| | | (1)Operating support center costs consist primarily of operations, technology, finance, legal, human resources, administrative personnel, and other personnel costs that support restaurant development and operations, as well as brand-related marketing.
(2)Other expense typically includes expenses recorded for accruals related to legal settlements, one-time costs incurred to acquire Spyce, and amortization costs associated with the implementation of the Company’s Enterprise Risk Management system.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled “Risk Factors” included under Part I, Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024. See the section titled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report. Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” the “Company,” or “Sweetgreen” refer to Sweetgreen, Inc. and its subsidiaries.
Overview
We are a mission-driven, next generation restaurant and lifestyle brand that serves healthy food at scale. Our bold vision is to be as ubiquitous as traditional fast food, but with the transparency and quality that consumers increasingly expect. As of June 29, 2025, we owned and operated 260 restaurants in 22 states and Washington, D.C.
Factors Affecting Our Business
Expanding Restaurant Footprint
Opening new restaurants, including those with Infinite Kitchen technology, is an important driver of our revenue growth. During the thirteen weeks ended June 29, 2025 and June 30, 2024, we had 9 and 4 Net New Restaurant Openings, respectively. During the twenty-six weeks ended June 29, 2025 and June 30, 2024, we had 14 and 10 Net New Restaurant Openings, respectively, bringing our total count as of June 29, 2025 to 260 restaurants in 22 states and Washington, D.C.
One of our strategies is to grow our footprint in both existing and new U.S. markets and, over time, internationally. In fiscal year 2025, we expect to open at least 40 new restaurants, of which, we expect to add at least 20 new Infinite Kitchen units to our fleet.
Real Estate Selection
We utilize a rigorous, data-driven real estate selection process to identify the location and timing of opening new restaurants, both in new and existing U.S. markets and in urban and suburban areas, with high anticipated foot or vehicle traffic and proximity to workplaces, residences and other restaurant and retail businesses that support our multi-channel approach, including our Native Delivery, Marketplace, Delivery and Outpost and Catering Channels.
Macroeconomic Conditions, Inflation, and Supply Chain Constraints
Consumer spending on food outside the home fluctuates with macroeconomic conditions. Consumers tend to allocate higher spending to food outside the home when macroeconomic conditions are stronger, and reduce spending on food outside the home during weaker economies. Our customers have in the past demonstrated a willingness to pay a premium for a craveable, convenient, and healthier alternative to traditional fast-food and fast-casual offerings. However, as a premium offering in the fast-casual industry, we are exposed both to consumers trading the convenience of food away from home for the cost benefit of cooking, and to consumers selecting less expensive fast-casual alternatives during weaker economic periods. We were impacted by a decrease in consumer spending during the second quarter of 2025, and we may continue to be impacted by this decrease.
We also continue to see variability in our customer traffic patterns, including as a result of fluctuations in return to office as a result of many workplaces adopting remote or hybrid models, and we expect this variability to continue for the foreseeable future. Additionally, our transactions have been and may continue to be impacted by periods of inclement weather across the country and the lingering impacts of the Los Angeles wildfires.
While we have historically been able to partially offset inflation and other increases in the costs of core operating resources, such as wage increases and increases in cost of goods sold, by gradually increasing menu prices or other customer fees, such as service fees and delivery fees, coupled with more efficient purchasing practices, productivity improvements, and greater economies of scale, there can be no assurance that we will be able to continue to do so in the current macroeconomic environment or regulatory environment or in the future. Moreover, there can be no assurance that any future cost increases, including as a result of inflation or tariffs, can be offset by increased menu prices or that our current or future menu prices will be fully absorbed by our customers without any resulting change to their demand for our products.
Our core ingredients are predominantly sourced from domestic suppliers. We also source certain items for our restaurants from outside the United States. Notably, most of our bowls and plates are produced outside of the United States, including in China. The items we procure from outside the United States expose our business to tariffs and duties implemented by the U.S. government. For the second quarter of 2025, we realized a tariff and duty impact from our food, beverage, and packaging supply chain of approximately 40 basis points, and we anticipate a similar impact in future fiscal periods.
In terms of new restaurant development, we now anticipate a net tariff-related increase of approximately 5% on the $1.4 to $1.5 million average unit cost, after taking into account our ongoing mitigation efforts and recent changes to government trade policies. We expect that this increase will not begin until the fourth quarter of 2025 due to our strategic advance purchasing of certain key components.
For Infinite Kitchen units, which typically cost between $450,000 and $550,000, we now estimate a price increase of approximately 5% due to tariffs. 10 of the 20 Infinite Kitchen units scheduled for installation in our new restaurants in 2025 were fully insulated from tariffs.
Management remains committed to further mitigating the impact of such costs across our supply chain, restaurant build-outs and Infinite Kitchen equipment through ongoing sourcing and cost-optimization strategies. Any future changes to the U.S. government’s trade policies may impact these estimates.
Seasonality
Our revenue fluctuates as a result of seasonal factors and weather conditions. Historically, our revenue has been lower in the first and fourth fiscal quarters of the year due, in part, to the holiday season and the fact that fewer people eat out during periods of inclement weather (generally the winter months, though inclement weather conditions may occur in certain markets at any time of the year) than during periods of mild to warm weather (the spring, summer, and fall months). In addition, a core part of our menu, salads, has proven to be more popular among consumers in the warmer months. In recent years, as consumer behavior trends have changed, due in part to the emergence of hybrid or remote work environments, the seasonality in our business has been less predictable than in prior years. We have seen an increase and prolonged negative impact on our revenue around national holidays. Additionally, we have seen extreme weather conditions and natural disasters, such as the wildfires in Los Angeles, cause disruptions to our operations and impact to our fiscal year 2025 results to date.
Sales Channel Mix
Our revenue is derived from sales of food and beverage to customers through our five sales channels: In-Store Channel, Pick-Up Channel, Native Delivery Channel, Marketplace Channel, and Outpost and Catering Channel. There have been historical fluctuations in the mix of sales between our various channels. Due to the fact that our Native Delivery, Outpost and Catering, and Marketplace Channels require the payment of third-party fees in order to fulfill deliveries, sales through these channels have historically negatively impacted our margins. Additionally, historically, orders on our Native Delivery, Outpost and Catering and Marketplace Channels have resulted in a higher rate of refunds and credits than our In-Store and Pick-Up Channels, which has a negative impact on revenue from these channels. We have also historically prioritized promotions and discounts on our Owned Digital Channels (which includes in-store digital scan-to-redeem and scan-to-earn transactions made pursuant to our new SG Rewards loyalty program), which also reduces revenue from these channels. If we see a shift in sales to Native Delivery, Outpost and Catering, and Marketplace channels, our margins may decrease. However, over time, we expect that our margins will improve on our Native Delivery, Outpost and Catering, and Marketplace Channels as we scale each of these channels.
Key Performance Metrics and Non-GAAP Financial Measures
We track the following key performance metrics and non-GAAP financial measures to evaluate our performance, identify trends, formulate financial projections, and make strategic decisions. We believe that these key performance metrics, which include certain non-GAAP financial measures, provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team. These key performance metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled metrics or measures presented by other companies.
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Twenty-six weeks ended |
| (dollar amounts in thousands ) | June 29,
2025 | | June 30,
2024 | | June 29,
2025 | | June 30,
2024 |
| Net New Restaurant Openings | 9 | | | 4 | | | 14 | | | 10 | |
Average Unit Volume (as adjusted)(1) | $2,831 | | $2,925 | | $2,831 | | $2,925 |
Same-Store Sales Change (%) (as adjusted)(2) | (7.6) | % | | 9.3 | % | | (5.5) | % | | 7.3 | % |
Total Digital Revenue Percentage(3) | 60.8 | % | | 55.7 | % | | 60.3 | % | | 57.2 | % |
Owned Digital Revenue Percentage(3) | 33.4 | % | | 30.5 | % | | 32.7 | % | | 31.6 | % |
(1) One restaurant was excluded from the Comparable Restaurant Base for both the thirteen and twenty-six weeks ended June 29, 2025 and the thirteen and twenty-six weeks ended June 30, 2024, respectively. Such adjustments did not result in a material change to AUV.
(2) Our results for the thirteen and twenty-six weeks ended June 29, 2025 have been adjusted to reflect the temporary closures of one and eight restaurants, respectively, which were excluded from the calculation of Same-Store Sales Change. Our results for the thirteen and twenty-six weeks ended June 30, 2024 have been adjusted to reflect the temporary closures of one and four restaurants, respectively, which were excluded from the calculation of Same-Store Sales Change. Such adjustments did not result in a material change to Same-Store Sales Change for either period.
(3) Purchases made in-store where a customer uses scan-to-redeem or scan-to-earn, as part of the new SG Rewards loyalty program introduced during the thirteen and twenty-six weeks ended June 29, 2025, are included as part of our Owned Digital Channels sales.
Net New Restaurant Openings
Net New Restaurant Openings reflect the number of new Sweetgreen restaurant openings during a given reporting period, net of any permanent Sweetgreen restaurant closures during the same given period. Before we open new restaurants, we incur pre-opening costs, as further described below. During fiscal year 2025, we plan to integrate our Infinite Kitchen technology into approximately half of our new restaurants.
Average Unit Volume
AUV is defined as the average trailing revenue for the prior four fiscal quarters for all restaurants in the Comparable Restaurant Base. The measure of AUV allows us to assess changes in guest traffic and per transaction patterns at our restaurants. Comparable Restaurant Base for any measurement period is defined as all restaurants that have operated for at least twelve full months as of the end of such measurement period, other than any restaurants that had a material, temporary closure during the relevant measurement period. For both the thirteen and twenty-six weeks ended June 29, 2025 and June 30, 2024, one restaurant was excluded from the Comparable Restaurant Base. Such adjustments did not result in a material change to AUV.
Same-Store Sales Change
Same-Store Sales Change reflects the percentage change in year-over-year revenue for the relevant fiscal period for all restaurants that have operated for at least 13 full fiscal months as of the end of such fiscal period; provided, that for any restaurant that has had a temporary closure (which historically has been defined as a closure of at least five days during which the restaurant would have otherwise been open) during any prior or current fiscal month, such fiscal month, as well as the corresponding fiscal month for the prior or current fiscal year, as applicable, will be excluded when calculating Same-Store Sales Change for that restaurant. During the thirteen and twenty-six weeks ended June 29, 2025, one and eight restaurants, respectively, were excluded from the calculation of Same-Store Sales Change. During the thirteen and twenty-six weeks ended June 30, 2024, one and four restaurants, respectively, were excluded from the calculation of Same-Store Sales Change. Such adjustments did not result in a
material change to Same-Store Sales Change for any period. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and closures.
Total Digital Revenue Percentage and Owned Digital Revenue Percentage
Our Total Digital Revenue Percentage is the percentage of our revenue attributed to purchases made through our Total Digital Channels. Our Owned Digital Revenue Percentage is the percentage of our revenue attributed to purchases made through our Owned Digital Channels. With the introduction of our new loyalty program in the second quarter of 2025, we have experienced and anticipate continuing to see an increase in Owned Digital sales, which is realized in our Owned Digital Revenue Percentage and our Total Digital Revenue Percentage.
Non-GAAP Financial Measures
In addition to our consolidated financial statements, which are presented in accordance with GAAP, we present certain non-GAAP financial measures, including Restaurant-Level Profit, Restaurant-Level Profit Margin, Adjusted EBITDA, and Adjusted EBITDA Margin. We believe these measures are useful to investors and others in evaluating our performance because these measures:
•facilitate operating performance comparisons from period to period by isolating the effects of some
items that vary from period to period without any correlation to core operating performance or that
vary widely among similar companies. These potential differences may be caused by variations in
capital structures (affecting interest expense), tax positions (such as the impact on periods or
companies of changes in effective tax rates or NOL), and the age and book depreciation of facilities
and equipment (affecting relative depreciation expense);
•are widely used by analysts, investors, and competitors to measure a company’s operating performance; are used by our management and board of directors for various purposes, including as measures of performance, and as a basis for strategic planning and forecasting; and
•are used internally for a number of benchmarks, including to compare our performance to that of our competitors.
Restaurant-Level Profit, Restaurant-Level Profit Margin, Adjusted EBITDA, and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. In particular, Restaurant-Level Profit and Adjusted EBITDA should not be viewed as substitutes for, or superior to, loss from operations or net loss prepared in accordance with GAAP as a measure of profitability. Some of these limitations are:
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Restaurant-Level Profit and Adjusted EBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
•Restaurant-Level Profit and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
•Restaurant-Level Profit and Adjusted EBITDA do not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to us;
•Restaurant-Level Profit and Adjusted EBITDA do not consider the potentially dilutive impact of stock-based compensation;
•Restaurant-Level Profit is not indicative of overall results of the Company and does not accrue directly to the benefit of stockholders, as corporate-level expenses are excluded;
•Adjusted EBITDA does not take into account any income or costs that management determines are not indicative of ongoing operating performance, such as stock-based compensation; loss on disposal of property and equipment; other (income) expense; restructuring charges; enterprise resource planning system (“ERP”) implementation and related costs; and legal settlements; and
•other companies, including those in our industry, may calculate Restaurant-Level Profit and Adjusted EBITDA differently, which reduces their usefulness as comparative measures.
Because of these limitations, you should consider Restaurant-Level Profit, Restaurant-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin alongside other financial performance measures, loss from operations, net loss, and our other GAAP results.
Restaurant-Level Profit and Restaurant-Level Profit Margin
We define Restaurant-Level Profit as loss from operations adjusted to exclude general and administrative expense, depreciation and amortization, pre-opening costs, loss on disposal of property and equipment, and, in certain periods, impairment and closure costs and restructuring charges. Restaurant-Level Profit Margin is Restaurant-Level Profit as a percentage of revenue.
As it excludes general and administrative expense, which is primarily attributable to our corporate headquarters, which we refer to as our Sweetgreen Support Center, we evaluate Restaurant-Level Profit and Restaurant-Level Profit Margin as a measure of profitability of our restaurants.
The following table sets forth a reconciliation of our loss from operations to Restaurant-Level Profit, as well as the calculation of loss from operations margin and Restaurant-Level Profit Margin for each of the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Twenty-six weeks ended |
| (dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | June 29, 2025 | | June 30, 2024 |
| Loss from operations | $ | (26,423) | | | $ | (16,184) | | | $ | (54,960) | | | $ | (43,099) | |
| Add back: | | | | | | | |
| General and administrative | 34,505 | | | 39,202 | | | 72,842 | | | 76,067 | |
| Depreciation and amortization | 17,996 | | | 16,737 | | | 35,102 | | | 33,164 | |
| Pre-opening costs | 2,534 | | | 1,104 | | | 4,230 | | | 2,536 | |
| Impairment and closure costs | 5,336 | | | 117 | | | 5,430 | | | 274 | |
Loss on disposal of property and equipment(1) | 31 | | | 49 | | | 117 | | | 115 | |
Restructuring charges(2) | 1,146 | | | 494 | | | 2,051 | | | 999 | |
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 | % |
__________
__
(1)Loss on disposal of property and equipment includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.
(2)Restructuring charges are expenses that are paid in connection with reorganization of our operations. These costs primarily include lease and related costs associated with our vacated former Sweetgreen Support Center, including the impairment and the amortization of the operating lease asset, severance and related benefits associated with a reduction in force at our Sweetgreen Support Center, and costs related to our vacated former New York office.
Adjusted EBITDA and Adjusted EBITDA Margin
We define Adjusted EBITDA as net loss adjusted to exclude income tax expense, interest income, interest expense, depreciation and amortization, stock-based compensation expense, loss on disposal of property and equipment, other (income) expense, ERP implementation and related costs, legal settlements, and, in certain periods, impairment and closure costs and restructuring charges. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of revenue.
The following table sets forth a reconciliation of our net loss to Adjusted EBITDA, as well as the calculation of net loss margin and Adjusted EBITDA Margin for each of the periods indicated:
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | Twenty-six weeks ended |
| (dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | June 29, 2025 | | June 30, 2024 |
| Net loss | $ | (23,158) | | | $ | (14,460) | | | $ | (48,197) | | | $ | (40,527) | |
| Non-GAAP adjustments: | | | | | | | |
| Income tax expense | 90 | | | 90 | | | 180 | | | 180 | |
| Interest income | (1,725) | | | (2,920) | | | (3,628) | | | (5,936) | |
| Interest expense | 5 | | | 197 | | | 5 | | | 216 | |
| Depreciation and amortization | 17,996 | | | 16,737 | | | 35,102 | | | 33,164 | |
Stock-based compensation(1) | 8,000 | | | 10,903 | | | 18,221 | | | 20,529 | |
Loss on disposal of property and equipment(2) | 31 | | | 49 | | | 117 | | | 115 | |
Impairment and closure costs(3) | 5,336 | | | 117 | | | 5,430 | | | 274 | |
Other expense/(income)(4) | (1,635) | | | 909 | | | (3,320) | | | 2,968 | |
| |
Restructuring charges(5) | 1,146 | | | 494 | | | 2,051 | | | 999 | |
ERP implementation and related costs(6) | 254 | | | 227 | | | 495 | | | 453 | |
Legal settlements(7) | 75 | | | 14 | | | 243 | | | 35 | |
| |
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 | % |
__________
__
(1)Includes non-cash, stock-based compensation.
(2)Loss on disposal of property and equipment includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.
(3)Includes costs related to impairment of long-lived and operating lease assets and store closures.
(4)Other expense (income) includes the change in fair value of the contingent consideration issued as part of the Spyce acquisition. See Note 3 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.
(5)Restructuring charges are expenses that are paid in connection with the reorganization of our operations. These costs primarily include lease and related non-cash expenses associated with our vacated former Sweetgreen Support Center, including the impairment and the amortization of the operating lease asset, severance and related benefits associated with a reduction in force at our Sweetgreen Support Center, and costs related to our vacated former New York office.
(6)Represents the amortization costs associated with the implementation of our cloud computing arrangements in relation to our ERP system.
(7)Expenses recorded for accruals related to the settlements of legal matters.
Components of Results of Operations
Revenue
We recognize food and beverage revenue, net of discounts and incentives, when payment is tendered at the point of sale as the performance obligation has been satisfied, through our three disaggregated revenue channels: Owned Digital Channels, In-Store-Channel (Non-Digital component), and Marketplace Channel. Provisions for discounts are provided for in the same period the related sales are recorded. Sales taxes and other taxes collected from customers and remitted to governmental authorities are presented on a net basis, and as such, are excluded from revenue. We record a liability and a corresponding reduction in revenue in periods when loyalty program rewards are earned by members. We recognize revenue and a corresponding reduction to the liability in periods when loyalty program rewards are redeemed by members, or the points expire after 180 days. We defer revenue based on the relative estimated standalone selling price of the loyalty points, which is estimated as the value of the
loyalty reward, net of loyalty related purchases not expected to be redeemed. We estimate loyalty purchases not expected to be redeemed based on industry data.
To drive future revenue growth, we are focusing on opening additional restaurants, diversifying and expanding our menu, and investing in marketing initiatives, including our new loyalty program designed to attract new customers and increase order frequency from our existing customers.
Gift Cards
We also sell gift cards that do not have an expiration date. Upon sale, gift cards are recorded as unearned revenue and included within gift card liability in the accompanying condensed consolidated balance sheets. The revenue from gift cards is recognized when redeemed by customers. Because we do not track addresses of gift card purchasers, the relevant jurisdiction related to the requirement for escheatment, the legal obligation to remit unclaimed assets to the state, is our state of incorporation, which is Delaware. The state of Delaware requires escheatment after five years from issuance. We do not recognize breakage income because of our requirements to escheat unredeemed gift card balances.
Delivery
The majority of our restaurant locations offer a delivery option. Delivery services are fulfilled by third-party service providers whether delivery is ordered through our Native Delivery Channel or Marketplace Channel. With respect to Native Delivery Channel sales, we control the delivery services and recognize revenue, including delivery revenue, when the delivery partner transfers food or beverage to the customer. For these sales, we receive payment directly from the customer at the time of sale. With respect to Marketplace Channel sales, we recognize revenue, excluding delivery fees collected by the delivery partner as we do not control the delivery service, when control of the food or beverage is delivered to the end customer. We receive payment from the delivery partner subsequent to the transfer of food and the payment terms are short-term in nature. For all delivery sales, we are considered the principal and recognize the revenue on a gross basis. For a more detailed discussion of our third-party delivery fees and our expectations regarding our margins, see the section titled “—Sales Channel Mix” above.
Restaurant Operating Costs, Exclusive of Depreciation and Amortization
Food, Beverage, and Packaging
Food, beverage, and packaging costs include the direct costs associated with food, beverage, and packaging of our menu items. We anticipate food, beverage and packaging costs on an absolute dollar basis will increase for the foreseeable future to the extent we experience additional customer orders, as we open additional restaurants, and as a result our revenue grows. Food, beverage, and packaging costs as a percentage of revenue may vary, as these costs are impacted by menu mix and fluctuations in commodity costs, inflation, and availability, as well as geographic scale and proximity. We will continue to innovate in key areas, including menu, which could lead to increases in commodity costs as we add items such as beef to our menu.
Labor and Related Expenses
Labor and related expenses include salaries, bonuses, benefits, payroll taxes, workers compensation expenses, and other expenses related to our restaurant employees. As with other variable expense items, we expect labor costs to grow as our revenue grows. Other factors that influence labor costs include each jurisdiction’s minimum wage and payroll tax legislation, inflation, the strength of the labor market for hourly employees, benefit costs, health care costs, and the size and location of our restaurants.
Occupancy and Related Expenses
Occupancy and related expenses consist of restaurant-level occupancy expenses (including rent, common area maintenance (“CAM”) expenses, and real estate taxes), and exclude occupancy expenses associated with unopened restaurants, which are recorded separately in pre-opening costs. We anticipate occupancy and related expenses on an absolute dollar basis will increase for the foreseeable future to the extent we continue to open new restaurants and revenue grows. Occupancy and related expenses as a percentage of revenue are impacted by geographic location, type of restaurant build, and amount of revenue.
Other Restaurant Operating Costs
Other restaurant operating costs include other operating expenses incidental to operating our restaurants, such as repairs and maintenance, utilities, certain local taxes, third-party delivery fees, non-perishable supplies, restaurant-level marketing, credit card fees, and property insurance. We expect that other restaurant operating costs will increase on an absolute dollar basis for the foreseeable future to the extent we continue to open new restaurants and our revenue grows. Other restaurant operating costs as a percentage of revenue are expected to increase in line with growth in our Native Delivery, Outpost and Catering, and Marketplace Channels, as these channels require us to pay third-party delivery fees. However, as revenue increases, we expect that other restaurant operating costs, such as repairs and maintenance and property insurance, as a percentage of revenue will decline.
Operating Expenses
General and Administrative
General and administrative expenses consist primarily of operations, technology, finance, legal, human resources, administrative personnel, and other personnel costs that support restaurant development and operations, as well as stock-based compensation expense and brand-related marketing. As a percentage of revenue, we expect our general and administrative expenses to vary from period to period and to decrease over time.
Depreciation and Amortization
Depreciation and amortization include the depreciation of fixed assets, including leasehold improvements and equipment, amortization of external costs, certain internal costs directly associated with developing computer software applications for internal use, and developed technology acquired as part of our Spyce acquisition. We expect that depreciation and amortization expenses will increase on an absolute dollar basis as we continue to build new restaurants and make investments in our digital platform.
Pre-Opening Costs
Pre-opening costs primarily consist of rent, wages, travel for training and restaurant opening teams, food, marketing, and other restaurant costs that we incur prior to the opening or during the major renovation of a restaurant. These expenses will increase in proportion to the increase of our new restaurant openings and major renovations. These costs are expensed as incurred. Pre-opening costs depend on the number of new restaurants and major restaurant renovations we open during each period or are planning to open during future periods. As a result, while we expect that pre-opening costs on an absolute dollar basis will fluctuate from period to period, we expect pre-opening costs to begin to increase in fiscal year 2025 in connection with the acceleration of our new restaurant growth as described above.
Impairment and Closure Costs
Impairment includes impairment charges related to our long-lived assets, which include property and equipment and operating lease assets.
Closure costs include lease and related costs associated with closed restaurants, including the amortization of the operating lease asset, and expenses associated with CAM and real estate taxes for previously impaired stores.
Loss on Disposal of Property and Equipment
Loss on disposal of property and equipment includes the net book value of assets that have been retired and consists primarily of furniture, equipment, and fixtures that were replaced in the normal course of business.
Restructuring Charges
Restructuring charges are expenses that are paid in connection with the reorganization of our operations. These costs primarily include operating lease asset impairment costs related to our vacated former Sweetgreen Support Center, as well as the amortization of the underlying operating lease asset and related real estate and CAM charges, severance and related benefits from workforce reductions at our Sweetgreen Support Center, and costs
related to abandoning certain potential future restaurant sites, which are a result of our efforts to streamline our future new restaurant openings, and other related expenses. During the twenty-six weeks ended June 29, 2025, we experienced additional restructuring costs including severance and related benefits associated with a reduction in force at our Sweetgreen Support Center and costs associated with vacating our former New York office space. We continue to evaluate our organizational structure and may implement additional changes to lower our administrative headcount.
Interest Income and Interest Expense
Interest income consists of interest earned on our cash and cash equivalents. Interest expense includes mainly amortization of deferred financing costs from our debt origination and commitment fees.
Other Expense (Income)
Other expense (income) consists primarily of changes in the fair value of our contingent consideration liability in connection with the Spyce acquisition. We will continue to remeasure the liability associated with our contingent consideration liability until the underlying service conditions are met, or the performance period expires.
Income Tax Expense
Income tax expense consists of federal and state tax expense on our operating activity, and changes to our deferred tax asset and deferred tax liability. For additional information, see Note 11 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.
Results of Operations
Comparison of the thirteen and twenty-six weeks ended June 29, 2025 and June 30, 2024
The following table summarizes our results of operations for the thirteen weeks ended June 29, 2025 and June 30, 2024:
| | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Dollar Change | | Percentage
Change |
Revenue | $ | 185,583 | | | $ | 184,641 | | | $ | 942 | | | 0.5 | % |
Restaurant operating costs (exclusive of depreciation and amortization presented separately below): | | | | | | | |
| Food, beverage, and packaging | 51,444 | | | 49,883 | | | 1,561 | | | 3.1 | % |
| Labor and related expenses | 51,044 | | | 49,668 | | | 1,376 | | | 2.8 | % |
| Occupancy and related expenses | 16,438 | | | 15,021 | | | 1,417 | | | 9.4 | % |
| Other restaurant operating costs | 31,532 | | | 28,550 | | | 2,982 | | | 10.4 | % |
Total cost of restaurant operations | 150,458 | | | 143,122 | | | 7,336 | | | 5.1 | % |
Operating expenses: | | | | | | | |
| General and administrative | 34,505 | | | 39,202 | | | (4,697) | | | (12.0 | %) |
| Depreciation and amortization | 17,996 | | | 16,737 | | | 1,259 | | | 7.5 | % |
| Pre-opening costs | 2,534 | | | 1,104 | | | 1,430 | | | 129.5 | % |
Impairment and closure costs | 5,336 | | | 117 | | | 5,219 | | | 4460.7 | % |
| Loss on disposal of property and equipment | 31 | | | 49 | | | (18) | | | (36.7 | %) |
| Restructuring charges | 1,146 | | | 494 | | | 652 | | | 132.0 | % |
| Total operating expenses | 61,548 | | | 57,703 | | | 3,845 | | | 6.7 | % |
| Loss from operations | (26,423) | | | (16,184) | | | (10,239) | | | 63.3 | % |
| Interest income | (1,725) | | | (2,920) | | | 1,195 | | | (40.9 | %) |
| Interest expense | 5 | | | 197 | | | (192) | | | (97.5 | %) |
Other expense (income) | (1,635) | | | 909 | | | (2,544) | | | (279.9 | %) |
| Net loss before income taxes | (23,068) | | | (14,370) | | | (8,698) | | | 60.5 | % |
| Income tax expense | 90 | | | 90 | | | — | | | — | % |
| Net loss | $ | (23,158) | | | $ | (14,460) | | | $ | (8,698) | | | 60.2 | % |
The following table summarizes our results of operations for the twenty-six weeks ended June 29, 2025 and June 30, 2024:
| | | | | | | | | | | | | | | | | | | | | | | |
| |
| Twenty-six weeks ended | | | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Dollar Change | | Percentage
Change |
Revenue | $ | 351,887 | | | $ | 342,491 | | | $ | 9,396 | | | 2.7 | % |
Restaurant operating costs (exclusive of depreciation and amortization presented separately below): | | | | | | | |
| Food, beverage, and packaging | 95,436 | | | 93,601 | | | 1,835 | | | 2.0 | % |
| Labor and related expenses | 99,115 | | | 95,434 | | | 3,681 | | | 3.9 | % |
| Occupancy and related expenses | 32,112 | | | 29,469 | | | 2,643 | | | 9.0 | % |
| Other restaurant operating costs | 60,412 | | | 53,931 | | | 6,481 | | | 12.0 | % |
Total cost of restaurant operations | 287,075 | | | 272,435 | | | 14,640 | | | 5.4 | % |
Operating expenses: | | | | | | | |
| General and administrative | 72,842 | | | 76,067 | | | (3,225) | | | (4.2 | %) |
| Depreciation and amortization | 35,102 | | | 33,164 | | | 1,938 | | | 5.8 | % |
| Pre-opening costs | 4,230 | | | 2,536 | | | 1,694 | | | 66.8 | % |
Impairment and closure costs | 5,430 | | | 274 | | | 5,156 | | | 1881.8 | % |
| Loss on disposal of property and equipment | 117 | | | 115 | | | 2 | | | 1.7 | % |
| Restructuring charges | 2,051 | | | 999 | | | 1,052 | | | 105.3 | % |
| Total operating expenses | 119,772 | | | 113,155 | | | 6,617 | | | 5.8 | % |
| Loss from operations | (54,960) | | | (43,099) | | | (11,861) | | | 27.5 | % |
| Interest income | (3,628) | | | (5,936) | | | 2,308 | | | (38.9 | %) |
| Interest expense | 5 | | | 216 | | | (211) | | | (97.7 | %) |
Other expense (income) | (3,320) | | | 2,968 | | | (6,288) | | | (211.9 | %) |
| Net loss before income taxes | (48,017) | | | (40,347) | | | (7,670) | | | 19.0 | % |
| Income tax expense | 180 | | | 180 | | | — | | | — | % |
| Net loss | $ | (48,197) | | | $ | (40,527) | | | $ | (7,670) | | | 19.0 | % |
Revenue
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
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 increase in revenue for the thirteen weeks ended June 29, 2025 was primarily due to an increase of $14.5 million of incremental revenue associated with 33 Net New Restaurant Openings during or subsequent to the thirteen weeks ended June 30, 2024. The increase in revenue was partially offset by a decrease in Comparable Restaurant Base revenue of $13.9 million, resulting in a negative Same-Store Sales Change of 7.6%, reflecting a 10.1% decrease in traffic and product mix, partially offset by a 2.5% benefit from menu price increases that were implemented subsequent to the thirteen weeks ended June 30, 2024.
The increase in revenue for the twenty-six weeks ended June 29, 2025 was primarily due to an increase of $28.2 million of incremental revenue associated with 39 Net New Restaurant Openings during or subsequent to the twenty-six weeks ended June 30, 2024. The increase in revenue was partially offset by a decrease in Comparable Restaurant Base revenue of $18.8 million, resulting in a negative Same-Store Sales Change of 5.5%, reflecting a 8.5% decrease in traffic and product mix, partially offset by a 3.0% benefit from menu price increases that were implemented subsequent to June 30, 2024.
Restaurant Operating Costs
Food, Beverage, and Packaging
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
Food, beverage, and packaging | 51,444 | | | 49,883 | | | 3.1 | % | | 95,436 | | | 93,601 | | | 2.0 | % |
As a percentage of total revenue | 27.7 | % | | 27.0 | % | | 0.7 | % | | 27.1 | % | | 27.3 | % | | (0.2 | %) |
The increase in food, beverage, and packaging costs for the thirteen weeks ended June 29, 2025 was primarily due to the 33 Net New Restaurant Openings during or subsequent to the thirteen weeks ended June 30, 2024.
The increase in food, beverage, and packaging costs for the twenty-six weeks ended June 29, 2025 was primarily due to the 39 Net New Restaurant Openings during or subsequent to the twenty-six weeks ended June 30, 2024.
As a percentage of revenue, food, beverage, and packaging costs for the thirteen weeks ended June 29, 2025 increased compared to the thirteen weeks ended June 30, 2024, primarily due to higher cost product mix as well as an increase in packaging cost associated with the imposition of tariffs and duties, partially offset by menu price increases.
As a percentage of revenue, food, beverage, and packaging costs for the twenty-six weeks ended June 29, 2025 slightly decreased compared to the twenty-six weeks ended June 30, 2024, primarily due to improvements in ingredient management, partially offset by higher cost product mix as well as an increase in packaging cost associated with the imposition of tariffs and duties.
Labor and Related Expenses
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
Labor and related expenses | 51,044 | | | 49,668 | | | 2.8 | % | | 99,115 | | | 95,434 | | | 3.9 | % |
As a percentage of total revenue | 27.5 | % | | 26.9 | % | | 0.6 | % | | 28.2 | % | | 27.9 | % | | 0.3 | % |
The increase in labor and related expenses for the thirteen weeks ended June 29, 2025 was primarily due to the 33 Net New Restaurant Openings during or subsequent to the thirteen weeks ended June 30, 2024. The increase was also driven by higher staffing expenses associated with increases in prevailing wage rates in many of our markets, partially offset by improved labor optimization.
The increase in labor and related expenses for the twenty-six weeks ended June 29, 2025 was primarily due to the 39 Net New Restaurant Openings during or subsequent to the twenty-six weeks ended June 30, 2024. The increase was also driven by higher staffing expenses associated with increases in prevailing wage rates in many of our markets, partially offset by improved labor optimization.
As a percentage of revenue, labor and related expenses increased for the thirteen and twenty-six weeks ended June 29, 2025 compared to the thirteen and twenty-six weeks ended June 30, 2024, respectively, primarily due to deleverage associated with the change in sales volume as well as wage rate increases, partially offset by improvements in labor optimization, as discussed above.
Occupancy and Related Expenses
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
Occupancy and related expenses | 16,438 | | | 15,021 | | | 9.4 | % | | 32,112 | | | 29,469 | | | 9.0 | % |
As a percentage of total revenue | 8.9 | % | | 8.1 | % | | 0.7 | % | | 9.1 | % | | 8.6 | % | | 0.5 | % |
The increase in occupancy and related expenses for the thirteen weeks ended June 29, 2025 was primarily due to the 33 Net New Restaurant Openings during or subsequent to the thirteen weeks ended June 30, 2024.
The increase in occupancy and related expenses for the twenty-six weeks ended June 29, 2025 was primarily due to the 39 Net New Restaurant Openings during or subsequent to the twenty-six weeks ended June 30, 2024.
As a percentage of revenue, occupancy and related expenses for the thirteen and twenty-six weeks ended June 29, 2025 was higher than the thirteen and twenty-six weeks ended June 30, 2024, respectively, primarily related to deleverage associated with the change in sales volume.
Other Restaurant Operating Costs
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
Other restaurant operating costs | 31,532 | | | 28,550 | | | 10.4% | | 60,412 | | | 53,931 | | | 12.0% |
As a percentage of total revenue | 17.0 | % | | 15.5 | % | | 1.5% | | 17.2 | % | | 15.7 | % | | 1.4% |
The increase in other restaurant operating costs for the thirteen weeks ended June 29, 2025 was primarily due to the 33 Net New Restaurant Openings during or subsequent to the thirteen weeks ended June 30, 2024. This includes increases in restaurant-level advertising spend, delivery fees, primarily related to the increase in revenue through our Marketplace and Catering Channels, and increases in repairs and maintenance for existing stores.
The increase in other restaurant operating costs for the twenty-six weeks ended June 29, 2025 was primarily due to the 39 Net New Restaurant Openings during or subsequent to the twenty-six weeks ended June 30, 2024. This includes increases in restaurant-level advertising spend and delivery fees, primarily related to the increase in revenue through our Marketplace and Catering Channels.
As a percentage of revenue, other restaurant operating costs for the thirteen and twenty-six weeks ended June 29, 2025 increased compared to the thirteen and twenty-six weeks ended June 30, 2024, respectively, primarily due to the increases noted above as well as with the change in sales volume.
Operating Expenses
General and Administrative
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
General and administrative | 34,505 | | | 39,202 | | | (12.0 | %) | | 72,842 | | | 76,067 | | | (4.2 | %) |
As a percentage of total revenue | 18.6 | % | | 21.2 | % | | (2.6 | %) | | 20.7 | % | | 22.2 | % | | (1.5 | %) |
The decrease in general and administrative expenses for the thirteen weeks ended June 29, 2025 was primarily due to a $2.9 million decrease in stock-based compensation expense, primarily related to the decrease in expenses associated with restricted stock units and performance-based restricted stock units issued prior to our IPO, and a $1.8 million decrease in management salary and bonus expense. These decreases were partially offset by an increase in other expenses across the Sweetgreen Support Center to support our restaurant growth.
The decrease in general and administrative expenses for the twenty-six weeks ended June 29, 2025 was primarily due to a $2.3 million decrease in stock-based compensation expense, primarily related to the decrease in expenses associated with restricted stock units and performance-based restricted stock units issued prior to our IPO, and a $2.2 million decrease in management salary and bonus expense. These decreases were partially offset by an increase in operational consulting spend and other expenses across the Sweetgreen Support Center to support our restaurant growth.
As a percentage of revenue, the decrease in general and administrative expenses for both the thirteen and twenty-six weeks ended June 29, 2025 was primarily due to the net effect of the fluctuations noted above.
Depreciation and Amortization
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
Depreciation and amortization | 17,996 | | | 16,737 | | | 7.5 | % | | 35,102 | | | 33,164 | | | 5.8 | % |
As a percentage of total revenue | 9.7 | % | | 9.1 | % | | 0.6 | % | | 10.0 | % | | 9.7 | % | | 0.3 | % |
The increase in depreciation and amortization for the thirteen weeks ended June 29, 2025 was primarily due to the 33 Net New Restaurant Openings during or subsequent to the thirteen weeks ended June 30, 2024.
The increase in depreciation and amortization for the twenty-six weeks ended June 29, 2025 was primarily due to the 39 Net New Restaurant Openings during or subsequent to the thirteen weeks ended June 30, 2024.
As a percentage of revenue, depreciation and amortization for both the thirteen and twenty-six weeks ended June 29, 2025 increased from the thirteen and twenty-six weeks ended June 30, 2024, respectively, primarily related to the increase in the total depreciable base, driven by our acceleration of new restaurant growth in fiscal year 2025.
Pre-Opening Costs
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
Pre-opening costs | 2,534 | | | 1,104 | | | 129.5 | % | | 4,230 | | | 2,536 | | | 66.8 | % |
As a percentage of total revenue | 1.4 | % | | 0.6 | % | | 0.8 | % | | 1.2 | % | | 0.7 | % | | 0.5 | % |
The increase in pre-opening costs for both the thirteen and twenty-six weeks ended June 29, 2025 was primarily due to our acceleration of new restaurant growth in fiscal year 2025.
As a percentage of revenue, pre-opening costs in both the thirteen and twenty-six weeks ended June 29, 2025 increased compared to the thirteen and twenty-six weeks ended June 30, 2024, respectively, due to the acceleration of growth noted above as well as with the change in sales volume.
Impairment and Closure Costs
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
Impairment and closure costs | 5,336 | | | 117 | | | 4460.7 | % | | 5,430 | | | 274 | | | 1881.8 | % |
As a percentage of total revenue | 2.9 | % | | 0.1 | % | | 2.8 | % | | 1.5 | % | | 0.1 | % | | 1.4 | % |
During both the thirteen and twenty-six weeks ended June 29, 2025, we recognized non-cash impairment charges of $5.3 million related to the impairment of property and equipment and related operating lease assets of five of our restaurants.
Restructuring Charges
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
| Restructuring charges | 1,146 | | | 494 | | | 132.0 | % | | 2,051 | | | 999 | | | 105.3 | % |
As a percentage of total revenue | 0.6 | % | | 0.3 | % | | 0.3 | % | | 0.6 | % | | 0.3 | % | | 0.3 | % |
The restructuring charges for both the thirteen and twenty-six weeks ended June 29, 2025 and June 30, 2024 are primarily related to our former Sweetgreen Support Center, which we vacated in fiscal year 2022, including continued amortization of the operating lease asset and related real estate and CAM charges. In addition, during the thirteen and twenty-six weeks ended June 29, 2025 we experienced additional restructuring costs including severance and related benefits associated with a reduction in force at our Sweetgreen Support Center and costs associated with vacating our former New York office space. We continue to evaluate our organizational structure and have and may continue to implement additional changes to lower our administrative headcount.
As a percentage of revenue, restructuring charges increased in the thirteen and twenty-six weeks ended June 29, 2025 compared to the thirteen and twenty-six weeks ended June 30, 2024 due to the increases noted above.
Loss on Disposal of Property and Equipment
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
Loss on disposal of property and equipment | 31 | | | 49 | | | (36.7 | %) | | 117 | | | 115 | | | 1.7 | % |
As a percentage of total revenue | — | % | | — | % | | — | % | | — | % | | — | % | | — | % |
The change in loss on disposal of property and equipment was due to timing of furniture, equipment and fixture replacements at multiple restaurants for the thirteen and twenty-six weeks ended June 29, 2025 compared to the prior year period.
Interest Income and Interest Expense
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
Interest income | (1,725) | | | (2,920) | | | (40.9 | %) | | (3,628) | | | (5,936) | | | (38.9 | %) |
Interest expense | 5 | | | 197 | | | (97.5 | %) | | 5 | | | 216 | | | (97.7 | %) |
Total interest income, net | $ | (1,720) | | | $ | (2,723) | | | (36.8 | %) | | $ | (3,623) | | | $ | (5,720) | | | (36.7 | %) |
As a percentage of total revenue | (0.9) | % | | (1.5) | % | | 0.5 | % | | (1.0) | % | | (1.7) | % | | 0.6 | % |
The decrease in interest income, net, was primarily due to a lower cash balance and lower interest rate in our money market accounts during the thirteen and twenty-six weeks ended June 29, 2025 compared to the prior year periods.
Other Expense (Income)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Thirteen weeks ended | | | | Twenty-six weeks ended | | |
(dollar amounts in thousands) | June 29, 2025 | | June 30, 2024 | | Percentage
Change | | June 29, 2025 | | June 30, 2024 | | Percentage
Change |
Other expense (Income) | (1,635) | | | 909 | | | (279.9 | %) | | (3,320) | | | 2,968 | | | (211.9 | %) |
As a percentage of total revenue | (0.9) | % | | 0.5 | % | | (1.4) | % | | (0.9) | % | | 0.9 | % | | (1.8 | %) |
The increase in other income for the thirteen and twenty-six weeks ended June 29, 2025 was primarily due to a change in the fair value of our contingent consideration compared to the prior year periods, which was issued as part of the Spyce acquisition in the third quarter of fiscal year 2021.
As a percentage of revenue, other income increased during the thirteen and twenty-six weeks ended June 29, 2025 compared to the thirteen and twenty-six weeks ended June 30, 2024, due to the variances noted above.
Liquidity and Capital Resources
Sources and Material Cash Requirements
To date, we have funded our operations through proceeds received from previous common stock and preferred stock issuances, our ability to obtain lending commitments and through cash flow from operations. As of June 29, 2025 and December 29, 2024, we had $168.5 million and $214.8 million in cash and cash equivalents, respectively. Based on our current operating plan, we believe our existing cash and cash equivalents and cash flow from operations will be sufficient to fund our operating lease obligations, capital expenditures, and working capital needs for at least the next 12 months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available cash balances. If we are unable to generate positive operating cash flows, additional debt and equity financings may be necessary to sustain future operations, and there can be no assurance that such financing will be available to us on commercially reasonable terms, or at all.
Our primary liquidity and capital requirements are for new restaurant development, including related to deployment of our Infinite Kitchen, initiatives to improve the customer experience in our restaurants, marketing-related costs, working capital and general corporate needs. Additionally, during the twenty-six weeks ended June 29, 2025, we made a cash payment of approximately $2.3 million related to the second Spyce milestone payment. See Note 3 for further details. We have not required significant working capital because customers generally pay using cash or credit and debit cards and, as a result, our operations do not require significant receivables. Additionally, our operations do not require significant inventories due, in part, to our use of numerous fresh ingredients. Further, we are able to sell most of our inventory items before payment is due to the supplier of such items.
Material Cash Requirements
Our material cash requirements primarily consist of operating lease obligations and purchase obligations and capital expenditures. The timing and nature of these commitments are expected to have an impact on our liquidity and capital requirements in future periods. Refer to Note 8, Leases, in the accompanying condensed consolidated financial statements included in Part I, Item 1 for additional information relating to our operating leases.
Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms. The majority of our purchase obligations relate to amounts owed for supplies within our restaurants and are due within the next twelve months.
During the twenty-six weeks ended June 29, 2025, we incurred approximately $40.3 million in capital expenditures, a portion of which was used to pre-purchase key materials. We expect capital expenditures to increase in 2025, primarily related to new store openings and Infinite Kitchens.
As noted below, we did not renew our prior credit facility and currently have no outstanding debt. If we decide to incur debt in the future, we will need cash to service any interest and principal payments for such debt.
Prior Credit Facility
During fiscal year 2024, we were party to a First Amended and Restated Revolving Credit, Delayed Draw Term Loan and Security Agreement (as amended, the “Credit Facility”) with EagleBank. We did not renew the Credit Facility in 2024 and it expired pursuant to its terms on December 13, 2024.
Cash Flows
The following table summarizes our cash flows for the periods indicated:
| | | | | | | | | | | |
| (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) | |
Operating Activities
For the twenty-six weeks ended June 29, 2025, cash used in operating activities increased by $25.2 million compared to the twenty-six weeks ended June 30, 2024. The increase was primarily due to the $15.7 million impact of unfavorable working capital fluctuations, which primarily related to the timing of rent expense, payroll, and other payments in the ordinary course of business. The remaining change was related to a $7.2 million decrease in income after excluding non-cash items and a $2.3 million Spyce milestone payment.
Investing Activities
For the twenty-six weeks ended June 29, 2025, cash used in investing activities was $44.5 million, an increase of $8.3 million compared to the twenty-six weeks ended June 30, 2024. Investing activities for the twenty-six weeks ended June 29, 2025 consisted primarily of purchases of property and equipment of $40.3 million related to the 2025 pipeline of new restaurants (excluding tenant improvement allowances) of which a portion of the purchase occurred in fiscal 2024, renovations, and an prepayments associated with the deployment of our Infinite Kitchen units and other restaurant related equipment. In addition we had cash outflow for the twenty-six weeks ended June 29, 2025 of $4.3 million related to purchases of intangible assets.
Financing Activities
For the twenty-six weeks ended June 29, 2025, cash provided by financing activities increased $0.9 million compared to the twenty-six weeks ended June 30, 2024, primarily due to a payment associated with the contingent consideration liability in the prior year period, partially offset by a decrease in proceeds from stock option exercises.
Critical Accounting Estimates
The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenue and expenses during the reporting period. Our most significant estimates and judgments involve difficult, subjective, or complex judgements made by management. Actual results may differ from these estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. There have been no material changes to our critical accounting estimates as described in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.
Recent Accounting Pronouncements
See Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Quarterly Report.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We have operations solely within the United States, and we are exposed to market risks in the ordinary course of our business. The primary risks we face are commodity price risks, interest rate risk, effects of inflation, and macroeconomic risks. There have been no material changes to our exposure to market risks as described in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.
ITEM 4. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.
Our disclosure controls and procedures are based on assumptions about the likelihood of future events, and even effective disclosure controls and procedures can only provide reasonable assurance of achieving their objectives. Because of their inherent limitations, we cannot guarantee that our disclosure controls and procedures will succeed in achieving their stated objectives in all cases, that they will be complied with in all cases, or that they will prevent or detect all misstatements.
Changes in Internal Control Over Financial Reporting
There were no changes to our internal control over financial reporting that occurred during the fiscal quarter ended June 29, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We are subject to various claims, lawsuits, governmental investigations, and administrative proceedings that arise in the ordinary course of business. We do not believe that the ultimate resolution of any of these matters will have a material effect on our financial position, results of operations, liquidity, or capital resources. However, an increase in the number of these claims, or one or more successful claims under which we incur greater liabilities than we currently anticipate, could materially and adversely affect our business, financial position, results of operations, and cash flows.
ITEM 1A. RISK FACTORS
For a description of risks and uncertainties that could impact our business, including risks and uncertainties related to macroeconomic conditions and changes in consumer discretionary spending and related to U.S. international trade policies, including the imposition of tariffs, and increases in the cost of ingredients and equipment, see Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024. Other than the risk factors listed below, there have been no material changes from the risk factors described in our Annual Report.
Changes in food and supply costs or failure to receive frequent deliveries of food ingredients and other supplies could have an adverse effect on our business, financial condition, and results of operations.
Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs, and our ability to maintain our menu depends in part on our ability to acquire ingredients that meet our specifications from our suppliers. Shortages or interruptions in the availability of certain supplies caused by unanticipated demand, our inability to accurately forecast our supply needs, problems in production or distribution, food contamination, inclement weather, or other conditions could adversely affect the availability and cost of food and supplies or the quality of our ingredients (including requiring distributors to provide substitute products, which may not be of equal quality), which could harm our operations and expose us to risk. We have a localized set of suppliers, and in some cases rely on a single regional distributor for our produce items and another single regional distributor for grocery products in each geographical market where we operate, which may make our supply chain inherently more difficult to manage than if we partnered with national distributors, which is the approach of many of our competitors. In addition, we partner with farmers and suppliers of various sophistication, and certain of those farmers and suppliers may have low inventory levels and limited ability to mitigate any supply disruptions that they experience, which may place our business at risk. This may further limit our ability to grow and scale and, in some situations, to serve our customers on a daily basis. Additionally, our farmers may not maintain food safety certifications, which may increase our risk in the event of a food safety incident. We have developed a process to monitor food safety certifications and standards of our farmers and we do not generally source products from farmers that do not have a comprehensive food safety plan. We periodically audit our farmers’ compliance with our food safety and other standards, and in the event of material noncompliance with our standards (which occurred with one of our leafy greens suppliers in fiscal year 2024 and with one of our pickle suppliers in fiscal year 2023), our policy is to pause our relationship with such farmer until they become compliant.
Any increase in the prices, or lack of availability, of the food products and other supplies most critical to our business, whether due to natural forces like weather or climate change, other companies offering more competitive terms to our suppliers, inflation, animal diseases, increased labor costs for our suppliers, or other reasons could have an adverse effect on our business, financial condition, and results of operations. For example, in fiscal year 2024, avian influenza outbreaks disrupted our supply of chicken and eggs in certain of our geographic regions, resulting in shortages and higher prices. United States’ immigration laws are currently a topic of considerable political focus, and U.S. Immigration and Customs Enforcement (ICE) recently intensified certain of its immigration enforcement efforts. Changes in immigration or work authorization laws or additional enforcement activities of existing immigration or work authorization laws by federal or state authorities could increase those suppliers’ labor costs, increase the prices, and limit the availability of the food products that we purchase from those suppliers. Additionally, the markets for some of the ingredients we use, such as avocados, are particularly volatile due to factors such as limited supply sources, crop yield, seasonal shifts, climate conditions, industry demand, food safety concerns, product recalls, government regulations, and international trade barriers. Further, the implementation of tariffs has impacted, and is expected to continue to impact, the cost of certain of our supplies. Material increases in
the prices or decreased availability of the ingredients and supplies most critical to our business could adversely affect our business, financial condition, and results of operations or cause us to consider changes to our product delivery strategy or adjustments to our menu pricing.
Our ability to maintain consistent price and quality throughout our restaurants depends in part upon our ability to acquire specified food products and supplies in sufficient quantities from our suppliers and distributors at a reasonable cost. Because of the way our supply chain is structured, finding a substitute product that meets our culinary requirements in any one geographical market where we operate, particularly with respect to our fresh food products, may be difficult. We do not control the businesses of our suppliers or distributors, and our efforts to specify and monitor the standards under which they perform may not be successful.
In the past, we experienced supply chain disruptions for our bowls and plates, which resulted in the use of alternative packaging solutions. Additionally, most of our bowls and plates are produced outside the United States, and beginning in 2025 we have been, and may continue to be, subject to new and increased tariffs and duties in connection with the importation of those items into the United States. Any additional tariffs or duties may significantly increase the price that we must pay for such items. We are also in the process of transitioning a portion of the production of our bowls and plates to a new supplier, which has increased certain of our costs and caused certain supply disruptions. If we experience further supply disruptions or further cost increases with respect to our bowls and plates, and if we are unable to mitigate those supply disruptions or further cost increases by identifying and securing alternative packaging solutions acceptable to our customers in a timely manner and on commercially reasonable terms, this may result in customer dissatisfaction and store closures and could adversely affect our business, financial condition, and results of operations (including, in particular our Restaurant Level Profit Margin).
If any of our distributors or suppliers performs inadequately or is unable to grow and scale with our business, or if our distribution or supply relationships are disrupted for any reason, there could be an adverse effect on our business, financial condition, and results of operations. Currently, we typically have shorter-term contracts for the purchase or distribution of most of our food products and supplies. As a result, we may see certain of our food or supply costs increase with limited or no notice, and we may not be able to anticipate or react to such increases by adjusting our purchasing practices or menu prices, which could cause our results of operations to deteriorate. When we have fixed-price agreements in place for particular ingredients or supply chain services, the durations of those agreements typically range from three months to multiple years, depending on our strategy and the pricing outlook with respect to that particular ingredient or service. In some cases, we have minimum purchase obligations.
We have tried to increase, where practical, the number of suppliers for our ingredients, which we believe can help mitigate pricing volatility, and we follow industry news, trade issues, exchange rates, foreign demand, weather, crises, and other world events that may affect our ingredient prices. In the event of a dispute with a distributor or supplier, we may not have adequate contractual recourse, and any insurance maintained by our distributors and/or suppliers, or by us, may not be sufficient to cover the cost of a potential claim. If we cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and other items at our restaurants such as packaging or paper products, which could cause a restaurant to remove items from its menu. If that were to happen, affected restaurants could experience significant reductions in sales during the shortage or thereafter, if customers change their dining habits as a result. In addition, we may choose not to, or may be unable to, pass along commodity price increases to customers. These potential changes in food and supply costs could have an adverse effect on our business, financial condition, and results of operations.
Furthermore, certain food items are perishable, and we have limited control over whether these items will be delivered to us in appropriate condition for use in our restaurants. If any of our vendors or other suppliers are unable to fulfill their obligations to our standards, including if we do not accurately forecast our needs (which has been historically challenging when there have been events outside of our control, such as the COVID-19 pandemic), or if we are unable to find replacement providers in the event of a supply or service disruption, we could encounter supply shortages and incur higher costs to secure adequate supplies or, alternatively, receive lower-quality substituted products, which would have an adverse effect on our business, financial condition, and results of operations. Additionally, unanticipated store closures may result in our donation of an excess supply of perishable products, which may also have an adverse effect on our financial condition.
As we expand into new markets, because of our commitment to our Food Ethos, we may be unable to find vendors to meet our supply specifications or service needs as we expand. We could likewise encounter supply shortages
and incur higher costs to secure adequate supplies, which would have an adverse effect on our business, financial condition, and results of operations. For example, during the fourth fiscal quarter of 2024, as a result of extreme weather conditions, we experienced supply chain disruptions for tomatoes and cucumbers, which resulted in higher prices for those products or resulted in temporarily discontinuing those products in certain geographic markets. In the event of such shortages in the future, there can be no assurance that we will be able to identify or negotiate additional or alternative sources on terms that are commercially reasonable to us, if at all. If our suppliers or distributors are unable to fulfill their obligations under their contracts or we are unable to identify alternative sources, we could encounter supply shortages and incur higher costs, each of which could have an adverse impact on our results of operations. Similarly, if we are unable to accurately forecast demand, we may end up with overages of custom and/or perishable products, which may result in food waste and in us paying suppliers or farmers for products that we do not end up using.
Our international supply chain subjects us to tariffs and duties, which have had and may continue to have an adverse effect on our business, financial condition, and results of operations.
Our international supply chain subjects us to tariffs and duties, which have caused and may continue to cause an increase in certain of our costs. While our core ingredients are predominantly sourced from domestic suppliers, we also source certain items for our restaurants from outside the United States. Notably, most of our bowls and plates are produced outside of the United States, including in China. The items procured from outside the United States expose our business to tariffs and duties implemented by the U.S. government, including new tariffs initiated by recent changes to U.S. trade policy. For our second fiscal quarter of 2025, we realized a tariff and duty impact from our food, beverage, and packaging supply chain of approximately 40 basis points, and we expect a similar impact in future fiscal periods. We also expect the recent tariffs implemented by the U.S. government to increase our new restaurant build-out costs and the cost of the Infinite Kitchen units that we purchase. If we fail to mitigate the financial impact of the tariffs and duties imposed by the U.S. government, such tariffs and duties could have an adverse effect on our business, financial condition, and results of operations.
There is currently significant uncertainty with respect to future trade regulations, including the possible imposition by the U.S. government of additional tariffs and penalties on products from non-U.S. countries. The U.S. government may impose additional tariffs or other trade restrictions in response to a diverse array of factors, including global and national economic and political conditions, which make it impossible for us to predict future developments regarding tariffs or other trade restrictions. Further, these tariffs could cause a general increase in the price of items we purchase within the United States. If there is a further escalation of existing tariffs or new tariffs are imposed, costs on a significant portion of our ingredients and equipment, as well as the costs of opening new restaurants and renovating existing restaurants, may increase further and our financial results may be negatively affected.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On June 10, 2025, we issued an aggregate of 242,722 shares of our Class A common stock to former equity holders of Spyce in satisfaction of the second milestone payment due in connection with our acquisition of Spyce.
The foregoing transaction did not involve any underwriters, underwriting discounts or commissions, or any public offering. We believe the issuance of the above securities was exempt from registration under the Securities Act by virtue of Section 4(a)(2) of the Securities Act or Regulation D or promulgated thereunder.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
Adoption or Termination of 10b5-1 Trading Plans
During the fiscal quarter ended June 29, 2025, no director or officer (as defined in Rule 16a-1(f) under the Exchange Act) or any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement, as such terms are defined in Item 408(a) of Regulation S-K under the Exchange Act.
ITEM 6. EXHIBITS
The following exhibits are included herein or incorporated herein by reference:
| | | | | | | | | | | | | | | | | | | | |
| Exhibit Number | Exhibit Description | Form | File No. | Exhibit | Filing Date | Filed Herewith |
| 3.1 | | 8-K | 001-41069 | 3.1 | 11/22/2021 | |
| 3.2 | | 8-K | 001-41069 | 3.2 | 11/22/2021 | |
| 10.1 | | 10-Q | 001-41069 | 10.1 | 05/08/2025 | |
| 10.2 | | 10-Q | 001-41069 | 10.2 | 05/08/2025 | |
| 31.1 | | | | | | X |
| 31.2 | | | | | | X |
| 32.1† | | | | | | X |
| 101.INS | XBRL Instance Document (embedded within the Inline XBRL document) | | | | | X |
| 101.SCH | XBRL Taxonomy Extension Schema Document | | | | | X |
| 101.CAL | XBRL Taxonomy Extension Calculation Linkbase Document | | | | | X |
| 101.DEF | XBRL Taxonomy Extension Definition Linkbase Document | | | | | X |
| 101.LAB | XBRL Taxonomy Extension Label Linkbase Document | | | | | X |
| 101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document | | | | | X |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | | | | | X |
__________
† The certifications attached as Exhibit 32.1 that accompany this Quarterly Report on Form 10-Q are not deemed filed with the SEC and are not to be incorporated by reference into any filing of the Registrant under the Securities Act, whether made before or after the date of this Quarterly Report on Form 10-Q, irrespective of any general incorporation language contained in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | | | |
| SWEETGREEN, INC. |
| | |
Date: August 7, 2025 | By: | /s/ Mitch Reback |
| | Mitch Reback |
| | Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer, and Duly Authorized Signatory) |
Similar companies
See also MCDONALDS CORP -
Annual report 2023 (10-K 2023-12-31)
Annual report 2024 (10-Q 2024-09-30)
See also CHIPOTLE MEXICAN GRILL INC -
Annual report 2022 (10-K 2022-12-31)
Annual report 2023 (10-Q 2023-09-30)
See also YUM BRANDS INC -
Annual report 2022 (10-K 2022-12-31)
Annual report 2025 (10-Q 2025-03-31)
See also Yum China Holdings, Inc. -
Annual report 2022 (10-K 2022-12-31)
Annual report 2023 (10-Q 2023-09-30)
See also Restaurant Brands International Inc. -
Annual report 2022 (10-K 2022-12-31)
Annual report 2023 (10-Q 2023-09-30)
Open main menu