Sweetgreen, Inc.: Form 10-Q for the period ended Sep 28, 2025

You should read the following discussion and analysis of our financial condition and results of operations together with the condensed consolidated financial statements and related notes included elsewhere in this report. This discussion contains forward-looking statements based upon current plans, expectations and beliefs that involve risks and uncertainties. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed in the section titled “Risk Factors” included under Part I, Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024. See the section titled “Special Note Regarding Forward-Looking Statements” in this Quarterly Report. Unless the context otherwise requires, all references in this section to “we,” “us,” “our,” the “Company,” or “Sweetgreen” refer to Sweetgreen, Inc. and its subsidiaries.

Overview

We are a mission-driven, next generation restaurant and lifestyle brand that serves healthy food at scale. Our bold vision is to be as ubiquitous as traditional fast food, but with the transparency and quality that consumers increasingly expect. As of September 28, 2025, we owned and operated 266 restaurants in 23 states and Washington, D.C.

Recent Developments

On November 5, 2025, we entered into a definitive agreement with Wonder to sell the Spyce Business for $100 million in cash and equity with an implied value of $86.4 million. Upon completion of the Spyce Sale, we expect to enter into a Supply Agreement and License Agreement that will allow us to continue deploying Infinite Kitchen units across our restaurants with greater efficiency while further strengthening our balance sheet. In connection with the Spyce Sale, certain employees principally responsible for developing the Infinite Kitchen will be transitioned to Wonder. Following the anticipated closing, Wonder will bear the operational costs associated with the development of the Infinite Kitchen technology, with the exception of custom developments that we may request, and will provide commissioning services, maintenance and support at fixed fee amounts that are subject to periodic increases. We expect the Spyce Sale to close in late 2025 or early 2026. See Part II, Item 5 of this Quarterly Report below for additional information regarding the Spyce Sale.

Factors Affecting Our Business

Expanding Restaurant Footprint

Opening new restaurants, including those with Infinite Kitchen technology, is an important driver of our revenue growth. During the thirteen weeks ended September 28, 2025 and September 29, 2024, we had 6 and 5 Net New Restaurant Openings, respectively. During the thirty-nine weeks ended September 28, 2025 and September 29, 2024, we had 20 and 15 Net New Restaurant Openings, respectively, bringing our total count as of September 28, 2025 to 266 restaurants in 23 states and Washington, D.C.

One of our strategies is to grow our footprint in both existing and new U.S. markets and, over time, internationally. In fiscal year 2025, we expect 37 Net New Restaurant Openings, of which, we expect to add 18 new Infinite Kitchen units to our fleet. In fiscal year 2026, we expect 15-20 Net New Restaurant Openings, with about half featuring Infinite Kitchen units.

We utilize a rigorous, data-driven real estate selection process to identify the location and timing of opening new restaurants, both in new and existing U.S. markets and in urban and suburban areas, with high anticipated foot or vehicle traffic and proximity to workplaces, residences and other restaurant and retail businesses that support our multi-channel approach, including our Native Delivery, Marketplace, Delivery and Outpost and Catering Channels.

Macroeconomic Conditions, Inflation, and Supply Chain Constraints

Consumer spending on food outside the home fluctuates with macroeconomic conditions. Consumers tend to allocate higher spending to food outside the home when macroeconomic conditions are stronger, and reduce spending on food outside the home during weaker economies. Our customers have in the past demonstrated a willingness to pay a premium for a craveable, convenient, and healthier alternative to traditional fast-food and fast-casual offerings. However, as a premium offering in the fast-casual industry, we are exposed both to consumers trading the convenience of food away from home for the cost benefit of cooking, and to consumers selecting less expensive fast-casual alternatives during weaker economic periods. We continue to be impacted by a decrease in consumer spending during fiscal year 2025, and have yet to see signs of improvement.

We also continue to see variability in our customer traffic patterns, including as a result of fluctuations in return to office as a result of many workplaces adopting remote or hybrid models, and we expect this variability to continue for the foreseeable future. Additionally, our transactions have been and may continue to be impacted by periods of inclement weather across the country and the lingering impacts of the Los Angeles wildfires.

We have historically been able to partially offset inflation and other increases in the costs of core operating resources, such as wage increases and increases in cost of goods sold, by gradually increasing menu prices or other customer fees, such as service fees and delivery fees, coupled with more efficient purchasing practices, productivity improvements, and greater economies of scale. There can be no assurance that we will be able to continue this practice in the current macroeconomic environment or regulatory environment or in the future. Moreover, there can be no assurance that any future cost increases, including as a result of inflation or tariffs, can be offset by increased menu prices or that our current or future menu prices will be fully absorbed by our customers without any resulting change to their demand for our products.

Our core ingredients are predominantly sourced from domestic suppliers. We also source certain items for our restaurants from outside the United States. Notably, most of our bowls and plates are produced outside of the United States, including in China. The items we procure from outside the United States expose our business to tariffs and duties implemented by the U.S. government. For the third quarter of 2025, we realized a tariff and duty impact from our food, beverage, and packaging supply chain of approximately 50 basis points, and we anticipate a similar impact in future fiscal periods.

In terms of new restaurant development, we now anticipate minimal net tariff-related increases on the $1.4 to $1.5 million average unit cost we have historically experienced, after taking into account our ongoing mitigation efforts, including advance purchasing of certain key components and strategic sourcing efforts, as well as recent changes to government trade policies.

For Infinite Kitchen units, which typically cost between $450,000 and $550,000, we have realized a price increase of approximately 5% due to tariffs. We do not anticipate any additional impact from tariffs on Infinite Kitchen units in fiscal year 2025 due to pre-purchasing of key materials. 10 of the 18 Infinite Kitchen units scheduled for installation in our new restaurants in 2025 were fully insulated from tariffs. We expect our costs for Infinite Kitchen units to increase approximately 5% after completion of the sale.

Management remains committed to further mitigating the impact of tariff costs across our supply chain, restaurant build-outs and equipment through ongoing sourcing and cost-optimization strategies that we and our suppliers intend to implement. Any future changes to the U.S. government’s trade policies may impact these estimates.

Seasonality

Our revenue fluctuates as a result of seasonal factors and weather conditions. Historically, our revenue has been lower in the first and fourth fiscal quarters of the year due, in part, to the holiday season and the fact that fewer people eat out during periods of inclement weather (generally the winter months, though inclement weather conditions may occur in certain markets at any time of the year) than during periods of mild to warm weather (the spring, summer, and fall months). In addition, a core part of our menu, salads, has proven to be more popular among consumers in the warmer months. In recent years, as consumer behavior trends have changed, due in part to the emergence of hybrid or remote work environments, the seasonality in our business has been less predictable than in prior years. We have seen an increase and prolonged negative impact on our revenue around national holidays. Additionally, we have seen extreme weather conditions and natural disasters, such as the wildfires in Los Angeles, cause disruptions to our operations and impact to our fiscal year 2025 results to date.

Sales Channel Mix

Our revenue is derived from sales of food and beverage to customers through our five sales channels: In-Store Channel, Pick-Up Channel, Native Delivery Channel, Marketplace Channel, and Outpost and Catering Channel. There have been historical fluctuations in the mix of sales between our various channels. Due to the fact that our Native Delivery, Outpost and Catering, and Marketplace Channels require the payment of third-party fees in order to fulfill deliveries, sales through these channels have historically negatively impacted our margins. Additionally, historically, orders on our Native Delivery, Outpost and Catering and Marketplace Channels have resulted in a higher rate of refunds and credits than our In-Store and Pick-Up Channels, which has a negative impact on revenue from these channels. We have also historically prioritized promotions and discounts on our Owned Digital Channels (which includes in-store digital scan-to-redeem and scan-to-earn transactions made pursuant to our new SG Rewards loyalty program), which also reduces revenue from these channels. If we see a shift in sales to Native Delivery, Outpost and Catering, and Marketplace channels, our margins may decrease. However, over time, we expect that our margins will improve on our Native Delivery, Outpost and Catering, and Marketplace Channels as we scale each of these channels.

Key Performance Metrics and Non-GAAP Financial Measures

We track the following key performance metrics and non-GAAP financial measures to evaluate our performance, identify trends, formulate financial projections, and make strategic decisions. We believe that these key performance metrics, which include certain non-GAAP financial measures, provide useful information to investors and others in understanding and evaluating our results of operations in the same manner as our management team. These key performance metrics and non-GAAP financial measures are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP, and may be different from similarly titled metrics or measures presented by other companies.

(dollar amounts in thousands )

(1) Three restaurants were excluded from the Comparable Restaurant Base for the thirteen and thirty-nine weeks ended September 28, 2025. One restaurant was excluded from the Comparable Restaurant Base for the thirteen and thirty-nine weeks ended September 29, 2024. Such adjustments did not result in a material change to AUV.

(2) Our results for the thirteen and thirty-nine weeks ended September 28, 2025 have been adjusted to reflect the temporary closures of six and thirteen restaurants, respectively, which were excluded from the calculation of Same-Store Sales Change. Our results for the thirteen and thirty-nine ended September 28, 2024 have been adjusted to reflect the temporary closures of two and five restaurants, respectively, which were excluded from the calculation of Same-Store Sales Change. Such adjustments did not result in a material change to Same-Store Sales Change for either period.

(3) Purchases made in-store where a customer uses scan-to-redeem or scan-to-earn, as part of the SG Rewards loyalty program introduced during the second quarter of fiscal year 2025, are included as part of our Owned Digital Channels sales.

Net New Restaurant Openings

Net New Restaurant Openings reflect the number of new Sweetgreen restaurant openings during a given reporting period, net of any permanent Sweetgreen restaurant closures during the same given period. Before we open new restaurants, we incur pre-opening costs, as further described below. During fiscal year 2025, we plan to integrate Infinite Kitchen technology into approximately half of our new restaurants.

Average Unit Volume

AUV is defined as the average trailing revenue for the prior four fiscal quarters for all restaurants in the Comparable Restaurant Base. The measure of AUV allows us to assess changes in guest traffic and per transaction patterns at our restaurants. Comparable Restaurant Base for any measurement period is defined as all restaurants that have operated for at least twelve full months as of the end of such measurement period, other than any restaurants that had a material, temporary closure during the relevant measurement period. For the thirteen and thirty-nine weeks ended September 28, 2025, three restaurants were excluded from the Comparable Restaurant Base. For the thirteen and thirty-nine weeks ended September 29, 2024, one restaurant was excluded from the Comparable Restaurant Base. Such adjustments did not result in a material change to AUV.

Same-Store Sales Change

Same-Store Sales Change reflects the percentage change in year-over-year revenue for the relevant fiscal period for all restaurants that have operated for at least 13 full fiscal months as of the end of such fiscal period; provided, that for any restaurant that has had a temporary closure (which historically has been defined as a closure of at least five days during which the restaurant would have otherwise been open) during any prior or current fiscal month, such fiscal month, as well as the corresponding fiscal month for the prior or current fiscal year, as applicable, will be excluded when calculating Same-Store Sales Change for that restaurant. During the thirteen and thirty-nine weeks ended September 28, 2025, six and thirteen restaurants, respectively, were excluded from the calculation of Same-Store Sales Change. During the thirteen and thirty-nine weeks ended September 29, 2024, two and five restaurants, respectively, were excluded from the calculation of Same-Store Sales Change. Such adjustments did not result in a material change to Same-Store Sales Change for any period. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and closures.

Total Digital Revenue Percentage and Owned Digital Revenue Percentage

Our Total Digital Revenue Percentage is the percentage of our revenue attributed to purchases made through our Total Digital Channels. Our Owned Digital Revenue Percentage is the percentage of our revenue attributed to purchases made through our Owned Digital Channels. With the introduction of our new loyalty program in the second quarter of 2025, we have experienced and anticipate continuing to see an increase in Owned Digital sales, which is realized in our Owned Digital Revenue Percentage and our Total Digital Revenue Percentage.

Non-GAAP Financial Measures

In addition to our consolidated financial statements, which are presented in accordance with GAAP, we present certain non-GAAP financial measures, including Restaurant-Level Profit, Restaurant-Level Profit Margin, Adjusted EBITDA, and Adjusted EBITDA Margin. We believe these measures are useful to investors and others in evaluating our performance because these measures:

• facilitate operating performance comparisons from period to period by isolating the effects of some

items that vary from period to period without any correlation to core operating performance or that

vary widely among similar companies. These potential differences may be caused by variations in

capital structures (affecting interest expense), tax positions (such as the impact on periods or

companies of changes in effective tax rates or NOL), and the age and book depreciation of facilities

and equipment (affecting relative depreciation expense);

• are widely used by analysts, investors, and competitors to measure a company’s operating performance; are used by our management and board of directors for various purposes, including as measures of performance, and as a basis for strategic planning and forecasting; and
• are used internally for a number of benchmarks, including to compare our performance to that of our competitors.

Restaurant-Level Profit, Restaurant-Level Profit Margin, Adjusted EBITDA, and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. In particular, Restaurant-Level Profit and Adjusted EBITDA should not be viewed as substitutes for, or superior to, loss from operations or net loss prepared in accordance with GAAP as a measure of profitability. Some of these limitations are:

• although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Restaurant-Level Profit and Adjusted EBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements;
• Restaurant-Level Profit and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
• Restaurant-Level Profit and Adjusted EBITDA do not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to us;
• Restaurant-Level Profit and Adjusted EBITDA do not consider the potentially dilutive impact of stock-based compensation;
• Restaurant-Level Profit is not indicative of overall results of the Company and does not accrue directly to the benefit of stockholders, as corporate-level expenses are excluded;
• Adjusted EBITDA does not take into account any income or costs that management determines are not indicative of ongoing operating performance, such as stock-based compensation; loss on disposal of property and equipment; other (income) expense; restructuring charges; enterprise resource planning system (“ERP”) implementation and related costs; and legal settlements; and
• other companies, including those in our industry, may calculate Restaurant-Level Profit and Adjusted EBITDA differently, which reduces their usefulness as comparative measures.

Because of these limitations, you should consider Restaurant-Level Profit, Restaurant-Level Profit Margin, Adjusted EBITDA and Adjusted EBITDA Margin alongside other financial performance measures, loss from operations, net loss, and our other GAAP results.

Restaurant-Level Profit and Restaurant-Level Profit Margin

We define Restaurant-Level Profit as loss from operations adjusted to exclude general and administrative expense, depreciation and amortization, pre-opening costs, loss on disposal of property and equipment, and, in certain periods, impairment and closure costs and restructuring charges. Restaurant-Level Profit Margin is Restaurant-Level Profit as a percentage of revenue.

As it excludes general and administrative expense, which is primarily attributable to our corporate headquarters, which we refer to as our Sweetgreen Support Center, we evaluate Restaurant-Level Profit and Restaurant-Level Profit Margin as a measure of profitability of our restaurants.

The following table sets forth a reconciliation of our loss from operations to Restaurant-Level Profit, as well as the calculation of loss from operations margin and Restaurant-Level Profit Margin for each of the periods indicated:

(dollar amounts in thousands)

(1) Loss on disposal of property and equipment includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.

(2) Restructuring charges are expenses that are paid in connection with reorganization of our operations. These costs primarily include lease and related costs associated with our vacated former Sweetgreen Support Center, including the impairment and the amortization of the operating lease asset, severance and related benefits associated with a reduction in force at our Sweetgreen Support Center, and costs related to our vacated former New York office.

Adjusted EBITDA and Adjusted EBITDA Margin

We define Adjusted EBITDA as net loss adjusted to exclude income tax expense, interest income, interest expense, depreciation and amortization, stock-based compensation expense, loss on disposal of property and equipment, other (income) expense, ERP implementation and related costs, legal settlements, and, in certain periods, impairment and closure costs and restructuring charges. Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of revenue.

The following table sets forth a reconciliation of our net loss to Adjusted EBITDA, as well as the calculation of net loss margin and Adjusted EBITDA Margin for each of the periods indicated:

(dollar amounts in thousands)

(1) Includes non-cash, stock-based compensation.

(2) Loss on disposal of property and equipment includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment.

(3) Includes costs related to impairment of long-lived and operating lease assets and store closures.

(4) Other expense (income) includes the change in fair value of the contingent consideration issued as part of the Spyce acquisition. See Note 3 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.

(5) Restructuring charges are expenses that are paid in connection with the reorganization of our operations. These costs primarily include lease and related non-cash expenses associated with our vacated former Sweetgreen Support Center, including the impairment and the amortization of the operating lease asset, severance and related benefits associated with a reduction in force at our Sweetgreen Support Center, and costs related to our vacated former New York office.

(6) Represents the amortization costs associated with the implementation of our cloud computing arrangements in relation to our ERP system.

(7) Expenses recorded for accruals related to the settlements of legal matters.

(8) Includes the employer portion of payroll taxes related to the vesting of 300,000 performance stock units released to each founder during the thirteen weeks ended September 29, 2024.

(9) Represents a non-recurring write-off of specific materials associated with legacy marketing initiatives which were determined to have no alternative use within current or future operations.

Components of Results of Operations

Revenue

We recognize food and beverage revenue, net of discounts and incentives, when payment is tendered at the point of sale as the performance obligation has been satisfied, through our three disaggregated revenue channels: Owned Digital Channels, In-Store-Channel (Non-Digital component), and Marketplace Channel. Provisions for discounts are provided for in the same period the related sales are recorded. Sales taxes and other taxes collected from customers and remitted to governmental authorities are presented on a net basis, and as such, are excluded from revenue. We record a liability and a corresponding reduction in revenue in periods when loyalty program rewards are earned by members. We recognize revenue and a corresponding reduction to the liability in periods when loyalty program rewards are redeemed by members, or the points expire after 180 days. We defer revenue based on the relative estimated standalone selling price of the loyalty points, which is estimated as the value of the loyalty reward, net of loyalty related purchases not expected to be redeemed. We estimate loyalty purchases not expected to be redeemed based on industry data.

To drive future revenue growth, we are focusing on opening additional restaurants, diversifying and expanding our menu, and investing in marketing initiatives, including our new loyalty program designed to attract new customers and increase order frequency from our existing customers.

Gift Cards

We also sell gift cards that do not have an expiration date. Upon sale, gift cards are recorded as unearned revenue and included within gift card liability in the accompanying condensed consolidated balance sheets. The revenue from gift cards is recognized when redeemed by customers. Because we do not track addresses of gift card purchasers, the relevant jurisdiction related to the requirement for escheatment, the legal obligation to remit unclaimed assets to the state, is our state of incorporation, which is Delaware. The state of Delaware requires escheatment after five years from issuance. We do not recognize breakage income because of our requirements to escheat unredeemed gift card balances.

Delivery

The majority of our restaurant locations offer a delivery option. Delivery services are fulfilled by third-party service providers whether delivery is ordered through our Native Delivery Channel or Marketplace Channel. With respect to Native Delivery Channel sales, we control the delivery services and recognize revenue, including delivery revenue, when the delivery partner transfers food or beverage to the customer. For these sales, we receive payment directly from the customer at the time of sale. With respect to Marketplace Channel sales, we recognize revenue, excluding delivery fees collected by the delivery partner as we do not control the delivery service, when control of the food or beverage is delivered to the end customer. We receive payment from the delivery partner subsequent to the transfer of food and the payment terms are short-term in nature. For all delivery sales, we are considered the principal and recognize the revenue on a gross basis. For a more detailed discussion of our third-party delivery fees and our expectations regarding our margins, see the section titled “—Sales Channel Mix” above.

Restaurant Operating Costs, Exclusive of Depreciation and Amortization

Food, Beverage, and Packaging

Food, beverage, and packaging costs include the direct costs associated with food, beverage, and packaging of our menu items. We anticipate food, beverage and packaging costs on an absolute dollar basis will increase for the foreseeable future to the extent we experience additional customer orders, as we open additional restaurants, and as a result our revenue grows. Food, beverage, and packaging costs as a percentage of revenue may vary, as these costs are impacted by menu mix and fluctuations in commodity costs, inflation, and availability, as well as geographic scale and proximity. We will continue to innovate in key areas, including menu, which could lead to increases in commodity costs as we add items such as beef to our menu.

Labor and Related Expenses

Labor and related expenses include salaries, bonuses, benefits, payroll taxes, workers compensation expenses, and other expenses related to our restaurant employees. As with other variable expense items, we expect labor costs to grow as our revenue grows. Other factors that influence labor costs include each jurisdiction’s minimum wage and payroll tax legislation, inflation, the strength of the labor market for hourly employees, benefit costs, health care costs, and the size and location of our restaurants.

Occupancy and Related Expenses

Occupancy and related expenses consist of restaurant-level occupancy expenses (including rent, common area maintenance (“CAM”) expenses, and real estate taxes), and exclude occupancy expenses associated with unopened restaurants, which are recorded separately in pre-opening costs. We anticipate occupancy and related expenses on an absolute dollar basis will increase for the foreseeable future to the extent we continue to open new restaurants and revenue grows. Occupancy and related expenses as a percentage of revenue are impacted by geographic location, type of restaurant build, and amount of revenue.

Other Restaurant Operating Costs

Other restaurant operating costs include other operating expenses incidental to operating our restaurants, such as repairs and maintenance, utilities, certain local taxes, third-party delivery fees, non-perishable supplies, restaurant-level marketing, credit card fees, and property insurance. We expect that other restaurant operating costs will increase on an absolute dollar basis for the foreseeable future to the extent we continue to open new restaurants and our revenue grows. Other restaurant operating costs as a percentage of revenue are expected to increase in line with growth in our Native Delivery, Outpost and Catering, and Marketplace Channels, as these channels require us to pay third-party delivery fees. However, as revenue increases, we expect that other restaurant operating costs, such as repairs and maintenance and property insurance, as a percentage of revenue will decline.

Operating Expenses

General and Administrative

General and administrative expenses consist primarily of operations, technology, finance, legal, human resources, administrative personnel, and other personnel costs that support restaurant development and operations, as well as stock-based compensation expense and brand-related marketing. As a percentage of revenue, we expect our general and administrative expenses to vary from period to period and to decrease over time.

Depreciation and Amortization

Depreciation and amortization include the depreciation of fixed assets, including leasehold improvements and equipment, amortization of external costs, certain internal costs directly associated with developing computer software applications for internal use, and developed technology acquired as part of our Spyce acquisition. We expect that depreciation and amortization expenses will increase on an absolute dollar basis as we continue to build new restaurants and make investments in our digital platform.

Pre-Opening Costs

Pre-opening costs primarily consist of rent, wages, travel for training and restaurant opening teams, food, marketing, and other restaurant costs that we incur prior to the opening or during the major renovation of a restaurant. These expenses will increase in proportion to the increase of our new restaurant openings and major renovations. These costs are expensed as incurred. Pre-opening costs depend on the number of new restaurants and major restaurant renovations we open during each period or are planning to open during future periods. As a result, while we expect that pre-opening costs on an absolute dollar basis will fluctuate from period to period, we expect pre-opening costs to begin to increase in fiscal year 2025 in connection with the acceleration of our new restaurant growth as described above.

Impairment and Closure Costs

Impairment includes impairment charges related to our long-lived assets, which include property and equipment and operating lease assets.

Closure costs include lease and related costs associated with closed restaurants, including the amortization of the operating lease asset, and expenses associated with CAM and real estate taxes for previously impaired stores.

Loss on Disposal of Property and Equipment

Loss on disposal of property and equipment includes the net book value of assets that have been retired and consists primarily of furniture, equipment, and fixtures that were replaced in the normal course of business.

Restructuring Charges

Restructuring charges are expenses that are paid in connection with the reorganization of our operations. These costs primarily include operating lease asset impairment costs related to our vacated former Sweetgreen Support Center, as well as the amortization of the underlying operating lease asset and related real estate and CAM charges, severance and related benefits from workforce reductions at our Sweetgreen Support Center, and costs related to abandoning certain potential future restaurant sites, which are a result of our efforts to streamline our future new restaurant openings, and other related expenses. During the thirty-nine weeks ended September 28, 2025, we experienced additional restructuring costs including severance and related benefits associated with a reduction in force at our Sweetgreen Support Center and costs associated with vacating our former New York office space. We continue to evaluate our organizational structure and may implement additional changes to lower our administrative headcount.

Interest Income and Interest Expense

Interest income consists of interest earned on our cash and cash equivalents. Interest expense includes mainly amortization of deferred financing costs from our debt origination and commitment fees.

Other Expense (Income)

Other expense (income) consists primarily of changes in the fair value of our contingent consideration liability in connection with the Spyce acquisition. We will continue to remeasure the liability associated with our contingent consideration liability until the underlying service conditions are met, or the performance period expires.

Income Tax Expense

Income tax expense consists of federal and state tax expense on our operating activity, and changes to our deferred tax asset and deferred tax liability. For additional information, see Note 11 to our condensed consolidated financial statements included elsewhere in this Quarterly Report.

Results of Operations

Comparison of the thirteen and thirty-nine weeks ended September 28, 2025 and September 29, 2024

The following table summarizes our results of operations for the thirteen weeks ended September 28, 2025 and September 29, 2024:

(dollar amounts in thousands)

28

The following table summarizes our results of operations for the thirty-nine weeks ended September 28, 2025 and September 29, 2024:

(dollar amounts in thousands)

Revenue

(dollar amounts in thousands)

The decrease in revenue for the thirteen weeks ended September 28, 2025 was primarily due to a decrease in Comparable Restaurant Base revenue of $16.2 million, resulting in a negative Same-Store Sales Change of 9.5%, reflecting an 11.7% decrease in traffic and product mix, partially offset by a 2.2% benefit from menu price increases that were implemented subsequent to the thirteen weeks ended September 29, 2024. The decline in traffic and product mix primarily resulted from a slowdown in consumer spending within the macroeconomic environment, as well as the discontinuation of our former Sweetpass+ loyalty program and corresponding transition to our new SG Rewards loyalty program. This decrease in revenue was partially offset by an increase of $15.9 million of incremental revenue associated with 35 Net New Restaurant Openings during or subsequent to the thirteen weeks ended September 29, 2024.

The increase in revenue for the thirty-nine weeks ended September 28, 2025 was primarily due to an increase of $44.1 million of incremental revenue associated with 45 Net New Restaurant Openings during or subsequent to the thirty-nine weeks ended September 29, 2024. The increase in revenue was partially offset by a decrease in Comparable Restaurant Base revenue of $34.9 million, resulting in a negative Same-Store Sales Change of 6.8%, reflecting a 9.5% decrease in traffic and product mix, partially offset by a 2.7% benefit from menu price increases that were implemented subsequent to September 29, 2024. The decline in traffic and product mix primarily resulted from a slowdown in consumer spending within the macroeconomic environment, as well as the discontinuation of our former Sweetpass+ loyalty program and corresponding transition to our new SG Rewards loyalty program.

Restaurant Operating Costs

Food, Beverage, and Packaging

(dollar amounts in thousands)

The increase in food, beverage, and packaging costs for the thirteen weeks ended September 28, 2025 was primarily due to the 35 Net New Restaurant Openings during or subsequent to the thirteen weeks ended September 29, 2024.

The increase in food, beverage, and packaging costs for the thirty-nine weeks ended September 28, 2025 was primarily due to the 45 Net New Restaurant Openings during or subsequent to the thirty-nine weeks ended September 29, 2024.

As a percentage of revenue, food, beverage, and packaging costs for the thirteen weeks ended September 28, 2025 increased compared to the thirteen weeks ended September 29, 2024, primarily due to higher protein costs resulting from increased chicken and tofu portions, which led to higher overall ingredient usage and costs, a one time write-off of discontinued materials, as well as higher packaging costs related to recently imposed tariffs and duties. These increases were partially offset by menu price increases.

As a percentage of revenue, food, beverage, and packaging costs for the thirteen and thirty-nine weeks ended September 28, 2025 increased compared to the thirteen and thirty-nine weeks ended September 29, 2024, respectively, primarily due to higher protein costs resulting from increased chicken and tofu portions, which led to higher overall ingredient usage and costs, higher packaging costs related to recently imposed tariffs and duties, as well as a one time write-off of discontinued materials. These increases were partially offset by menu price increases.

Labor and Related Expenses

(dollar amounts in thousands)

The increase in labor and related expenses for the thirteen weeks ended September 28, 2025 was primarily due to the 35 Net New Restaurant Openings during or subsequent to the thirteen weeks ended September 29, 2024. The increase was also driven by higher staffing expenses associated with increases in prevailing wage rates in many of our markets, partially offset by lower staffing needs associated with the change in sales volume.

The increase in labor and related expenses for the thirty-nine weeks ended September 28, 2025 was primarily due to the 45 Net New Restaurant Openings during or subsequent to the thirty-nine weeks ended September 29, 2024. The increase was also driven by higher staffing expenses associated with increases in prevailing wage rates in many of our markets, partially offset by lower staffing needs associated with the change in sales volume.

As a percentage of revenue, labor and related expenses increased for the thirteen and thirty-nine weeks ended September 28, 2025 compared to the thirteen and thirty-nine weeks ended September 29, 2024, respectively, primarily due to deleverage associated with the change in sales volume as well as wage rate increases, partially offset by menu price increases.

Occupancy and Related Expenses

(dollar amounts in thousands)

The increase in occupancy and related expenses for the thirteen weeks ended September 28, 2025 was primarily due to the 35 Net New Restaurant Openings during or subsequent to the thirteen weeks ended September 29, 2024.

The increase in occupancy and related expenses for the thirty-nine weeks ended September 28, 2025 was primarily due to the 45 Net New Restaurant Openings during or subsequent to the thirty-nine weeks ended September 29, 2024.

As a percentage of revenue, occupancy and related expenses for the thirteen and thirty-nine weeks ended September 28, 2025 was higher than the thirteen and thirty-nine weeks ended September 29, 2024, respectively, primarily related to deleverage associated with the change in sales volume.

Other Restaurant Operating Costs

(dollar amounts in thousands)

The increase in other restaurant operating costs for the thirteen weeks ended September 28, 2025 was primarily due to the 35 Net New Restaurant Openings during or subsequent to the thirteen weeks ended September 29, 2024 as well as increases in restaurant-level advertising spend.

The increase in other restaurant operating costs for the thirty-nine weeks ended September 28, 2025 was primarily due to the 45 Net New Restaurant Openings during or subsequent to the thirty-nine weeks ended September 29, 2024. This includes increases in restaurant-level advertising spend and delivery fees, primarily related to the increase in revenue through our Marketplace and Catering Channels, and increases in repairs and maintenance for existing stores.

As a percentage of revenue, other restaurant operating costs for the thirteen and thirty-nine weeks ended September 28, 2025 increased compared to the thirteen and thirty-nine weeks ended September 29, 2024, respectively, primarily due to the increases noted above as well as the change in sales volume.

Operating Expenses

General and Administrative

(dollar amounts in thousands)

31

The decrease in general and administrative expenses for the thirteen weeks ended September 28, 2025 was primarily due to a $3.9 million decrease in stock-based compensation expense, primarily related to the decrease in expenses associated with restricted stock units and performance-based restricted stock units issued prior to our IPO, and a $2.1 million decrease in management salary and bonus expense. These decreases were partially offset by an increase in other expenses across the Sweetgreen Support Center to support our restaurant growth.

The decrease in general and administrative expenses for the thirty-nine weeks ended September 28, 2025 was primarily due to a $6.2 million decrease in stock-based compensation expense, primarily related to the decrease in expenses associated with restricted stock units and performance-based restricted stock units issued prior to our IPO, and a $4.4 million decrease in management salary and bonus expense. These decreases were partially offset by an increase in other expenses across the Sweetgreen Support Center to support our restaurant growth.

As a percentage of revenue, the decrease in general and administrative expenses for both the thirteen and thirty-nine weeks ended September 28, 2025 was primarily due to the net effect of the fluctuations noted above.

Depreciation and Amortization

(dollar amounts in thousands)

The increase in depreciation and amortization for the thirteen weeks ended September 28, 2025 was primarily due to the 35 Net New Restaurant Openings during or subsequent to the thirteen weeks ended September 29, 2024.

The increase in depreciation and amortization for the thirty-nine weeks ended September 28, 2025 was primarily due to the 45 Net New Restaurant Openings during or subsequent to the thirteen weeks ended September 29, 2024.

As a percentage of revenue, depreciation and amortization for both the thirteen and thirty-nine weeks ended September 28, 2025 increased from the thirteen and thirty-nine weeks ended September 29, 2024, respectively, primarily related to the increase in the total depreciable base, driven by our acceleration of new restaurant growth in fiscal year 2025 as well as the change in sales volume.

Pre-Opening Costs

(dollar amounts in thousands)

The increase in pre-opening costs for both the thirteen and thirty-nine weeks ended September 28, 2025 was primarily due to our acceleration of new restaurant growth in fiscal year 2025.

As a percentage of revenue, pre-opening costs in both the thirteen and thirty-nine weeks ended September 28, 2025 increased compared to the thirteen and thirty-nine weeks ended September 29, 2024, respectively, due to the acceleration of growth noted above as well as the change in sales volume.

Impairment and Closure Costs

(dollar amounts in thousands)

32

During the thirteen weeks ended September 28, 2025, we recognized non-cash impairment charges of $4.3 million related to the impairment of property and equipment of four of our restaurants. The remaining balance consists of closure costs, including lease-related expenses, amortization of operating lease assets, and other costs associated with previously closed restaurants.

During the thirty-nine weeks ended September 28, 2025, we recognized non-cash impairment charges of $9.6 million related to the impairment of property and equipment and related operating lease assets of nine of our restaurants. The remaining balance consists of closure costs, including lease-related expenses, amortization of operating lease assets, and other costs associated with previously closed restaurants.

Restructuring Charges

(dollar amounts in thousands)

Restructuring charges for both the thirteen and thirty-nine weeks ended September 28, 2025 and September 29, 2024 are primarily related to our former Sweetgreen Support Center, which we vacated in fiscal year 2022, including continued amortization of the operating lease asset and related real estate and CAM charges. In addition, during the thirteen and thirty-nine weeks ended September 28, 2025 we experienced additional restructuring costs including severance and related benefits associated with a reduction in force at our Sweetgreen Support Center and costs associated with vacating our former New York office space. We continue to evaluate our organizational structure and have and may continue to implement additional changes to lower our administrative headcount.

Loss on Disposal of Property and Equipment

(dollar amounts in thousands)

The change in loss on disposal of property and equipment for both the thirteen and thirty-nine weeks ended September 28, 2025, compared to the prior year periods, was primarily due to the disposal of specialized kitchen equipment.

Interest Income and Interest Expense

(dollar amounts in thousands)

33

The decrease in interest income, net, was primarily due to a lower cash balance and lower interest rate in our money market accounts during the thirteen and thirty-nine weeks ended September 28, 2025 compared to the prior year periods.

Other Expense (Income)

(dollar amounts in thousands)

The decrease in other expense for the thirteen weeks ended September 28, 2025 was primarily due to a change in the fair value of our contingent consideration compared to the prior year periods, which was issued as part of the Spyce acquisition in the third quarter of fiscal year 2021.

The increase in other income for the thirty-nine weeks ended September 28, 2025 was primarily due to a change in the fair value of our contingent consideration compared to the prior year periods, which was issued as part of the Spyce acquisition in the third quarter of fiscal year 2021.

As a percentage of revenue, other expense (income) decreased during the thirteen and thirty-nine weeks ended September 28, 2025 compared to the thirteen and thirty-nine weeks ended September 29, 2024, due to the variances noted above.

Liquidity and Capital Resources

Sources and Material Cash Requirements

To date, we have funded our operations through proceeds received from equity, our ability to obtain lending commitments and through cash flow from operations. As of September 28, 2025 and December 29, 2024, we had $130.0 million and $214.8 million in cash and cash equivalents, respectively. Based on our current operating plan, we believe our existing cash and cash equivalents and cash flow from operations will be sufficient to fund our operating lease obligations, capital expenditures, and working capital needs for at least the next 12 months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available cash balances. If we are unable to generate positive operating cash flows, additional debt and equity financings may be necessary to sustain future operations, and there can be no assurance that such financing will be available to us on commercially reasonable terms, or at all.

Our primary liquidity and capital requirements are for operating lease obligations, new restaurant development, including related to deployment of Infinite Kitchen units, initiatives to improve the customer experience in our restaurants, marketing-related costs, working capital and general corporate needs. Additionally, during the thirty-nine weeks ended September 28, 2025, we made a cash payment of approximately $2.3 million related to the second Spyce milestone payment. See Note 3 for further details. We have not required significant working capital because customers generally pay using cash or credit and debit cards and, as a result, our operations do not require significant receivables. Additionally, our operations do not require significant inventories due, in part, to our use of numerous fresh ingredients. Further, we are able to sell most of our inventory items before payment is due to the supplier of such items.

On November 5, 2025, we entered into an agreement to sell Spyce Food Co. for total consideration of $186.4 million, allocated between cash of $100 million and shares of Series C Preferred Stock with an implied value of $86.4 million. We expect this transaction to close in late 2025 or early 2026.

Material Cash Requirements

Our material cash requirements primarily consist of operating lease obligations and purchase obligations and capital expenditures. The timing and nature of these commitments are expected to have an impact on our liquidity and capital requirements in future periods. Refer to Note 8, Leases, in the accompanying condensed consolidated financial statements included in Part I, Item 1 for additional information relating to our operating leases.

Purchase obligations include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms. The majority of our purchase obligations relate to amounts owed for supplies within our restaurants and are due within the next twelve months.

During the thirty-nine weeks ended September 28, 2025, we incurred approximately $76.1 million in capital expenditures, a portion of which was used to pre-purchase key materials. We expect capital expenditures to increase in 2025, primarily related to new store openings and Infinite Kitchens.

As noted below, we did not renew our prior credit facility and currently have no outstanding debt. If we decide to incur debt in the future, we will need cash to service any interest and principal payments for such debt.

Prior Credit Facility

During fiscal year 2024, we were party to a First Amended and Restated Revolving Credit, Delayed Draw Term Loan and Security Agreement (as amended, the “Credit Facility”) with EagleBank. We did not renew the Credit Facility in 2024 and it expired pursuant to its terms on December 13, 2024.

Cash Flows

The following table summarizes our cash flows for the periods indicated:

(amounts in thousands)

Operating Activities

For the thirty-nine weeks ended September 28, 2025, cash used in operating activities increased by $41.3 million compared to the thirty-nine weeks ended September 29, 2024. The increase was primarily due to the $21.8 million impact of unfavorable working capital fluctuations, driven by the timing of rent expense, payroll, and other payments in the ordinary course of business, as well as a $2.3 million Spyce milestone payment. The remaining change was related to a $19.5 million decrease in income after excluding non-cash items.

Investing Activities

For the thirty-nine weeks ended September 28, 2025, cash used in investing activities was $82.0 million, an increase of $18.8 million compared to the thirty-nine weeks ended September 29, 2024. Investing activities for the thirty-nine weeks ended September 28, 2025 consisted primarily of purchases of property and equipment of $76.1 million related to the 2025 pipeline of new restaurants (excluding tenant improvement allowances) of which a portion of the purchase occurred in fiscal 2024, renovations, and an prepayments associated with the deployment of Infinite Kitchen units and other restaurant related equipment. Additionally, we had a cash outflow of $6.0 million related to purchases of intangible assets for the thirty-nine weeks ended September 28, 2025.

Financing Activities

For the thirty-nine weeks ended September 28, 2025, cash provided by financing activities decreased by $3.1 million compared to the thirty-nine weeks ended September 29, 2024, primarily due to a decrease in proceeds from stock option exercises, partially offset by a payment associated with the contingent consideration liability in the prior year.

Critical Accounting Estimates

The preparation of financial statements in conformity with GAAP requires us to make certain estimates and assumptions. These estimates and assumptions affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the balance sheet date, as well as reported amounts of revenue and expenses during the reporting period. Our most significant estimates and judgments involve difficult, subjective, or complex judgements made by management. Actual results may differ from these estimates. To the extent that there are differences between our estimates and actual results, our future financial statement presentation, financial condition, results of operations, and cash flows will be affected. There have been no material changes to our critical accounting estimates as described in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.

Recent Accounting Pronouncements

See Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report for recently adopted accounting pronouncements and recently issued accounting pronouncements not yet adopted as of the date of this Quarterly Report.

We have operations solely within the United States, and we are exposed to market risks in the ordinary course of our business. The primary risks we face are commodity price risks, interest rate risk, effects of inflation, and macroeconomic risks. There have been no material changes to our exposure to market risks as described in Part II, Item 7A of our Annual Report on Form 10-K for the fiscal year ended December 29, 2024.

Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of such date. Our disclosure controls and procedures are designed to ensure that information required to be disclosed in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to management including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosures.

Our disclosure controls and procedures are based on assumptions about the likelihood of future events, and even effective disclosure controls and procedures can only provide reasonable assurance of achieving their objectives. Because of their inherent limitations, we cannot guarantee that our disclosure controls and procedures will succeed in achieving their stated objectives in all cases, that they will be complied with in all cases, or that they will prevent or detect all misstatements.

Changes in Internal Control Over Financial Reporting

There were no changes to our internal control over financial reporting that occurred during the fiscal quarter ended September 28, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

For a description of risks and uncertainties that could impact our business, including risks and uncertainties related to macroeconomic conditions and changes in consumer discretionary spending and related to U.S. international trade policies, including the imposition of tariffs, and increases in the cost of ingredients and equipment, see Part I, Item 1A. "Risk Factors" in our Annual Report on Form 10-K for the fiscal year ended December 29, 2024 (“Annual Report”) and our Quarterly Report for the thirteen weeks ended June 29, 2025 (“Prior Quarterly Report”). Other than the risk factor listed below, there have been no material changes from the risk factors described in our Annual Report and Prior Quarterly Report.

Completion of the Spyce Sale is subject to numerous conditions outside of our control. There can be no assurances regarding the timing or likelihood of completion of the Spyce Sale, and failure to complete the Spyce Sale could have an adverse effect on our stock price, growth plan, financial condition, and results of operations.

The Agreement governing the Spyce Sale contains customary conditions to closing, including: (i) the expiration or termination of the applicable waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended; (ii) the absence of legal proceedings, court orders or other governmental actions preventing the consummation of the transactions; (iii) that the parties have performed and complied in all material respects with all agreements and covenants contained in the Agreement governing the Spyce Sale to be performed and complied with by them before or on the closing date of the Spyce Sale; (iv) that no Material Adverse Effect (as defined in the Agreement) will have occurred; and (v) that the representations and warranties of the parties to the Agreement are true and correct, subject to certain materiality standards, as of the closing date of the Spyce Sale.

While we believe that we will receive the requisite approvals, there can be no assurance that these and other conditions to closing will be satisfied at all or be satisfied on the proposed terms and schedules as contemplated by the parties. Although we and Wonder have agreed, subject to certain exceptions, to use efforts and accept certain remedies to obtain the requisite regulatory approvals, there can be no assurance that these approvals will be obtained, and the governmental entities from which these approvals are required may impose conditions on the completion of the sale or require changes to the terms of the sale. Satisfaction of the closing conditions may delay the consummation of the sale, and if certain closing conditions are not satisfied prior to the end date specified in the Agreement, the parties will not be obligated to complete the sale. The Agreement may be terminated by either us or Wonder prior to Closing under certain circumstances, including if certain closing conditions in the Agreement have not been satisfied or waived on or before 180 days after the date of the Agreement.

If the Spyce Sale is not completed for any reason, we will not realize the potential benefits we anticipate from the sale, including reduced operating costs and a strengthened balance sheet. Moreover, substantial expenses would have already been incurred, including professional advisor fees that are payable regardless of the outcome. Our management team has allocated significant time and resources to the pending sale. For these and other reasons, a failed transaction may have an adverse impact on our business, operating results, or financial condition, and our stock price may decline.