sweetgreen to Debut Automated Production Line
Key Takeaways
sweetgreen Inc. announced financial results for its first fiscal quarter ended March 26, 2023 on May 4.
- Total digital revenue was 61% and owned digital revenue was 39%, versus 66% and 43% in the prior year, respectively
- Same-store sales change of 5% versus 35% in the prior year period.
- Total revenue was $125.1 million versus $102.6 million in the prior year period, an increase of 22%.
- AUV of $2.9 million versus AUV of $2.8 million in the prior year
- Loss from operations was $(35.3) million and loss from operations margin was (28)%
sweetgreen will open its first restaurant with its automated production line called the sweetgreen Infinite Kitchen, in Naperville, Illinois, on May 10.
Jonathan Neman, Co-Founder and CEO, made the announcement during a May 4 earnings call with analysts.
“Later this year, we will open a second Infinite Kitchen retrofitting an existing restaurant so that we can learn how best to integrate the Infinite Kitchen in an existing site,” he said.
This is the brand's first automated kitchen since sweetgreen acquired the robotic kitchen concept Spyce back in 2021. Four MIT grads, who were seeking healthy and affordable fast-casual food, introduced Spyce’s original automated concept in May 2018 in Boston.
“From these pilots, we hope to learn how we can create a more consistent customer experience faster throughput and make our team members' jobs easier and more dynamic. We believe this new concept powered by automation unlocks efficiency that will enable us to grow more quickly and have higher profit margins. While we're still testing and learning, we expect the Infinite Kitchen will be increasingly integrated into our pipeline,” Neman added. No other details were disclosed during the May 4 call.
For fiscal Q1 '23, sweetgreen opened 12 new restaurants, ending the quarter with 195 locations. “Since the quarter ended, we've opened an additional five restaurants,” Neman said. “We remain on pace to open between 30 and 35 net new restaurants this year with plans to enter three additional new markets: Seattle, San Antonio and Milwaukee.”
Building Loyalty
Another key initiative is increasing the number of members in Sweetpass, its loyalty program that debuted last month. Sweetpass has a free and a premium tier. For $10 a month, Sweetpass Plus members receive additional perks such as $3 off daily orders, delivery perks, premier access to merch drops, and exclusive sweetgreen experiences. sweetgreen ran a pilot of this program in January 2022 and based on strong customer demand and feedback, they made it part of the program.
Regarding Sweetpass, "We had a very smooth launch with great buzz. We believe the program will drive margin improvements not only from the underlying membership fees, which come at limited costs, but also through incrementality across our customer base," Neman said.
Menu Updates
Known for its healthy food options, the brand is broadening its menu with new food and beverage options including a Chipotle Burrito Bowl (not affiliated with the fast-casual brand) and at its South Florida locations an LTO bowl with Michelin starred Miami restaurant Boia De.
“Our robust menu roadmap includes continuing to test into additional heartier and more craveable grains and proteins, more collaborations with influential chefs, and expanding savory and sweet attachments, including expanding our dessert offering,” he added.
Workforce Activated
Neman told the analysts that the restaurants are fully staffed. “During Q1, sweetgreen increased its digital throttle levels 20% across the fleet, and we continue to see improved front of house throughput across trade areas.”
Full-time employees are proving to be the most reliable. “Our restaurants are fully staffed and we continue to focus on hiring and retaining those that work full time. Our data shows those who are scheduled to work full time call out less and have higher tenure. In the first quarter we saw lower turnover attributable to these scheduling practices.”
By the end of the year, sweetgreen will join the number of brands adding digital tipping, which Neman says will improve team member turnover rate and in turn create a better overall customer experience.