Sweetgreen, Inc 10-Q for FY2023 Q1

Sweetgreen, Inc. (SG)

10-Q 2023-05-05 For: 2023-03-26

Added on April 08, 2026

About this 10-Q

Sweetgreen, Inc filed this 10-Q on May 5, 2023, covering the quarter ended March 26, 2023 (FY2023 Q1).

Headline figures

Quarter ended March 26, 2023, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $125.06M; up 21.9% from $102.59M a year earlier
Net loss: $33.66M; compared with a net loss of $49.65M a year earlier
Diluted EPS: -$0.30; compared with -$0.45 a year earlier

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Delaware						27-1159215
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

3102 36th Street Los Angeles, CA						90018
(Address of Principal Executive Offices)						(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock	SG	New York Stock Exchange


Large accelerated filer	x	Accelerated filer	o
Non-accelerated filer	o	Smaller reporting company	o
		Emerging growth company	o


		Page
Part I Financial Information
Item 1.	Financial Statements	1
	Condensed Consolidated Statements of Balance Sheets	1
	Condensed Consolidated Statements of Operations	2
	Condensed Consolidated Statement of Stockholders’ (Deficit) Equity	3
	Condensed Consolidated Statements of Cash Flows	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market	38
Item 4.	Controls and Procedures	38

Part II Other Information
Item 1.	Legal Proceedings	39
Item 1A.	Risk Factors	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	39
Item 3.	Defaults Upon Senior Securities	39
Item 4.	Mine Safety Disclosures	39
Item 5.	Other Information	39
Item 6.	Exhibits	39
Signatures		41


	As of March 26, 2023		As of December 25, 2022
ASSETS
Current assets:
Cash and cash equivalents	$	296,828	$	331,614
Accounts receivable	5,064		3,244
Inventory	1,284		1,383
Prepaid expenses	7,537		8,161

Current portion of lease acquisition costs	93		93
Other current assets	8,042		1,654
Total current assets	318,848		346,149
Operating lease assets	$	257,130	$	254,059
Property and equipment, net	246,929		235,257
Goodwill	35,970		35,970
Intangible assets, net	30,082		30,562
Lease acquisition costs, net	495		518
Security deposits	1,522		1,528
Other assets	4,705		4,767
Restricted cash	125		125
Total assets	$	895,806	$	908,935
LIABILITIES, AND STOCKHOLDERS’ EQUITY
Current liabilities:
Current portion of operating lease liabilities	$	28,814	$	29,642
Accounts payable	13,124		12,242
Accrued expenses	20,731		22,069
Accrued payroll	8,757		6,580
Gift cards and loyalty liability	1,836		2,016


Total current liabilities	73,262		72,549
Operating lease liabilities, net of current portion	$	274,607	$	271,097


Contingent consideration liability	22,348		21,296
Other non-current liabilities	1,299		1,353
Deferred income tax liabilities	1,733		1,414

Total liabilities	$	373,249	$	367,709
COMMITMENTS AND CONTINGENCIES (Note 14)


Stockholders’ equity:
Common stock, $0.001 par value per share, 2,000,000,000 Class A shares authorized, 98,162,944 and 97,656,690 Class A shares issued and outstanding as of March 26, 2023 and December 25, 2022, respectively; 300,000,000 Class B shares authorized, 13,280,558 and 13,476,303 Class B shares issued and outstanding as of March 26, 2023 and December 25, 2022, respectively	111		111

Additional paid-in capital	1,227,704		1,212,716
Accumulated deficit	(705,258)		(671,601)
Total stockholders’ equity	522,557		541,226
Total liabilities and stockholders’ equity	$	895,806	$	908,935


x			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Thirteen weeks ended
	March 26, 2023		March 27, 2022
Revenue	$	125,062	$	102,591
Restaurant operating costs (exclusive of depreciation and amortization presented separately below):
Food, beverage, and packaging	35,587		27,106
Labor and related expenses	39,243		34,302
Occupancy and related expenses	12,630		10,517
Other restaurant operating costs	20,665		17,275
Total restaurant operating costs	108,125		89,200
Operating expenses:
General and administrative	34,907		50,199
Depreciation and amortization	13,110		10,677
Pre-opening costs	3,366		2,512
Impairment and closure costs	190		17
Loss on disposal of property and equipment	48		8
Restructuring charges	638		—
Total operating expenses	52,259		63,413
Loss from operations	(35,322)		(50,022)
Interest income	(3,062)		(168)
Interest expense	21		23
Other (income) expense	1,058		(245)
Net loss before income taxes	(33,339)		(49,632)
Income tax expense	318		20
Net loss	$	(33,657)	$	(49,652)
Earnings per share:
Net loss per share basic and diluted	$	(0.30)	$	(0.45)
Weighted average shares used in computing net loss per share basic and diluted	111,297,064		109,472,050


		For the thirteen weeks ended March 26, 2023 and March 27, 2022
	Common Stock	Additional Paid-in Capital					Accumulated Deficit		Total
			Shares			Amount
Balances at December 26, 2021		109,345,697		$	109		$	1,129,224		$	(476,216)	$	653,117
Net loss		—		—			—			(49,652)		(49,652)
Exercise of stock options		153,158		1			848			—		849
Issuance of common stock related to restricted shares		12,500		—			—			—		—

Stock-based compensation expense		—		—			22,165			—		22,165


Adoption of ASC 842		—		—			—			(4,944)		(4,944)
Balances at March 27, 2022		109,511,355		$	110		$	1,152,237		$	(530,812)	$	621,535

Balances at December 25, 2022		111,132,993		$	111		$	1,212,716		$	(671,601)	$	541,226
Net loss		—		—			—			(33,657)		(33,657)
Exercise of stock options		160,964		—			767			—		767
Issuance of common stock related to restricted shares		155,558		—			—			—		—

Shares repurchased for employee tax withholding		(6,013)		—			(44)			—		(44)
Stock-based compensation expense		—		—			14,265			—		14,265

Balances at March 26, 2023		111,443,502		$	111		$	1,227,704		$	(705,258)	$	522,557


SWEETGREEN, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS


(dollar amounts in thousands)	As of March 26, 2023		As of December 25, 2022
Reconciliation of cash, cash equivalents and restricted cash:
Cash and cash equivalents	$	296,828	$	331,614
Restricted cash, noncurrent	125		125
Total cash, cash equivalents and restricted cash shown on statement of cash flows	$	296,953	$	331,739


		Fair Value Measurements as of March 26, 2023				Fair Value Measurements as of December 25, 2022
	Total	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3
(dollar amounts in thousands)
Contingent consideration	22,348	—	—	22,348	21,296	—	—	21,296


(dollar amounts in thousands)	Contingent Consideration
Balance—December 25, 2022	$	21,296
Change in fair value	1,052
Balance—March 26, 2023	$	22,348


(dollar amounts in thousands)
2023	$	4,629
2024	3,953
2025	1,400
2026	50
2027	—


(dollar amounts in thousands)	Classification	March 26, 2023		March 27, 2022
Operating lease cost	Occupancy and related expense General and administrative expense Pre-opening costs	11,829		9,640
Variable lease cost	Occupancy and related expense General and administrative expense	2,612		2,023
Short term lease cost	Occupancy and related expense General and administrative expense	145		145
Sublease income	General and administrative expense	(178)		(178)
Total lease cost		$	14,408	$	11,630


(dollar amounts in thousands)	As of March 26, 2023		As of December 25, 2022
Furniture and fixtures	$	29,915	$	27,262
Computers and other equipment	31,884		30,543
Kitchen equipment	75,600		71,304
Leasehold improvements	226,936		212,825
Assets not yet placed in service	32,349		34,767
Total property and equipment	396,684		376,701
Less: accumulated depreciation	(149,755)		(141,444)
Property and equipment, net	$	246,929	$	235,257


(dollar amounts in thousands)	As of March 26, 2023		As of December 25, 2022
Rent deferrals	$	1,362	$	1,728
Accrued general and sales tax	3,276		2,736
Accrued delivery fee	1,107		968
Accrued settlements and legal fees	1,256		1,106
Fixed asset accrual	4,316		5,963
Other accrued expenses	9,414		9,568
Total accrued expenses	$	20,731	$	22,069


(dollar amounts in thousands)
2023			32,748
2024			52,260
2025			52,457
2026			51,329
2027			47,018
Thereafter			163,890
Total			399,702
Less: imputed interest			96,281
Total lease liabilities			303,421


	As of March 26, 2023	As of December 25, 2022

Options outstanding under the 2009 Stock Plan, 2019 Equity Incentive Plan, Spyce Food Co. 2016 Stock Option Plan and Grant Plan and 2021 Equity Incentive Plan	14,367,322	13,813,922
Shares reserved for achievement of Spyce milestones	714,285	714,285
Shares reserved for employee stock purchase plan	3,000,000	3,000,000
RSUs and PSUs outstanding under the 2019 Equity Incentive Plan and 2021 Equity Incentive Plan	8,231,831	8,402,109


Shares available for future issuance under the 2019 Equity Incentive Plan and 2021 Equity Incentive Plan	9,961,480	10,655,568
Total reserved shares of common stock	36,274,918	36,585,884


	March 26, 2023		December 25, 2022
Weighted average remaining lease term (years):
Operating Leases	7.91		7.98
Weighted average discount rate:
Operating Leases	6.35	%	6.09	%


	March 26, 2023		March 27, 2022
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases, net of lease incentives	$	12,789	$	8,930
Right of use assets obtained in exchange for lease obligations:
Operating leases	$	10,532	$	8,697


(dollar amounts in thousands except per share amounts)	Number of Shares	Weighted Average Exercise Price Per Share		Weighted-Average Remaining Contractual Term (In Years)	Aggregate Intrinsic Value





Balance—December 25, 2022	13,813,922	$	7.86	6.63	$	34,454
Options granted	1,014,844	7.95
Options exercised	(160,964)	4.77
Options forfeited	(256,242)	8.66
Options expired	(44,238)	11.09
Balance—March 26, 2023	14,367,322	$	7.88	6.75	$	17,845

Exercisable—March 26, 2023	9,945,317	$	6.24	5.79	$	17,638

Vested and expected to vest—March 26, 2023	14,367,322	$	7.88	6.75	$	17,845


(dollar amounts in thousands except per share amounts)	Number of Shares	Weighted-Average Grant Date Fair Value
Balance—December 25, 2022	1,780,681	$	23.40
Granted	214,431	8.42
Released	(155,558)	22.15
Forfeited	(229,151)	22.65
Balance—March 26, 2023	1,610,403	$	23.77


	Thirteen weeks ended
(dollar amounts in thousands )	March 26, 2023			March 27, 2022
Net New Restaurant Openings	9			8
Average Unit Volume (as adjusted)(1)	$	2,932		$	2,793
Same-Store Sales Change (%)	5		%	35		%
Restaurant-Level Profit	$	16,937		$	13,391
Restaurant-Level Profit Margin (%)	14		%	13		%
Adjusted EBITDA	$	(6,694)		$	(16,976)
Adjusted EBITDA Margin (%)	(5)		%	(17)		%
Total Digital Revenue Percentage	61		%	66		%
Owned Digital Revenue Percentage	39		%	43		%


	Thirteen weeks ended
(dollar amounts in thousands)	March 26, 2023		March 27, 2022		Dollar Change		Percentage Change
Revenue	$	125,062	$	102,591	$	22,471	22	%
Restaurant operating costs (exclusive of depreciation and amortization presented separately below):
Food, beverage, and packaging	35,587		27,106		8,481		31	%
Labor and related expenses	39,243		34,302		4,941		14	%
Occupancy and related expenses	12,630		10,517		2,113		20	%
Other restaurant operating costs	20,665		17,275		3,390		20	%
Total cost of restaurant operations	108,125		89,200		18,925		21	%
Operating expenses:
General and administrative	34,907		50,199		(15,292)		(30	%)
Depreciation and amortization	13,110		10,677		2,433		23	%
Pre-opening costs	3,366		2,512		854		34	%
Impairment and closure costs	190		17		173		1018	%
Loss on disposal of property and equipment	48		8		40		100	%
Restructuring charges	638		—		638		N/A
Total operating expenses	52,259		63,413		(11,154)		(18	%)
Loss from operations	(35,322)		(50,022)		14,700		(29	%)
Interest income	(3,062)		(168)		(2,894)		1723	%
Interest expense	21		23		(2)		(9	%)
Other (income) expense	1,058		(245)		1,303		(532	%)
Net loss before income taxes	(33,339)		(49,632)		16,293		(33	%)
Income tax expense	318		20		298		100	%
Net loss	$	(33,657)	$	(49,652)	$	16,591	(32	%)


(amounts in thousands)	Thirteen weeks ended March 26, 2023		Thirteen weeks ended March 27, 2022
Net cash used in operating activities	(3,130)		(17,293)
Net cash used in investing activities	(32,379)		(19,065)
Net cash provided by financing activities	723		849
Net decrease in cash and cash equivalents and restricted cash	$	(34,786)	$	(35,509)


	SWEETGREEN, INC.

Date: May 4, 2023	By:	/s/ Mitch Reback
		Mitch Reback
		Chief Financial Officer (Principal Financial Officer, Principal Accounting Officer, and Duly Authorized Signatory)


			/s/ Jonathan Neman
			Jonathan Neman
			President and Chief Executive Officer
			(Principal Executive Officer)


			/s/ Mitch Reback
			Mitch Reback
			Chief Financial Officer
			(Principal Financial Officer)