One of the cases for sweetgreen’s call to go public in November 2021, reaching a valuation of $6 billion, was the idea the fast casual’s awareness outsized its unit count. It had expanded fivefold since being founded 15 years prior by three college friends in a 560-square-foot Washington, D.C., restaurant. But there were still just 150 units at year-end 2021 and a vision of 1,000 that had one prominent roadblock: profitability.

This topic has weaved through earnings calls and updates ever since. The brand reduced its corporate staff by 5 percent in August 2022 and moved a Los Angeles base to a smaller, adjacent facility. It started to focus on “quality over quantity” with new sites last February and got bold with an automated “Infinite Kitchen” and “sweetlane” drive-thru.

The potential, however, lied in these two corners of ambition coming together. And that’s getting closer.

Sweetgreen in Q1 reported arguably its best three-month stretch since taking to the stock market, besting Wall Street expectations on all key metrics, per William Blair. Revenue of $157.9 million was 26 percent above last year’s result. Same-store sales climbed 5 percent (flat traffic, benefit of menu price; on an adjacent point, the brand took 5 percent price in California recently to offset the April 1 $20 minimum wage hike). Sweetgreen’s price benefit should settle at roughly 4 percent for the remainder of 2024, as a percent rolled off in April.

Total digital sales clocked 59 percent of the business, with 56 percent of that flowing via sweetgreen’s own digital channels.

Sweetgreen’s comp progressed through the quarter as many brands in Q1 could relate—slightly negative in January due to weather, mid-single-digits by February, high-single digits in March.

But the flashing metric was restaurant-level margins, which at 18.1 percent represented a 400-basis point improvement, year-over-year (13.5 percent), and “one of the highest first-quarter restaurant-level margin performances in the company’s history,” CEO Jonathan Neman said.

Store-level profit in Q1 was also $28.5 million, or nearly 70 percent higher than Q1 2023, when it was $16.9 million.

While sweetgreen still swung a loss ($26.9 million from operations), it was a material improvement from dropping $35.3 million in the comparable quarter last year. Net loss was $26.1 million compared to $33.7 million as well.

Adjusted EBITDA was $100,000 over a negative result of $6.7 million in 2023. EBITDA margin reported zero percent instead of 5 percent slide.

As for what drove the trajectory, it’s a few developments that trace back to that early promise. In Q1, sweetgreen debuted six restaurants, including two in a new market—Seattle. It also opened in San Francisco, Miami, Denver, and Austin. The stores are already outpacing sweetgreen’s existing fleet average ($2.9 million AUVs in the period).

Sweetgreen’s Totem Lake, Washington, opening, Neman said, fast became a top performer. Then, the South Lake Union store in Seattle generated one of the strongest first weeks in recent sweetgreen history. Both, Neman added, are operating at volumes akin to large urban locations.

“Openings like these demonstrate that our brand has significantly greater reach than our current physical footprint and that there is massive whitespace of our category-defining concept,” Neman said.

CFO Mitch Reback added some of the fastest sales growth at sweetgreen stemmed from new markets. The Southeast, for instance, grew double-digits in Q1.

As sweetgreen navigated and learned from scale in recent years, it adjusted real estate targeting, especially when it comes to entering suburban markets. In tandem, Neman explained, there’s been a clear unlock in brand awareness over time. “There’s markets that are waiting for us to open,” he said.

DMAs that were once struggling, like Texas, Atlanta, and Florida, have begun to flip as sweetgreen’s profile expands. Neman said the chain adjusted many of its marketing strategies, from how it promotes new stores to how it supports them, “not just for the launch, but for the first … three to six months,” he said. “We’ve seen really positive results. So we feel really good about the new stores. I think we’re getting a lot of momentum here and it gives us a lot of confidence as we look to reaccelerate our pipeline.”

Additionally, there’s been a good deal of learnings around in-store operations, staffing, head coaches (managers), training, and the internal promotion focus of bringing along leaders who understand the business and culture, and empowering them to open new stores.

Sweetgreen's Infinite Kitchen.
Sweetgreen’s Infinite Kitchen stores are seeing a 10 percent higher average check.

Automation and acceleration

Perhaps the buzziest of sweetgreen’s initiatives of late, though—its Infinite Kitchen, which automates the bowl making process—continues to progress. At the end of Q1, the two units, located in suburban trade areas, were tracking toward AUVs of $2.6 million. They also delivered margin of 28 percent, 10 points above the system average.

Neman said they’re producing faster throughput, better order accuracy, consistent portions, and “substantiality lower” employee turnover, as well as higher average checks.

Sweetgreen is on track to open about seven Infinite Kitchens this year alongside three to four retrofits of large urban units, the first of which is coming to New York City in the summer.

In 2025, Neman said, it’ll head into another gear.

Sweetgreen told investors last quarter it expected about 7 points of leverage for Infinite Kitchen stores. It’s actually seen a bit higher thus far.

“As we think about what the Infinite Kitchen could look like going forward, we do think it’s going to be a huge part of our go-forward strategy,” Neman said. “As we get manufacturing set up and get more confident in … how we design those experiences and continue to drive down the cost of the machines to fit into more places, you’ll see a much higher mix of our deployment in new stores.”

The retrofits, in particular, will offer feedback for sweetgreen as it examines the wider goal. How much downtime will be involved? What’s the cost involved? How much uplift does it offer? Then a picture of where Infinite Kitchens extend beyond new openings can crystalize.

“We’ve talked in the past that there is definitely a huge chunk of very high-volume stores that we think have an opportunity for retrofit, but I think we have a little bit more to learn in terms of understanding does it go everywhere and at what time frame and do we wait for the renovation cycle? Or do we pull it forward?” Neman said.

Both Infinite Kitchens (Huntington Beach, California, and Naperville, Illinois) are young. Naperville just turned a year this week. “A lot of people have asked about the Infinite Kitchen, how we feel about it and what our confidence level is,” Neman continued. “And what I’ve shared in the past, and I’ll reiterate, is that we feel very good about the technology and what the scalability of the technology [is]. It works, our teams love it, and it delivers.”

Overall, sweetgreen expects to return to a growth rate of 15–20 percent next year, with 2025 being at the lower end and 2026 targeting the higher. This year, the company should open 23–27 new stores. There are 227 currently.

Neman added, alongside Infinite Kitchens, smaller formats and drive-thru prototypes remain part of the playbook. The “sweetlane” pickup window has seen “some great success” and there’s a pickup kitchen where guests can order ahead and grab their orders that does “phenomenally well.”

Into the stores

Neman said sweetgreen’s turnover in Q1 was 19 points lower than a year ago and has stabilized to the lowest level since pre-COVID. The brand’s 90-day retention is 10 points higher, year-over-year, and more than half of “head coaches” are internal promotions. Sweetgreen recently introduced manager bonuses and tipping for crew members.

The goal, as Neman hinted before, is to increase that percentage so future openings reach the market with strong leadership in place. “That is our people flywheel,” Neman said. “And so much of what we can offer at sweetgreen is really part of what I call the American Dream of starting somewhere as a team member and within three years being a head coach making over $100,000 a year. It’s a huge part about what we’re trying to do, is not only create something great for our customers, but create great opportunities for our team members.”

The company hopes staffing efforts flow to throughput, where it’s working to narrow the gap between high-performing units that boast 90 orders per peak 15 minutes and those toward the bottom (more like 40 to 50 orders). Five incremental transactions per 15-minute interval, per location, translates to a comp point, Neman explained. The brand wants to get better staffed and trained and deployed correctly to unlock throttles on its digital make line. “One, there’s the immediate pickup of those additional transactions,” Neman said. “So as you go faster, you can pick up those additional transactions. But I think what you get over time is a change in perception around the brand. So you think about lunch or dinner and you think about how much time you have and there’s brands that are in your consideration set, and then there’s one that’s not. As we start to pick up throughput, you start to enter that consideration set for people that have more limited time, and we know that over time that drives transactions.”

Sweetgreen recently made a big menu move on Tuesday by taking Caramelized Garlic Steak to menus nationwide. it resulted in the highest-grossing sales day in the company’s nearly 17-year history.

The recipe features cuts of grass-fed, pasture-raised steak, seasoned with a garlic spice blend and roasted for a caramelized char on the outside and a juicy center on the inside. It’s then finished in a toss of extra virgin olive oil and herbs.

Sweetgreen started testing the product February in Boston. During pilot, Neman said, it became a dinner favorite, with steak included in nearly one in every five orders at the daypart. Protein Plates, more broadly, are over-indexed at dinner and in Southeast and Texas markets. Those launched less than six months ago.

Meanwhile, Neman said there’s gains to be had in “urban lunch time demand,” where there’s a walkway factor (this is mostly a legacy market conversation). Sweetgreen invested in labor scheduling last spring and is asking head coaches to spend more time on the floor with customers to improve hospitality and throughput. In the coming quarters, Neman added, sweetgreen will try to tap in by reducing time on routine, in-restaurant tasks and by improving labor deployment across dayparts.

“How we deploy labor, not just from an efficiency perspective, but to better capture peak demand and offer that hospitality that our customers expect, there is a ton of opportunity,” Neman said. “So today, we’ve put a huge focus on both of those things on staffing for the peak and being ready to serve as many customers as we can in those periods. But we are looking at investments around different labor deployment systems that we think over time can continue to drive more efficiencies in how we deploy labor.”

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