Think Sweetgreen Stock Can Provide Chipotle-esque Returns? Here's 1 Stat to Keep in Mind.

Core Insights - Sweetgreen is often compared to Chipotle as a potential investment opportunity in the restaurant sector, but it currently lacks profitability, which Chipotle achieved early in its history [2][4][10] - Sweetgreen has a smaller footprint with approximately 230 locations, yet it generates significant revenue, with trailing 12-month revenue of about $650 million [3] - The company has been able to increase same-store sales by 9% year over year, indicating strong customer demand despite recent price hikes [6] Financial Performance - Sweetgreen reported an operating loss of $16 million in Q2 2024, contrasting with Chipotle's profitability since 2004 [4] - Chipotle's revenue in 2004 was $471 million with an operating profit of $6 million, while Sweetgreen's general and administrative expenses as a percentage of revenue are more than double what Chipotle's were in 2004 [4][5] - Sweetgreen's restaurant-level profit margin was 22% in Q2, showcasing its operational efficiency at the restaurant level despite overall unprofitability [7] Growth Potential - Sweetgreen is experimenting with robotic automation technology called Infinite Kitchen, which has improved restaurant-level margins to 31% at its first location [8] - General and administrative expenses as a percentage of revenue have decreased from 45% in 2020 to 22% in 1H 2024, indicating effective cost management [9] - The company aims to expand to 1,000 locations by 2030, which is significantly less than Chipotle's long-term target of over 7,000 locations [11] Market Considerations - There may be limitations on consumer demand for a high-volume salad chain compared to burritos, raising questions about the long-term profitability potential of Sweetgreen [12] - While Sweetgreen presents a promising investment opportunity, it may not reach the same scale of profitability as Chipotle did when it went public [12]