loyalty Liability | $1,260 | $0 | [3. Fair Value](index=13&type=section&id=3.%20FAIR%20VALUE) This note explains the company's fair value measurements, including contingent consideration and impairment charges Contingent Consideration Fair Value (dollar amounts in thousands) | (dollar amounts in thousands) | As of June 29, 2025 | As of December 29, 2024 | | :---------------------------- | :------------------ | :---------------------- | | Contingent consideration | $4,637 | $14,974 | - The second milestone for the Spyce acquisition was achieved in Q2 fiscal 2025, resulting in a **$7.0 million payment** to former equity holders, comprising **$4.7 million** in Class A common stock and **$2.3 million** in cash[51](index=51&type=chunk) - For the thirteen and twenty-six weeks ended June 29, 2025, the company recorded non-cash impairment charges of **$5.3 million** related to five store locations, with **$3.7 million** for property and equipment and **$1.6 million** for operating lease assets[55](index=55&type=chunk) [4. Property and Equipment](index=15&type=section&id=4.%20PROPERTY%20AND%20EQUIPMENT) This note provides details on the company's property and equipment, including depreciation and construction in progress Property and Equipment, Net (dollar amounts in thousands) | (dollar amounts in thousands) | As of June 29, 2025 | As of December 29, 2024 | | :---------------------------- | :------------------ | :---------------------- | | Total property and equipment | $573,864 | $535,897 | | Less: accumulated depreciation | $(269,068) | $(239,412) | | Property and equipment, net | $304,796 | $296,485 | - Depreciation expense for the thirteen weeks ended June 29, 2025, was **$15.3 million** (vs. **$14.0 million** in 2024), and for the twenty-six weeks, it was **$29.7 million** (vs. **$27.6 million** in 2024)[58](index=58&type=chunk)[59](index=59&type=chunk) - As of June 29, 2025, **16 facilities** were under construction, expected to open in fiscal year 2025[59](index=59&type=chunk) [5. Goodwill and Intangible Assets, Net](index=16&type=section&id=5.%20GOODWILL%20AND%20INTANGIBLE%20ASSETS,%20NET) This note outlines the company's goodwill and intangible assets, along with their amortization - Goodwill remained unchanged at **$36.0 million** during the twenty-six weeks ended June 29, 2025[61](index=61&type=chunk) Intangible Assets, Net (dollar amounts in thousands) | (dollar amounts in thousands) | As of June 29, 2025 | As of December 29, 2024 | | :---------------------------- | :------------------ | :---------------------- | | Internal use software | $50,052 | $45,933 | | Developed technology | $20,050 | $20,050 | | Total intangible assets | $70,102 | $65,983 | | Accumulated amortization | $(47,386) | $(41,943) | | Intangible assets, net | $22,716 | $24,040 | - Amortization expense for intangible assets was **$2.7 million** for the thirteen weeks ended June 29, 2025 (vs. **$2.8 million** in 2024) and **$5.4 million** for the twenty-six weeks (vs. **$5.5 million** in 2024)[62](index=62&type=chunk) [6. Accrued Expenses](index=16&type=section&id=6.%20ACCRUED%20EXPENSES) This note breaks down the components of the company's accrued expenses Accrued Expenses Breakdown (dollar amounts in thousands) | (dollar amounts in thousands) | As of June 29, 2025 | As of December 29, 2024 | | :---------------------------- | :------------------ | :---------------------- | | Accrued general and sales tax | $6,581 | $4,625 | | Fixed asset accrual | $5,375 | $5,983 | | Accrued settlements and legal fees | $1,595 | $3,529 | | Other accrued expenses | $12,325 | $10,237 | | Total accrued expenses | $28,221 | $26,564 | [7. Debt](index=16&type=section&id=7.%20DEBT) This note describes the company's debt arrangements, including the expiration of its credit facility - The company's Credit Facility with EagleBank, which allowed borrowing up to **$45.0 million**, expired on December 13, 2024, and was not renewed[64](index=64&type=chunk) [8. Leases](index=16&type=section&id=8.%20LEASES) This note details the company's operating lease commitments, costs, and future payment obligations Total Lease Cost (dollar amounts in thousands) | (dollar amounts in thousands) | Thirteen weeks ended June 29, 2025 | Thirteen weeks ended June 30, 2024 | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :---------------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Operating lease cost | $14,306 | $12,766 | $28,030 | $25,148 | | Variable lease cost | $3,615 | $3,329 | $6,753 | $6,276 | | Short term lease cost | $135 | $116 | $214 | $230 | | Total lease cost | $18,056 | $16,211 | $34,997 | $31,654 | Future Minimum Lease Payments for Operating Leases (as of June 29, 2025) (dollar amounts in thousands) | (dollar amounts in thousands) | Amount | | :---------------------------- | :-------- | | 2025 | $26,027 | | 2026 | $65,827 | | 2027 | $62,791 | | 2028 | $56,963 | | 2029 | $55,141 | | Thereafter | $173,502 | | Total | $440,251 | | Less: imputed interest | $101,519 | | Total lease liabilities | $338,732 | - The weighted average remaining lease term for operating leases as of June 29, 2025, was **7.26 years**, with a weighted average discount rate of **6.82%**[67](index=67&type=chunk) [9. Common Stock](index=18&type=section&id=9.%20COMMON%20STOCK) This note provides information on the company's common stock, including reserved shares for various plans Reserved Shares of Common Stock (shares) | (shares) | As of June 29, 2025 | As of December 29, 2024 | | :---------------------------------------------------------------------------------------------------- | :------------------ | :---------------------- | | Options outstanding under various plans | 13,792,250 | 13,169,869 | | Shares reserved for achievement of Spyce milestones | 250,000 | 500,000 | | Shares reserved for employee stock purchase plan | 4,111,331 | 4,111,331 | | RSUs and PSUs outstanding under various plans | 5,073,387 | 5,410,024 | | Shares available for future issuance under the 2021 Equity Incentive Plan | 7,391,440 | 8,516,216 | | Total reserved shares of common stock | 30,618,408 | 31,707,440 | [10. Stock-Based Compensation](index=18&type=section&id=10.%20STOCK-BASED%20COMPENSATION) This note explains the company's stock-based compensation plans and related expenses - The 2021 Equity Incentive Plan authorizes the issuance of up to **35,166,753 shares** of common stock, including new shares and shares from prior plans[71](index=71&type=chunk) - The ESPP share reserve was increased by **1,111,331 shares** to **4,111,331** on January 1, 2023, but the Board determined no increase for 2024 or 2025[77](index=77&type=chunk) Stock-Based Compensation Expense (dollar amounts in thousands) | (dollar amounts in thousands) | Thirteen weeks ended June 29, 2025 | Thirteen weeks ended June 30, 2024 | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :---------------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Stock-options | $3,193 | $2,957 | $5,811 | $5,294 | | Restricted stock units | $2,344 | $3,088 | $6,552 | $4,736 | | Performance stock units | $2,463 | $4,858 | $5,858 | $10,499 | | Total stock-based compensation | $8,000 | $10,903 | $18,221 | $20,529 | [11. Income Taxes](index=21&type=section&id=11.%20INCOME%20TAXES) This note details the company's income tax expense and Employee Retention Tax Credits - The company recorded **$0.1 million** in income tax expense for the thirteen weeks ended June 29, 2025, and **$0.2 million** for the twenty-six weeks, with no significant discrete items[88](index=88&type=chunk) - As of June 29, 2025, the company received **$5.0 million** in cash payments for Employee Retention Tax Credits (ERC), reducing the ERC receivable to **$2.1 million**[89](index=89&type=chunk) [12. Net Loss Per Share](index=21&type=section&id=12.%20NET%20LOSS%20PER%20SHARE) This note presents the calculation of basic and diluted net loss per common share Net Loss Per Common Share (dollar amounts in thousands) | (dollar amounts in thousands) | Thirteen weeks ended June 29, 2025 | Thirteen weeks ended June 30, 2024 | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :---------------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Net loss | $(23,158) | $(14,460) | $(48,197) | $(40,527) | | Weighted-average common shares outstanding—basic and diluted | 117,827,054 | 113,580,674 | 117,566,164 | 113,238,928 | | Earnings per share—basic and diluted | $(0.20) | $(0.13) | $(0.41) | $(0.36) | - Potentially dilutive securities, including stock options, RSUs, PSUs, and contingently issuable stock, were excluded from diluted net loss per share computation as their effect would be anti-dilutive[92](index=92&type=chunk) [13. Related-Party Transactions](index=22&type=section&id=13.%20RELATED-PARTY%20TRANSACTIONS) This note discloses transactions with related parties - Total payments to Welcome to the Dairy, LLC, a related party, were **$1.2 million** for the thirteen weeks ended June 29, 2025 (vs. **$1.1 million** in 2024) and **$2.7 million** for the twenty-six weeks (vs. **$2.1 million** in 2024)[93](index=93&type=chunk) [14. Commitments and Contingencies](index=22&type=section&id=14.%20COMMITMENTS%20AND%20CONTINGENCIES) This note outlines the company's various commitments and potential liabilities - The company is subject to various operating lease commitments, purchase obligations (mostly for restaurant supplies due within 12 months), and legal proceedings arising in the ordinary course of business[94](index=94&type=chunk)[96](index=96&type=chunk)[97](index=97&type=chunk) - Management does not believe the ultimate resolution of legal matters will materially affect the company's financial position, results of operations, liquidity, or capital resources[97](index=97&type=chunk) [15. Reportable Segment](index=23&type=section&id=15.%20REPORTABLE%20SEGMENT) This note identifies the company's single operating and reportable segment and its general and administrative expenses - The company operates as one operating and reportable segment, deriving revenue from retail sales of food and beverages by company-owned restaurants in the U.S[98](index=98&type=chunk) General and Administrative Expenses Breakdown (dollar amounts in thousands) | (dollar amounts in thousands) | Thirteen weeks ended June 29, 2025 | Thirteen weeks ended June 30, 2024 | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :---------------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Operating support center cost | $26,177 | $28,058 | $53,883 | $55,050 | | Stock-based compensation | $8,000 | $10,903 | $18,221 | $20,529 | | Other expenses | $328 | $241 | $738 | $488 | | Total General and administrative | $34,505 | $39,202 | $72,842 | $76,067 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=24&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Sweetgreen's business, factors influencing its performance, key performance metrics, and a detailed analysis of its financial condition and results of operations for the thirteen and twenty-six weeks ended June 29, 2025, compared to the prior year. It also discusses liquidity, capital resources, and critical accounting estimates [Overview](index=24&type=section&id=Overview) This section provides a high-level summary of the company's business and operational footprint - Sweetgreen is a mission-driven restaurant and lifestyle brand serving healthy food, operating **260 restaurants** across 22 states and Washington, D.C. as of June 29, 2025[104](index=104&type=chunk) [Factors Affecting Our Business](index=24&type=section&id=Factors%20Affecting%20Our%20Business) This section discusses external and internal factors that influence the company's operational and financial performance - The company plans to open at least **40 new restaurants** in fiscal year 2025, with at least **20** incorporating Infinite Kitchen units, as part of its expansion strategy[107](index=107&type=chunk) - Macroeconomic conditions, inflation, and supply chain constraints, including tariffs on imported bowls and plates, continue to impact consumer spending and operating costs. The company anticipates a **5% tariff-related increase** on new restaurant unit costs and Infinite Kitchen units[109](index=109&type=chunk)[112](index=112&type=chunk)[113](index=113&type=chunk)[114](index=114&type=chunk) - Revenue fluctuates due to seasonality, with lower sales in Q1 and Q4, and is impacted by changing consumer behavior (e.g., remote work) and extreme weather events[116](index=116&type=chunk) - A shift in sales towards Native Delivery, Outpost and Catering, and Marketplace Channels, which incur third-party fees, could negatively impact margins, although long-term margin improvement is expected with scale[117](index=117&type=chunk) [Key Performance Metrics and Non-GAAP Financial Measures](index=26&type=section&id=Key%20Performance%20Metrics%20and%20Non-GAAP%20Financial%20Measures) This section defines and presents the key operational and non-GAAP financial metrics used to evaluate the company's performance Key Performance Metrics (dollar amounts in thousands) | (dollar amounts in thousands) | Thirteen weeks ended June 29, 2025 | Thirteen weeks ended June 30, 2024 | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :---------------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Net New Restaurant Openings | 9 | 4 | 14 | 10 | | Average Unit Volume (as adjusted) | $2,831 | $2,925 | $2,831 | $2,925 | | Same-Store Sales Change (%) (as adjusted) | (7.6)% | 9.3 % | (5.5)% | 7.3 % | | Total Digital Revenue Percentage | 60.8 % | 55.7 % | 60.3 % | 57.2 % | | Owned Digital Revenue Percentage | 33.4 % | 30.5 % | 32.7 % | 31.6 % | - The company defines Restaurant-Level Profit as loss from operations adjusted for general and administrative expense, depreciation and amortization, pre-opening costs, loss on disposal of property and equipment, and certain impairment/restructuring charges[130](index=130&type=chunk) Restaurant-Level Profit and Margin (dollar amounts in thousands) | (dollar amounts in thousands) | Thirteen weeks ended June 29, 2025 | Thirteen weeks ended June 30, 2024 | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :---------------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Loss from operations | $(26,423) | $(16,184) | $(54,960) | $(43,099) | | Restaurant-Level Profit | $35,125 | $41,519 | $64,812 | $70,056 | | Loss from operations margin | (14.2)% | (8.8)% | (15.6)% | (12.6)% | | Restaurant-Level Profit Margin | 18.9 % | 22.5 % | 18.4 % | 20.5 % | Adjusted EBITDA and Margin (dollar amounts in thousands) | (dollar amounts in thousands) | Thirteen weeks ended June 29, 2025 | Thirteen weeks ended June 30, 2024 | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :---------------------------- | :--------------------------------- | :--------------------------------- | :----------------------------------- | :----------------------------------- | | Net loss | $(23,158) | $(14,460) | $(48,197) | $(40,527) | | Adjusted EBITDA | $6,415 | $12,357 | $6,699 | $12,470 | | Net loss margin | (12.5)% | (7.8)% | (13.7)% | (11.8)% | | Adjusted EBITDA Margin | 3.5 % | 6.7 % | 1.9 % | 3.6 % | [Components of Results of Operations](index=29&type=section&id=Components%20of%20Results%20of%20Operations) This section details the various revenue and expense categories that constitute the company's financial performance - Revenue recognition occurs at the point of sale, net of discounts, across Owned Digital, In-Store (Non-Digital), and Marketplace Channels. Loyalty program rewards and gift cards are recognized as revenue upon redemption[141](index=141&type=chunk)[144](index=144&type=chunk) - Restaurant operating costs (food, labor, occupancy, other) are expected to increase with new restaurant openings and revenue growth. Food costs are influenced by menu mix, commodity prices, and tariffs, while labor costs are affected by wage rates and market strength[146](index=146&type=chunk)[147](index=147&type=chunk)[148](index=148&type=chunk)[149](index=149&type=chunk) - Operating expenses include General and Administrative (expected to decrease as a percentage of revenue over time), Depreciation and Amortization (expected to increase with new restaurants and digital investments), Pre-Opening Costs (expected to increase with accelerated growth), Impairment and Closure Costs, Loss on Disposal of Property and Equipment, and Restructuring Charges[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk)[153](index=153&type=chunk)[154](index=154&type=chunk)[155](index=155&type=chunk) - Other expense (income) primarily reflects changes in the fair value of the contingent consideration liability from the Spyce acquisition[158](index=158&type=chunk) [Results of Operations](index=33&type=section&id=Results%20of%20Operations) This section provides a comparative analysis of the company's financial performance for the reported periods Revenue Performance (dollar amounts in thousands) | (dollar amounts in thousands) | June 29, 2025 (13 weeks) | June 30, 2024 (13 weeks) | % Change (13 weeks) | June 29, 2025 (26 weeks) | June 30, 2024 (26 weeks) | % Change (26 weeks) | | :---------------------------- | :----------------------- | :----------------------- | :------------------ | :----------------------- | :----------------------- | :------------------ | | Revenue | $185,583 | $184,641 | 0.5% | $351,887 | $342,491 | 2.7% | | Average Unit Volume | $2,831 | $2,925 | (3.2%) | $2,831 | $2,925 | (3.2%) | | Same-Store Sales Change | (7.6)% | 9.3% | (16.9%) | (5.5%) | 7.3 % | (12.8%) | - The **0.5% revenue increase** for the thirteen weeks ended June 29, 2025, was driven by **$14.5 million** from **33 Net New Restaurant Openings**, offset by a **$13.9 million decrease** in Comparable Restaurant Base revenue (**7.6% negative Same-Store Sales Change**, reflecting a **10.1% decrease** in traffic/product mix, partially offset by **2.5% menu price increases**)[163](index=163&type=chunk) - Food, beverage, and packaging costs as a percentage of revenue increased to **27.7%** for the thirteen weeks ended June 29, 2025 (from **27.0%**), primarily due to higher cost product mix and increased packaging costs from tariffs, partially offset by menu price increases[165](index=165&type=chunk)[167](index=167&type=chunk) - Labor and related expenses as a percentage of revenue increased to **27.5%** for the thirteen weeks ended June 29, 2025 (from **26.9%**), mainly due to deleverage from sales volume changes and wage rate increases, partially offset by labor optimization[169](index=169&type=chunk)[171](index=171&type=chunk) - General and administrative expenses decreased by **12.0%** for the thirteen weeks ended June 29, 2025, primarily due to a **$2.9 million decrease** in stock-based compensation and a **$1.8 million decrease** in management salary and bonus expense[177](index=177&type=chunk) - Pre-opening costs increased by **129.5%** for the thirteen weeks and **66.8%** for the twenty-six weeks ended June 29, 2025, reflecting the acceleration of new restaurant growth in fiscal year 2025[183](index=183&type=chunk) - Impairment and closure costs significantly increased to **$5.3 million** for the thirteen weeks and **$5.4 million** for the twenty-six weeks ended June 29, 2025, due to non-cash impairment charges on property, equipment, and operating lease assets for five restaurants[185](index=185&type=chunk) - Restructuring charges increased by **132.0%** for the thirteen weeks and **105.3%** for the twenty-six weeks ended June 29, 2025, primarily due to severance costs from workforce reductions and expenses related to vacating the former New York office space[186](index=186&type=chunk) - Net interest income decreased by **36.8%** for the thirteen weeks and **36.7%** for the twenty-six weeks ended June 29, 2025, mainly due to a lower cash balance and lower interest rates in money market accounts[189](index=189&type=chunk) - Other expense (income) shifted from an expense of **$909 thousand** to an income of **$1,635 thousand** for the thirteen weeks ended June 29, 2025, primarily due to changes in the fair value of the contingent consideration liability from the Spyce acquisition[190](index=190&type=chunk)[191](index=191&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) This section discusses the company's ability to generate and manage cash to meet its financial obligations and fund operations - As of June 29, 2025, cash and cash equivalents were **$168.5 million**, down from **$214.8 million** on December 29, 2024[193](index=193&type=chunk) - The company believes existing cash and cash equivalents, along with cash flow from operations, will be sufficient to fund operating lease obligations, capital expenditures, and working capital needs for at least the next 12 months[193](index=193&type=chunk) - Primary capital requirements include new restaurant development (including Infinite Kitchen deployment), customer experience improvements, marketing, working capital, and general corporate needs. Capital expenditures for the twenty-six weeks ended June 29, 2025, were **$40.3 million**[194](index=194&type=chunk)[197](index=197&type=chunk) - The prior credit facility expired on December 13, 2024, and was not renewed; the company currently has no outstanding debt[198](index=198&type=chunk) Cash Flows Summary (amounts in thousands) | (amounts in thousands) | Twenty-six weeks ended June 29, 2025 | Twenty-six weeks ended June 30, 2024 | | :------------------------------------------ | :----------------------------------- | :----------------------------------- | | Net cash (used in) provided by operating activities | $(2,665) | $22,542 | | Net cash used in investing activities | $(44,533) | $(36,275) | | Net cash provided by financing activities | $2,420 | $1,536 | | Net decrease in cash and cash equivalents and restricted cash | $(44,778) | $(12,197) | - Cash used in operating activities increased by **$25.2 million** for the twenty-six weeks ended June 29, 2025, primarily due to unfavorable working capital fluctuations and a **$2.3 million** Spyce milestone payment[202](index=202&type=chunk) - Cash used in investing activities increased by **$8.3 million** to **$44.5 million**, mainly due to purchases of property and equipment for new restaurants and Infinite Kitchen units, and intangible assets[203](index=203&type=chunk) [Critical Accounting Estimates](index=40&type=section&id=Critical%20Accounting%20Estimates) This section highlights the accounting estimates that require significant judgment and can materially impact financial results - There have been no material changes to the company's critical accounting estimates as described in its Annual Report on Form 10-K for the fiscal year ended December 29, 2024[206](index=206&type=chunk) [Recent Accounting Pronouncements](index=40&type=section&id=Recent%20Accounting%20Pronouncements) This section provides updates on new accounting standards and their potential impact on the company's financial statements - Refer to Note 1 of the condensed consolidated financial statements for details on recently adopted and issued accounting pronouncements not yet adopted[208](index=208&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=40&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section outlines the company's exposure to market risks, including commodity price risks, interest rate risk, effects of inflation, and macroeconomic risks. It states that there have been no material changes to these exposures since the last annual report - The company's primary market risks include commodity price risks, interest rate risk, effects of inflation, and macroeconomic risks, with no material changes since the fiscal year ended December 29, 2024[209](index=209&type=chunk) [Item 4. Controls and Procedures](index=41&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of the company's disclosure controls and procedures as of June 29, 2025, based on an evaluation by management, including the CEO and CFO. It also states that there were no material changes in internal control over financial reporting during the fiscal quarter - The company's disclosure controls and procedures were evaluated and deemed effective as of June 29, 2025[210](index=210&type=chunk) - No material changes to internal control over financial reporting occurred during the fiscal quarter ended June 29, 2025[212](index=212&type=chunk) Part II Other Information This section covers legal proceedings, risk factors, equity sales, defaults, and other miscellaneous disclosures [Item 1. Legal Proceedings](index=42&type=section&id=Item%201.%20Legal%20Proceedings) This section addresses the company's involvement in various claims, lawsuits, governmental investigations, and administrative proceedings that arise in the ordinary course of business. Management believes these matters will not have a material effect on the company's financial position, results of operations, liquidity, or capital resources - The company is subject to various legal proceedings in the ordinary course of business, but management does not anticipate a material adverse effect on its financial position or results[214](index=214&type=chunk) [Item 1A. Risk Factors](index=42&type=section&id=Item%201A.%20Risk%20Factors) This section highlights key risks impacting the company, including changes in food and supply costs, potential shortages, and the adverse effects of international supply chain tariffs. It emphasizes the company's reliance on a localized supplier network and the challenges of mitigating cost increases and supply disruptions - Profitability is sensitive to changes in food and supply costs, which can be impacted by commodity fluctuations, inflation, labor costs, and supply chain disruptions (e.g., avian influenza, extreme weather)[216](index=216&type=chunk)[217](index=217&type=chunk)[225](index=225&type=chunk) - The company's international supply chain, particularly for bowls and plates produced outside the U.S. (e.g., China), exposes it to tariffs and duties, which have increased costs and are expected to continue impacting food, beverage, packaging, and new restaurant build-out expenses[220](index=220&type=chunk)[226](index=226&type=chunk) - Reliance on localized and sometimes single regional distributors for fresh produce and grocery products, along with suppliers with low inventory levels, makes the supply chain vulnerable to disruptions and limits the ability to find substitutes[216](index=216&type=chunk)[219](index=219&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) This section reports the issuance of Class A common stock to former Spyce equity holders as part of a milestone payment, noting that these shares were exempt from registration under the Securities Act - On June 10, 2025, Sweetgreen issued **242,722 shares** of Class A common stock to former Spyce equity holders to satisfy the second milestone payment related to the Spyce acquisition[228](index=228&type=chunk) - This transaction was exempt from registration under the Securities Act, pursuant to Section 4(a)(2) or Regulation D[229](index=229&type=chunk) [Item 3. Defaults Upon Senior Securities](index=44&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section states that there were no defaults upon senior securities - There were no defaults upon senior securities[230](index=230&type=chunk) [Item 4. Mine Safety Disclosures](index=44&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This section indicates that mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the company[230](index=230&type=chunk) [Item 5. Other Information](index=44&type=section&id=Item%205.%20Other%20Information) This section reports that no director or officer adopted or terminated any Rule 10b5-1 trading arrangements during the fiscal quarter ended June 29, 2025 - No director or officer adopted or terminated any Rule 10b5-1 trading arrangements during the fiscal quarter ended June 29, 2025[232](index=232&type=chunk) [Item 6. Exhibits](index=45&type=section&id=Item%206.%20Exhibits) This section provides a list of exhibits included in or incorporated by reference into the Quarterly Report on Form 10-Q, detailing various corporate documents, employment agreements, certifications, and XBRL data files - The report includes exhibits such as the Amended and Restated Certificate of Incorporation and Bylaws, Separation Agreement, Executive Employment Agreement, and various certifications (31.1, 31.2, 32.1) and XBRL documents[233](index=233&type=chunk) Signatures This section confirms the official signing and submission of the report by the authorized financial officer - The report was signed on August 7, 2025, by Mitch Reback, Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer, and Duly Authorized Signatory) of SWEETGREEN, INC[238](index=238&type=chunk)

Core Viewpoint - Sweetgreen, Inc. reported a quarterly loss of $0.20 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.12, marking an earnings surprise of -66.67% [1][2] Financial Performance - The company posted revenues of $185.58 million for the quarter ended June 2025, missing the Zacks Consensus Estimate by 3.11% and showing a slight increase from $184.64 million a year ago [2] - Over the last four quarters, Sweetgreen has not surpassed consensus EPS estimates and has topped revenue estimates only once [2] Stock Performance - Sweetgreen shares have declined approximately 61.6% since the beginning of the year, contrasting with the S&P 500's gain of 7.9% [3] - The current Zacks Rank for Sweetgreen is 4 (Sell), indicating expected underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.14 on revenues of $193.25 million, and for the current fiscal year, it is -$0.65 on revenues of $739.04 million [7] - The trend of estimate revisions for Sweetgreen has been unfavorable leading up to the earnings release [6] Industry Context - The Retail - Restaurants industry, to which Sweetgreen belongs, is currently ranked in the bottom 31% 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]