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Sweetgreen, Inc. (SG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 underperformed: revenue grew 0.5% YoY to $185.6M while same-store sales fell 7.6% on a 10.1% traffic/mix decline; restaurant-level margin compressed ~360 bps to 18.9% and Adjusted EBITDA dropped to $6.4M .
  • Company cut FY25 guidance materially: revenue to $700–$715M (from $740–$760M), SSS to (6)%–(4)% (from ~flat), restaurant-level margin ~17.5% (from ~19.5%), and Adjusted EBITDA to $10–$15M (from ~$30M) .
  • Management cited macro softness (especially urban Northeast), lapping last year’s steak launch, and loyalty transition (~250 bps headwind) as key drivers; early Q3 signs show modest comp improvement helped by summer seasonals and loyalty .
  • Strategic actions: 25% protein portion increase, discontinuation of Ripple Fries to focus operations, NYC footprint consolidation (two closures with demand captured at nearby units), and accelerating Infinite Kitchen deployments (at least 20 new IK in 2025) .
  • Stock reaction catalysts: revenue miss vs consensus*, guidance reduction, and narrative around loyalty headwinds turning into tailwinds by late Q3; potential offset from IK efficiency and improving guest satisfaction .

What Went Well and What Went Wrong

What Went Well

  • Early Q3 momentum: “We have seen a modest improvement in same store sales” driven by summer seasonals and loyalty .
  • Guest value and satisfaction initiatives: increased chicken/tofu portions by 25% and recipe improvements; “about a 30% lift in… satisfaction around portioning” .
  • Infinite Kitchen (IK) performance: continues to outpace comparable restaurants with labor savings, throughput, and accuracy; at least 20 new IK builds plus relocations planned for 2025 .

What Went Wrong

  • Revenue growth stalled and profitability compressed: restaurant-level margin fell to 18.9% (–360 bps YoY) on negative comps and higher restaurant-level advertising; Adjusted EBITDA fell to $6.4M from $12.4M YoY .
  • Macro and regional headwinds: pronounced weakness in urban Northeast; NYC saw closures and consolidations to larger, newer sites (demand recapture at +15–20% SSS in receiving locations) .
  • Loyalty transition drag: ~250 bps SSS headwind from deferred revenue/accounting and former SweetPass Plus cohort; expected to turn neutral by late Q3 and accretive thereafter .

Financial Results

Quarterly Progression

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$160.9 $166.3 $185.6
Net Loss per Share (basic & diluted, $)$(0.25) $(0.21) $(0.20)
Loss from Operations Margin %(20)% (17.2)% (14.2)%
Restaurant-Level Profit Margin %17% 17.9% 18.9%
Net Loss Margin %(18)% (15.1)% (12.5)%
Adjusted EBITDA ($USD Millions)$(0.573) $0.285 $6.415
AUV ($USD Millions)$2.924 $2.907 $2.831
Same-Store Sales Change (%)4% (3.1)% (7.6)%
Total Digital Revenue %56% 59.9% 60.8%
Owned Digital Revenue %29% 31.9% 33.4%
Net New Restaurant Openings10 5 9
Cash & Equivalents ($USD Millions)$214.8 $183.9 $168.5

YoY Comparison – Q2

MetricQ2 2024Q2 2025
Revenue ($USD Millions)$184.6 $185.6
Same-Store Sales Change (%)9.3% (7.6)%
AUV ($USD Millions)$2.925 $2.831
Restaurant-Level Profit Margin %22.5% 18.9%
Loss from Operations Margin %(8.8)% (14.2)%
Net Loss Margin %(7.8)% (12.5)%
Adjusted EBITDA ($USD Millions)$12.357 $6.415

Q2 2025 vs Consensus (S&P Global)

MetricConsensus*Actual*
Revenue ($USD Millions)$191.8*$185.6*
Primary EPS (Normalized, $)$(0.122)*$(0.085)*
EBITDA ($USD Millions)$11.0*$(7.3)*

Values marked with * retrieved from S&P Global.

KPIs and Operating Detail

KPIQ2 2025
Restaurant-Level Profit ($USD Millions)$35.1
Food, Beverage & Packaging (% of revenue)27.7%
Labor & Related (% of revenue)27.5%
Occupancy (% of revenue)8.9%
Other Restaurant Operating Costs (% of revenue)17.0%
G&A ($USD Millions; % of revenue)$34.5; 18.6%
Depreciation & Amortization ($USD Millions)$18.0
Impairment & Closure Costs ($USD Millions)$5.336
Adjusted EBITDA Margin %3.5%

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025$740–$760 $700–$715 Lowered
Same-Store Sales Change (%)FY 2025~0% (6)%–(4)% Lowered
Restaurant-Level Profit Margin (%)FY 2025~19.5 ~17.5 Lowered
Adjusted EBITDA ($USD Millions)FY 2025~$30 $10–$15 Lowered
Net New Restaurant OpeningsFY 2025≥40; 20 IK ≥40; 20 IK Maintained
PricingFY 2025No additional increases in 2025 No price increases anticipated for rest of year Maintained

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Loyalty programAnnounced SG Rewards launch for April; increased paid media planned SG Rewards launched; ~20k new members/week; acquisition mostly in-store ~250 bps SSS headwind from deferred revenue + SweetPass Plus cohort; neutral by late Q3, accretive thereafter Improving tailwind expected
AI/workforce techAI workforce mgmt rollout; early results: +10% hours, −33% absentee On track for full implementation by end of Q2 Labor optimization sustained; lowest turnover since COVID; head coach stability at all-time high Continued deployment
Tariffs/macroMacro uncertainty; wildfire impacts; paid media shift 75 bps supply-chain tariff exposure; targeting 40 bps 2H; IK cost tariff sensitivity ~40 bps tariff/duty impact on packaging in Q2; persistent near term Persistent, mitigated over time
Menu & productRipple Fries planned; seasonals returning in 2025 Ripple Fries launched; KBBQ chef collab; seasonal calendar Summer seasonals mixing ~15% of entrees; discontinuing Ripple Fries to focus on core ops Refocus on core + value
Regional trendsLA wildfires hurt comps; DC softness; urban footprint heavier Pressure in NYC/Boston/LA; comps mixed by region Urban Northeast softness; NYC closures with +15–20% SSS at receiving stores Gradual portfolio optimization
Infinite KitchenIK shows margin leverage; customer satisfaction ~90% IK returns remain accretive despite tariffs; throughput advantage IK outperformance continues; ≥20 IK builds + 2 relocations in 2025 Accelerating deployment
Marketing mixMore paid media; seasonal “newness” drumbeat Back-half weighted marketing More local vs national allocation; influencer/social ROI; new CCO joining Sept Optimizing channel mix

Management Commentary

  • CEO: “We are not satisfied with the results… [they] reflected a convergence of several external headwinds and internal actions… a more cautious consumer, lapping a tough comparison… and the transition of our new loyalty program” .
  • CFO: “Restaurant level profit margin… was 18.9%… primarily driven by sales deleverage and some tariff impact… food, beverage and packaging costs were 27.7%… roughly 40 bps due to tariffs and duties on packaging” .
  • Operational focus: Project “One Best Way” to standardize throughput and food quality; 25% protein portion increase to reinforce value proposition; guest satisfaction feedback improved ~30% on portions .
  • Portfolio actions: Closed two smaller NYC units (Bleecker, Astor Place); redirected demand to three larger nearby restaurants with +15–20% SSS gains; multiple new NYC openings and relocations planned with IK .
  • Infinite Kitchen strategy: “These units are delivering significant labor savings driven by greater efficiency, throughput capacity, and consistent execution… we continue to expect at least 20 new restaurants will have the Infinite Kitchen” .
  • Pricing: “We do not anticipate any price increases for the rest of the year” .

Q&A Highlights

  • Comp trajectory: Management sees “modest improvement” in Q3 comps driven by seasonals and loyalty; loyalty headwind expected to turn neutral by late Q3 and accretive afterwards .
  • Margin drivers: FY25 restaurant-level margin reduction largely sales deleverage; portion increases ~120 bps and tariffs ~40 bps impact; seeking offsets in RLPM and G&A .
  • Development vs cash: Maintained ≥40 openings given strong returns; disciplined site selection and build-out cost control (targeting ~$1.4–$1.5M per core build) .
  • NYC footprint strategy: Closures tied to lease maturity and small footprints; consolidating to larger, newer units rather than broad market retrenchment .
  • Marketing mix: Shift toward local store marketing and influencer/social channels under incoming CCO; reallocations from national to local impacted RLPM in Q2 .
  • Operational simplification: Ripple Fries to be discontinued to reduce complexity and elevate core food standards; tests show improved satisfaction with reduced hot-hold times .

Estimates Context

  • Q2 2025: Revenue missed consensus by ~$6.2M; on S&P Global’s normalized EPS basis, SG beat (actual $(0.085) vs $(0.122) estimate); EBITDA missed (actual $(7.3)M vs $11.0M estimate)*.
  • FY 2025: Company’s lowered revenue guidance ($700–$715M) sits above S&P Global consensus ($684.4M)*, suggesting analysts were already discounting the outlook; expect estimate revisions focused on margin compression and EBITDA trajectories amid loyalty accounting dynamics and deleverage.
  • FY 2026: Consensus models revenue $755.2M and normalized EPS $(0.78)*; management deferred detailed 2026 commentary to year-end call, framing 2025 headwinds as temporary .

Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Expect near-term volatility: Q2 miss and significant FY25 guidance cut reset expectations; watch Q3 comp recovery from seasonals/loyalty turning neutral-to-accretive by late Q3 .
  • Revenue vs EPS signals: SG missed revenue consensus* but beat normalized EPS*—differences in GAAP vs normalized definitions matter; use Adjusted EBITDA and RLPM to judge operational progress .
  • Margin path hinges on execution: Throughput standards, food quality, and portfolio optimization must offset portioning and tariff headwinds to stabilize RLPM back toward 20% over time .
  • Loyalty transition is the swing factor: Deferred revenue and cohort re-engagement dynamics should flip to tailwind by late Q3; monitor frequency metrics and Owned Digital % for proof points .
  • Infinite Kitchen expansion is the structural lever: IK deployment pace and retrofit economics remain key to medium-term labor savings and consistency .
  • Real estate discipline in urban cores: NYC closures and relocations to larger, high-throughput units are improving comps and AUVs; expect selective consolidation in legacy urban markets .
  • Trading lens: Near term focus on sequential comp improvement signals and loyalty/seasonal traction; medium-term thesis rests on IK scale benefits, disciplined growth, and restored margin trajectory.

Sources

  • Q2 2025 earnings press release and 8-K: financial results, guidance, KPI detail .
  • Q2 2025 earnings call transcript: management themes, Q&A clarifications .
  • Q1 2025 materials: prior outlook and context .
  • Q4 2024 materials: baseline margin trajectory and strategic pillars .
  • Seasonal menu press release (July 7, 2025): menu “newness” and loyalty early access .
  • Consensus estimates: S&P Global Capital IQ (Revenue, EPS, EBITDA, FY25/FY26) — values marked with * above.