Nicolas Jammet, chief concept officer and co-founder of Sweetgreen Inc., right, eats a salad during the company’s initial public offering (IPO) on the floor of the New York Stock Exchange (NYSE) in New York, the United States, on Thursday. November 18, 2021.
Michael Nagel | Bloomberg | Getty Images
sweet green on Thursday reported a lower-than-expected first-quarter loss after slowing its expansion to focus on profitability.
The lettuce chain, which went public in November 2021, aims to start making profits by 2024. Last quarter, it announced that it would be more conservative when entering new markets. It also reduces support center costs and simplifies the management structure.
Sweetgreen shares were up 7% in extended trading.
Here’s what the company reported, compared to Wall Street expectations, based on a poll of analysts by Refinitiv:
- Loss per share: 30 cents vs. 35 cents expected
- Revenue: $125.1 million versus $126 million expected
The salad chain reported a net loss of $33.7 million, or 30 cents a share, in the first quarter, narrowing its net loss from $49.7 million, or 45 cents a share, a year earlier.
Sweetgreen said its restaurant-level profit margins improved 1% during the quarter.
net sales was up 22% year over year to $125.1 million and same-store sales were up 5%, beating FactSet’s estimate of 4.9%. Quarterly traffic increased 2%, while menu prices rose 3% compared to the same period last year.
Sweetgreen CEO Jonathan Neman told CNBC that the chain’s Chicken + Chipotle Pepper Bowl attracted new customers and caused a stir. The menu item was Sweetgreen’s first warm bowl with no lettuce.
But some of the excitement may have come from Chipotle’s lawsuit against Sweetgreen for alleged copyright infringement of the item’s original name, Chipotle Chicken Burrito Bowl. The two fast-casual chains reached an interim settlement that included renaming the bowl shortly after Chipotle filed the lawsuit.
Digital transactions accounted for 61% of revenue, down slightly from last year when they accounted for two-thirds of revenue. Neman said the drop was a result of more personal orders adding to Sweetgreen’s overall sales.
The Company net opened nine new restaurant locations during the quarter. The company plans to open between 30 and 35 new locations in 2023, including two restaurants with automated kitchens using technology from the Spyce acquisition. The first of those restaurants, called Infinite Kitchens, will open Wednesday in Naperville, Illinois, outside of Chicago.
“We expect this to result in a higher margin profile and better economics for the units,” Neman said. “It’s a pilot project so we’ll learn a lot from it very early on, but overall I’m really looking forward to bringing it to life.”
Sweetgreen reiterated most of its 2023 guidance, which projects sales of between $575 million and $595 million and same-store sales growth of 2% to 6%.
However, it has updated its outlook for adjusted earnings before interest, taxes, depreciation and amortization from a loss of between $13 million and $15 million to a loss of between $13 million and $3 million. The company said the update was due to a $6.9 million benefit from employee retention tax credits.
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