Q1 2023 results for Sweetgreen (SG)


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, in the United States, Thursday, November 18, 2021.

Michael Nagle | Bloomberg | Getty Images

sweetgreen THURSDAY reported a lower-than-expected loss in the first quarter after slowing its expansion to focus on profitability.

The salad chain, which went public in November 2021, aims to make an initial profit by 2024. Last quarter, it announced it would take a more conservative approach to entering new markets. It also reduces support center costs and simplifies its management structure.

Shares of Sweetgreen rose 6% in extended trading.

Here’s what the company reported compared to what Wall Street expected, based on a Refinitiv analyst survey:

  • Loss per share: 30 cents vs. 35 cents expected
  • Income: $125.1 million vs $126 million expected

The salad chain posted a net loss of $33.7 million, or 30 cents per share, in the first quarter, reducing its net loss from $49.7 million, or 45 cents per share, a year earlier.

Sweetgreen said its restaurant-level profit margins improved 1% in the quarter.

Net sales climbed 22% year-over-year to $125.1 million, and same-store sales rose 5%, beating FactSet’s estimate of 4.9%. Quarterly traffic increased by 2% while menu prices increased by 3% compared to the same period of the previous year.

Sweetgreen CEO Jonathan Neman told CNBC that the chain’s Chicken + Chipotle Pepper Bowl has brought in new customers and generated buzz. The menu item was Sweetgreen’s first hot bowl without lettuce.

But some of the buzz may come from Chipotle’s lawsuit against Sweetgreen for alleged copyright infringement over the article’s original name, Chipotle Chicken Burrito Bowl. The two fast food chains reached a tentative settlement that included renaming the bowl shortly after Chipotle filed the lawsuit.

Digital transactions accounted for 61% of sales, down slightly from a year earlier, when they accounted for two-thirds of its revenue. Neman said the decline was the result of more in-person orders adding to Sweetgreen’s overall sales.

The company opened nine net new restaurants during the quarter.

Sweetgreen reiterated most of its guidance for 2023, which calls for revenue between $575 million and $595 million and same-store sales growth of 2% to 6%.

However, it updated its outlook for adjusted earnings before interest, tax, depreciation and amortization from a loss of $13-15 million to a loss of $13-3 million. The company said the update is due to a $6.9 million benefit from employee retention tax credits.

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