8-K/A: Sweetgreen Announces Fourth Quarter and Fiscal Year 2024 Financial Results, Expects Continued Growth in 2025

Sweetgreen reports a 5% increase in total revenue for the fourth quarter of 2024 and anticipates at least 40 net new restaurant openings in fiscal year 2025.

Summary

• Sweetgreen, Inc. announced its financial results for the fourth quarter and fiscal year ended December 29, 2024.
• Total revenue for Q4 2024 was $160.9 million, a 5% increase compared to $153.0 million in the prior year period.
• Same-Store Sales Change was 4% in Q4 2024, compared to 6% in the prior year period.
• The Average Unit Volume (AUV) was $2.9 million, consistent with the prior year period.
• Net loss for Q4 2024 was $(29.0) million, compared to a net loss of $(27.4) million in the prior year period.
• Adjusted EBITDA for Q4 2024 was $(0.6) million, compared to $(1.8) million in the prior year period.
• For the full fiscal year 2024, total revenue was $676.8 million, a 16% increase compared to $584.0 million in the prior fiscal year.
• Same-Store Sales Change for fiscal year 2024 was 6%, compared to 4% in the prior fiscal year.
• Net loss for fiscal year 2024 was $(90.4) million, compared to $(113.4) million in the prior fiscal year.
• Adjusted EBITDA for fiscal year 2024 was $18.7 million, compared to $(2.8) million in the prior fiscal year.
• The company opened 10 net new restaurants in Q4 2024 and 25 net new restaurants in fiscal year 2024.
• Sweetgreen anticipates at least 40 net new restaurant openings in fiscal year 2025, with 20 featuring the Infinite Kitchen.
• Revenue for fiscal year 2025 is projected to range from $760 million to $780 million.
• Same-Store Sales Change for fiscal year 2025 is expected to be between 1-3%.
• Adjusted EBITDA for fiscal year 2025 is projected to be between $32 million to $38 million.
• For the first quarter of fiscal year 2025, Sweetgreen anticipates revenue ranging from $163 million to $166 million.
• Same-Store Sales Change for the first quarter of fiscal year 2025 is expected to be approximately (5)-(3)%.
• Adjusted EBITDA for the first quarter of fiscal year 2025 is projected to be between $(3) million to $(1) million.

Sentiment

Score: 6

Explanation: The sentiment is neutral to slightly positive. While the company is still reporting net losses, there's significant improvement in Adjusted EBITDA and Restaurant-Level Profit Margin. The forward-looking guidance is cautiously optimistic, but the projected negative Same-Store Sales Change for Q1 2025 tempers the overall positive outlook.

Positives

• Total revenue increased by 5% in Q4 2024 and 16% for the full year 2024.
• Restaurant-Level Profit Margin improved to 17% in Q4 2024 and 20% for the full year 2024.
• Adjusted EBITDA improved significantly, reaching $18.7 million for the full year 2024, marking the first full year of Adjusted EBITDA profitability.
• The company plans to open at least 40 net new restaurants in 2025, indicating continued expansion.
• Sweetgreen is focused on menu innovation, technology, and enhancing the guest experience.
• The company is strategically investing more in marketing to attract more customers.
• Sweetgreen's digital revenue remains a significant portion of total revenue, indicating a strong online presence.

Negatives

• The company experienced a net loss of $(29.0) million in Q4 2024 and $(90.4) million for the full year 2024.
• Loss from operations margin was (20)% for Q4 2024.
• Same-Store Sales Change decreased to 4% in Q4 2024 compared to 6% in the prior year period.
• Owned Digital Revenue Percentage decreased to 29% in Q4 2024 and 30% for the full year 2024.
• The company anticipates a negative Same-Store Sales Change of approximately (5)-(3)% for the first quarter of fiscal year 2025.
• Adjusted EBITDA is projected to be negative for the first quarter of fiscal year 2025, ranging from $(3) million to $(1) million.

Risks

• The company's forward-looking statements are subject to risks and uncertainties, including economic conditions, competition, and food safety concerns.
• The company's ability to achieve profitability in the future is uncertain.
• The company faces risks related to labor costs, labor shortages, and difficulties in hiring and retaining a qualified workforce.
• The company's expansion into new markets presents risks.
• The company's ability to build, deploy, and maintain its Infinite Kitchen technology in a timely and cost-effective manner is a risk.
• The company is subject to governmental regulation and changes in employment laws.
• The company faces potential privacy and cybersecurity incidents.

Future Outlook

Sweetgreen anticipates at least 40 net new restaurant openings in fiscal year 2025, with revenue ranging from $760 million to $780 million and Same-Store Sales Change between 1-3%. Adjusted EBITDA is projected to be between $32 million to $38 million for fiscal year 2025.

Management Comments

• Our 2024 results exceeded our initial expectations, thanks to the strength of our menu innovation, technology, and overall guest experience, said Jonathan Neman, Co-Founder and CEO.
• In 2025, we're rolling out a new and improved loyalty program, introducing exciting new menu items, and strategically investing more in marketing to bring more people into our restaurants.
• By staying focused on delivering an exceptional experience, we're setting Sweetgreen up to lead and redefine fast food for the future.
• Since our IPO in 2021, we have delivered 4 years of double digit revenue growth and 4 consecutive years of restaurant level margin expansion, said Mitch Reback, Chief Financial Officer.
• In 2024, restaurant-level margin expanded over 200 basis points, and Adjusted EBITDA of $18.7 million improved by $21.5 million over the prior year period.
• This marks our first full year of Adjusted EBITDA profitability in Sweetgreen's history, providing a solid foundation to grow and expand in the years to come.

Industry Context

Sweetgreen is positioning itself as a leader in the fast-casual restaurant industry, focusing on healthy food and technology innovation. The company's emphasis on digital channels and menu innovation aligns with current industry trends. The expansion plans indicate a belief in the continued growth of the healthy fast-casual market.

Comparison to Industry Standards

• Comparing Sweetgreen's Same-Store Sales Change of 6% for fiscal year 2024 to competitors like Chipotle (CMG) which reported 7.9% growth in 2024, Sweetgreen is performing slightly below the top tier in terms of sales growth.
• However, Sweetgreen's focus on digital revenue, with 56% of total revenue coming from digital channels, is comparable to other tech-forward restaurant chains like Domino's (DPZ), which has invested heavily in online ordering and delivery.
• Sweetgreen's Adjusted EBITDA margin of 3% for fiscal year 2024 is lower than more established players like McDonald's (MCD), which typically has EBITDA margins above 40%, but it's a significant improvement from the previous year and indicates progress towards profitability.
• The planned expansion of 40 net new restaurants in 2025 is a moderate growth rate compared to rapidly expanding chains like Dutch Bros (BROS), which is aggressively opening new locations across the US.
• Sweetgreen's AUV of $2.9 million is competitive within the fast-casual segment, but lags behind industry leaders like Chick-fil-A, which boasts significantly higher AUVs.

Stakeholder Impact

• Shareholders may be encouraged by the improved Adjusted EBITDA and Restaurant-Level Profit Margin, but concerned about the continued net losses.
• Employees may benefit from the company's expansion plans and investments in technology.
• Customers can expect new menu items and an improved loyalty program.
• Suppliers may see increased demand as the company opens more restaurants.
• Creditors may view the improved financial performance as a positive sign.

Next Steps

• Sweetgreen will roll out a new and improved loyalty program in 2025.
• The company will introduce exciting new menu items in 2025.
• Sweetgreen will strategically invest more in marketing to attract more customers.
• The company will open at least 40 net new restaurants in fiscal year 2025.
• Sweetgreen will file its Annual Report on Form 10-K for the fiscal year ended December 29, 2024.

Key Dates

Keywords

Sweetgreen, financial results, revenue, same-store sales, EBITDA, restaurant, profitability, expansion, digital revenue, Infinite Kitchen