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Sweetgreen, Inc. (SG)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 revenue of $166.3M was at the high end of company guidance and above Wall Street consensus; same‑store sales fell 3.1% on traffic/mix, partially offset by pricing, while restaurant‑level margin held at 17.9% .
  • EPS loss per share was $(0.21) GAAP; Adjusted EBITDA of $0.3M exceeded company’s Q1 guide ($(3)M to $(1)M) and topped consensus “Primary EPS,” but S&P Global EBITDA (GAAP) came in below consensus due to definitional differences and non‑GAAP adjustments .
  • Management lowered FY25 guidance (revenue $740–$760M, SSS ≈ flat, RLP margin ≈19.5%, Adjusted EBITDA ≈$30M) amid April mid‑single‑digit comp softness, macro headwinds, and tariff effects on packaging/build‑out/IK components .
  • Strategic catalysts: SG Rewards launched in April with strong adoption (≈20k new digital customers per week), Ripple Fries drove March attachment/ticket, and the KBBQ collaboration aims to reaccelerate traffic; Infinite Kitchen and Sweetlane continue to show margin/return advantages .

What Went Well and What Went Wrong

What Went Well

  • Restaurant‑level margin of 17.9% was delivered “ahead of our guidance range despite external headwinds,” supported by ingredient optimization and labor efficiencies .
  • Strong operational and economic performance of Infinite Kitchen and Sweetlane, with Schaumburg Sweetlane comps >20% YoY, AUV and margin above fleet average, and accretive returns even under current tariff assumptions .
  • Loyalty and menu innovation: SG Rewards launched nationwide with ~20k new digital customers per week; Ripple Fries became the most attached side and lifted ticket averages; KBBQ collaboration targets new flavor discovery and frequency .

What Went Wrong

  • Same‑store sales declined (3.1%) from a 6.5% drop in traffic/mix, partly offset by +3.4% pricing; loss from operations margin ticked to (17.2)% and net loss remained sizeable at $(25.0)M .
  • April trends turned mid‑single‑digit negative, breaking historical seasonal patterns; macro softness in key markets (NY, Boston, LA) and DC weakness added pressure .
  • Tariff impacts: ~75 bps headwind in Q2 (packaging from China), expected ~40 bps in H2; ~10% build‑out cost inflation per unit late in 2025; ~15% of IK components sourced from China, though 10 IKs on hand mitigate near‑term impact .

Financial Results

Multi‑Quarter Trend (older → newer)

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Millions)$173.431 $160.904 $166.304
Loss from Operations ($USD Millions)$(21.175) $(31.430) $(28.537)
Loss from Operations Margin (%)(12)% (20)% (17.2)%
Restaurant‑Level Profit ($USD Millions)$34.941 $27.952 $29.687
Restaurant‑Level Profit Margin (%)20% 17% 17.9%
Net Loss ($USD Millions)$(20.816) $(29.030) $(25.039)
Net Loss Margin (%)(12)% (18)% (15.1)%
Net Loss per Share ($)$(0.18) $(0.25) $(0.21)
Adjusted EBITDA ($USD Millions)$6.810 $(0.573) $0.285
Adjusted EBITDA Margin (%)4% 0% 0.2%
Same‑Store Sales Change (%)6% 4% (3.1)%
AUV ($USD Millions)$2.907 $2.924 $2.907
Total Digital Revenue (%)55% 56% 59.9%
Owned Digital Revenue (%)29% 29% 31.9%

Year‑over‑Year (older → newer)

MetricQ1 2024Q1 2025
Revenue ($USD Millions)$157.850 $166.304
Loss from Operations ($USD Millions)$(26.915) $(28.537)
Loss from Operations Margin (%)(17.1)% (17.2)%
Restaurant‑Level Profit ($USD Millions)$28.537 $29.687
Restaurant‑Level Profit Margin (%)18.1% 17.9%
Net Loss ($USD Millions)$(26.067) $(25.039)
Net Loss Margin (%)(16.5)% (15.1)%
Net Loss per Share ($)$(0.23) $(0.21)
Adjusted EBITDA ($USD Millions)$0.113 $0.285
Adjusted EBITDA Margin (%)0.1% 0.2%
Same‑Store Sales Change (%)5.0% (3.1)%
AUV ($USD Millions)$2.889 $2.907
Total Digital Revenue (%)58.9% 59.9%
Owned Digital Revenue (%)32.8% 31.9%

KPIs (Q1 2025 details)

  • Mix/traffic: SSS (3.1)% from 6.5% decline in traffic and mix, offset by +3.4% pricing .
  • Net new restaurants: 5 in Q1; ending restaurants 251; Q1 class margin 18.3% for 2024 openings .
  • Cash and equivalents: $183.9M at quarter end (balance sheet) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net New Restaurant OpeningsFY 2025At least 40; 20 with Infinite Kitchen At least 40; 20 with Infinite Kitchen Maintained
Revenue ($USD Millions)FY 2025$760–$780 $740–$760 Lowered
Same‑Store Sales Change (%)FY 20251%–3% ≈ flat Lowered
Restaurant‑Level Profit Margin (%)FY 202519.8%–20.5% ≈19.5% Lowered
Adjusted EBITDA ($USD Millions)FY 2025$32–$38 ≈$30 Lowered
Pricing AssumptionsFY 2025Not specifiedNo additional price increases planned Clarified
Pipeline TimingFY 2025Not specified~30 of 40 openings in H2 New disclosure

Earnings Call Themes & Trends

TopicQ3 2024 (older)Q4 2024 (prior)Q1 2025 (current)Trend
Menu innovationSeasonal ingredients and broader menu drove +6% SSS; strong restaurant‑level margin Outlook included more menu innovation, paid media in 2025 Ripple Fries lifted March attachment/tickets; KBBQ collaboration launching to drive traffic Sustained focus; leaning harder into bold flavors/LTOs
Loyalty/digitalStrong digital mix; Owned digital % down YoY Announced new loyalty program for 2025 SG Rewards launched; ~20k new digital customers/week; early access for KBBQ Accelerating owned digital engagement
Infinite Kitchen (IK)Deployment performing well; efficiency and margin benefits Continued deployment embedded in 2025 plan IK shows strong efficiency/consistency; tariff component exposure ~15%; returns remain accretive Continued expansion; ROIC durable despite tariffs
SweetlaneNot highlightedNot highlightedSchaumburg comps >20% YoY; strong cash‑on‑cash returns; pipeline adds 2 in 2025 Emerging format lever
Macro/tariffsNot highlightedOutlook raised despite 2024 macro April mid‑single‑digit comp decline; tariffs ~75 bps in Q2, ~40 bps H2; build‑out +~10% late 2025 Near‑term headwinds; mitigation plan underway
Workforce/AI opsNot highlightedNot highlightedAI workforce scheduling rolled out; weekly hours up ~10%, absentee down ~50%; COO hire to tighten standards Execution focus improving
Geographic trendsNot highlightedNot highlightedLA still impacted post‑wildfires; softness in NY/Boston; DC change noted in April Mixed core markets performance

Management Commentary

  • “Sweetgreen’s first quarter results demonstrate the strength and adaptability of our operating model… driving innovation and elevating the guest experience” — Jonathan Neman, CEO .
  • “Restaurant‑level margin of 17.9%, ahead of our guidance range despite external headwinds” — Mitch Reback, CFO .
  • “April sales trends were soft… reflective of a broader consumer slowdown… particularly in our largest markets” — Jonathan Neman .
  • “Tariff impact ~75 bps in Q2… reduced to ~40 bps in H2 as we move packaging out of China” — Mitch Reback .
  • “No price increases for the remainder of the year… 30 of our 40 planned new restaurants will open in the second half” — Mitch Reback .

Q&A Highlights

  • Tariff build‑out math: ~10% per $1.5M NRO plus ~$100k per $500k IK, totaling ~$250k on a $2M project; impacts start in Q4 given pre‑purchases .
  • Value offering: introducing more mid/lower‑priced items (seasonal/evergreen) and leveraging loyalty for personalized value without a “value menu” label .
  • Geography: LA remains affected after wildfires; DC saw performance change in April; older/smaller DC units noted .
  • Fries performance: strong attachment and social buzz; supports comp/ticket initiatives .
  • Marketplace channel: continues to grow with higher average check; loyalty expected to shift more native digital .
  • Cadence: Q2 challenging (April softness, loyalty accounting headwinds); expect improvement in H2 with seasonals and loyalty tailwind .
  • Capital allocation and development: maintain 15%–20% unit growth algorithm given strong ROIC, especially with IK .
  • SG Rewards metrics/data: ~20k weekly new digital customers; richer data across in‑store and digital enabling personalized CRM and menu development .

Estimates Context

Metric (Q1 2025)Consensus (S&P Global)Actual (S&P Global)Result
Revenue ($USD)$164,908,030*$166,304,000*Beat by ~$1.4M*
Primary EPS ($)$(0.2179)*$(0.1279)*Beat by ~$0.09*
EBITDA ($USD)$(1,515,760)*$(10,446,000)*Miss by ~$8.9M*

Values retrieved from S&P Global.*

Additional context: Company‑reported Adjusted EBITDA was $0.3M versus its Q1 guide of $(3)M to $(1)M, reflecting operational efficiencies and ingredient optimization; note Adjusted EBITDA is non‑GAAP and excludes stock‑based comp and other items, explaining divergence from S&P Global EBITDA actuals .

Where estimates may need to adjust: FY25 guidance reductions (revenue, SSS, margin, Adjusted EBITDA) and management’s April comp softness/tariff impacts likely drive downward revisions to near‑term comp/margin and EBITDA trajectories .

Key Takeaways for Investors

  • Near‑term demand headwinds and tariffs prompted FY25 guide cuts, but operational levers (IK, Sweetlane, loyalty, seasonals) remain intact; watch H2 cadence and comp recovery .
  • Revenue and “Primary EPS” beat consensus in Q1; Adjusted EBITDA outperformed company guidance, yet S&P Global EBITDA missed—track reconciliation and non‑GAAP adjustments when modeling .
  • Loyalty traction (~20k weekly new digital customers) and KBBQ/Ripple Fries provide credible frequency/ticket drivers; monitor owned digital mix and CRM personalization benefits into Q3–Q4 .
  • Infinite Kitchen remains ROIC‑accretive even with tariff cost inflation; IK deployment should support labor leverage and margin resilience .
  • Geographic softness in major markets and DC suggests targeted operational fixes (portioning, accuracy/speed on digital make lines) will be key to stabilizing comps .
  • No further price increases planned; strategy shifts to value architecture through menu mix and loyalty—important for sustaining frequency without margin erosion .
  • Trading lens: focus on upcoming menu/loyalty activations, H2 opening cadence (30 units), and quarterly comp/margin trajectories as catalysts; tariff mitigation progress and IK cost clarity are key de‑risking milestones .

Guidance Changes

See table above for detailed FY25 changes and new disclosures .

Additional Relevant Press Releases (Q1 2025 context)

  • SG Rewards nationwide launch (points‑based, 10 points per dollar, bonus points in April; free Ripple Fries redemption) .
  • Ripple Fries nationwide launch; most‑attached side, designed to lift tickets and broaden meal experience .
  • KBBQ collaboration with COTE; new KBBQ glazed steak and kimchi line, early access via SG Rewards .

Notes on Non‑GAAP Adjustments

Sweetgreen reports Restaurant‑Level Profit and Adjusted EBITDA excluding corporate G&A, stock‑based comp, ERP costs, legal settlements, and other items; compare these to GAAP loss from operations/net loss and S&P Global EBITDA carefully when modeling margins and cash generation .