Sweetgreen Reduces Corporate Support Center Space, Staff

Sweetgreen Inc. is looking for the path to profitability.

For the Q2 of fiscal year 2022, compared to the Q2 2021:

• Total revenue was $124.9 million versus $86.2 million 
• Same-Store Sales Change of 16% versus Same-Store Sales Change of 86%
• Total Digital Revenue Percentage of 62% and Owned Digital Revenue Percentage of 40%, versus Total Digital Revenue Percentage of 68% and Owned Digital Revenue Percentage of 47% 
• Loss from operations was $(42.2) million and loss from operations margin was (34)% versus loss from operations of $(24.2) million and loss from operations margin of (28)% in the prior year period.

“The team remains laser-focused on operational discipline and our path to profitability. We will continue to invest in our key strategic initiatives to drive long-term growth and are committed to being a positive force on the food system, while creating a sustainable and durable brand and business loved by customers,” said Co-Founder and CEO Jonathan Neman in the Q2 earnings statement.

STUDY: Increasing Number of Consumer Reviews Mention Inflationary Pressures

The fast-casual brand has cut 5% of employees at its support center. The reduction in support staff coincides with a relocation of its support center to a smaller space adjacent to its existing location, according to the  earnings statement.  

Lowering Expectations

“…Restaurant-level margin and Adjusted EBITDA on both a year over year basis and since Q1 ’22 saw meaningful improvements,” said CFO Mitch Reback. “However, we began to see softness in revenue around Memorial Day and are therefore lowering our 2022 guidance. We will continue to manage corporate overhead and efficiently run our restaurants as we work towards profitability.”
Sweetgreen's news comes as consumers are experiencing inflation at record rates, with review mentions of inflationary language up by 28% compared to Q2 2021, and up by 33% compared to the same time period in 2020, according to the Q2 Yelp Economic Average (YEA) report, a benchmark of local economic strength in the U.S.

For Q2, general and administrative expense was $51.3 million, or 41% of revenue for the quarter including a $21.3 million increase in stock-based compensation expenses related to the IPO and $3.5 million related to its investment in Spyce. General and administrative expenses were also impacted by an increase in office systems,  an increase in rent, and an increase in marketing and advertising.

The full earnings release is available here