Sweetgreen, Inc.: Form 10-Q for the period ended Mar 29, 2026

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 28, 2025. 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 March 29, 2026, we owned and operated 285 restaurants in 24 states and Washington, D.C.

Opening new restaurants, including those with Infinite Kitchen technology, is an important driver of our revenue growth. One of our strategies is to grow our footprint in both existing and new U.S. markets and, over time, internationally. During the thirteen weeks ended March 29, 2026 and March 30, 2025, we had 4 and 5 Net New Restaurant Openings, respectively.

As of March 29, 2026, we utilized the Infinite Kitchen, a kitchen automation technology in 33 of our 285 restaurants. We incorporate the Infinite Kitchen technology into new and existing restaurants based, in large part, upon our evaluation of the potential economic and certain other benefits for those restaurants.

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. In fiscal year 2026, we expect approximately 13 Net New Restaurant Openings, with about half featuring Infinite Kitchen units.

We have historically been able to partially offset rising costs - including as a result of inflation, tariffs, wage increases and increases in cost of goods sold - through gradual menu price increases, customer service and delivery fees, and operational efficiencies. There can be no assurance that we will be able to continue this practice in the current or future macroeconomic or regulatory environment. We also continue to see variability in our customer traffic patterns, including as a result of many workplaces adopting remote or hybrid models, which has shifted sales away from our In-Store Channel. Our Native Delivery, Outpost and Catering, and Marketplace Channels carry higher costs due to third-party fees, elevated refund rates, and promotional activity, and a continued shift in sales mix toward these channels could pressure margins. However, we expect margins on these channels to improve over time as we achieve greater scale.

For the first quarter of fiscal year 2026, tariffs had minimal net impact on our average new unit development cost due to mitigation efforts including advance purchasing, strategic sourcing, and favorable trade policy changes. Management remains committed to 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 have implemented and continue to implement. Any future changes to the U.S. government’s trade policies, including developments related to the Supreme Court's February 2026 ruling on tariffs imposed under the International Emergency Economic Powers Act, may impact these estimates.

We continue to monitor ongoing military conflicts, including the Iran conflict, and their potential impact on our supply chain, construction costs, and the broader macroeconomic environment. We are working with our suppliers to reduce the impacts on buildout costs through strategic contracting and design standardization.

Sales Channel Mix

Our revenue is derived from sales of food and beverage to customers through our five sales channels. We own and operate all of these channels other than our Marketplace Channel, which is operated by various third-party delivery marketplaces.

1. In-Store Channel. Sales to customers who make in-store purchases in our restaurants. Purchases made via cash or credit card are referred to as 'Non-Digital' transactions. Purchases made via digital scan-to-pay or via digital scan-to-earn and scan-to-redeem associated with our SG Rewards loyalty program are included as part of our Owned Digital Channels (defined below).

2. Marketplace Channel. Sales to customers for delivery or pick-up made through third-party delivery marketplaces.

3. Native Delivery Channel. Sales to customers for delivery made through the Sweetgreen website or mobile app.

4. Outpost and Catering Channel. Sales to customers for delivery made through the Sweetgreen website or mobile app to our Outposts, which are our designated offsite drop-off points at offices, residential buildings, and hospitals. In addition, our Outpost and Catering Channel includes our catering offerings, which refer to sales to customers made through our catering website for pick-up at one of our restaurants or delivery to a customer-specified address.

5. Pick-Up Channel. Sales to customers made for pick-up at one of our restaurants through the Sweetgreen website or mobile app.

Key Performance Metrics

We track the following key performance metrics to evaluate our performance, identify trends, formulate financial projections, and make strategic decisions. We believe that these key performance metrics 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 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) Seven restaurants were excluded from the Comparable Restaurant Base for the thirteen weeks ended March 29, 2026. One restaurant was excluded from the Comparable Restaurant Base for the thirteen weeks ended March 30, 2025. Such adjustments did not result in a material change to AUV.

(2) Our results for the thirteen weeks ended March 29, 2026 have been adjusted to reflect the closures of 14 restaurants, including nine temporary closures and five permanent closures, which were excluded from the calculation of Same-Store Sales Change. Our results for the thirteen weeks ended March 30, 2025 have been adjusted to reflect the temporary closures of seven restaurants, 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.

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

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 or permanently closed during the relevant measurement period. A restaurant is considered to have had a material, temporary closure if it had no operations for a consecutive period of at least 30 days.

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, excluding any restaurant that has had a temporary or permanent closure during any prior or current fiscal month in the relevant measurement period. We define a temporary closure as a closure of at least five days during which the restaurant would have otherwise been open; for any such temporary closure occurring during a 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. 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 all channels except Non-Digital transactions made through our In-Store Channel. Our Owned Digital Revenue Percentage is the percentage of our revenue attributed to purchases made through our Owned Digital Channels, which include our Pick-Up Channel, Native Delivery Channel, Outpost and Catering Channel (excluding catering orders placed through third-party platforms), and purchases made in our In-Store Channel via digital scan-to-pay, or digital scan-to-earn and scan-to-redeem associated with our SG Rewards loyalty program. With the introduction of our new loyalty program in the second quarter of fiscal year 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.

Results of Operations

Comparison of the thirteen weeks ended March 29, 2026 and March 30, 2025

The following table summarizes our results of operations for the thirteen weeks ended March 29, 2026 and March 30, 2025:

(dollar amounts in thousands)

During the first quarter of fiscal year 2026, the Company reported net income, primarily reflecting the impact of the $160.6 million gain on disposal of business from the Spyce sale. The Company reported a loss from operations for the period.

Revenue

(dollar amounts in thousands)

Revenue decreased for the thirteen weeks ended March 29, 2026 compared to the thirteen weeks ended March 30, 2025, primarily due to a decrease in Comparable Restaurant Base revenue of $20.7 million, resulting in a negative

Same-Store Sales Change of 12.8%, primarily driven by an 11.2% decrease in traffic and a 2.3% decrease in product mix, partially offset by a 0.7% benefit from menu price increases that were implemented subsequent to the thirteen weeks ended March 30, 2025. Traffic softness reflected the adverse impacts of weather in the current year period and the prior year benefit from the launch of Ripple Fries in the first quarter of 2025. The decrease in mix was primarily driven by increased promotional activity in the current year period and the transition from our former Sweetpass+ program to SG Rewards. This decrease in revenue was partially offset by an increase of $19.2 million of incremental revenue associated with 39 Net New Restaurant Openings during or subsequent to the thirteen weeks ended March 30, 2025.

Restaurant Operating Costs

Food, Beverage, and Packaging

(dollar amounts in thousands)

As a percentage of revenue, food, beverage, and packaging costs for the thirteen weeks ended March 29, 2026 increased compared to the thirteen weeks ended March 30, 2025, primarily driven by higher overall ingredient usage, investments in chicken and tofu portions, and increased promotional activity through our loyalty program. These increases were partially offset by lower ingredient costs resulting from supply chain savings initiatives.

Tariff costs have been absorbed into our supplier pricing, and while the impact is no longer separately identifiable, we expect it to continue at a similar magnitude to the prior year. Actual impact may vary based on tariff policy changes. In the second quarter of fiscal year 2026, we expect food, beverage, and packaging costs to reflect elevated produce prices resulting from adverse weather conditions and expect to incur incremental fuel surcharges from our distribution network.

Labor and Related Expenses

(dollar amounts in thousands)

As a percentage of revenue, labor and related expenses for the thirteen weeks ended March 29, 2026 increased compared to the thirteen weeks ended March 30, 2025, primarily due to deleverage from lower sales volume as well as wage inflation.

Occupancy and Related Expenses

(dollar amounts in thousands)

As a percentage of revenue, occupancy and related expenses for the thirteen weeks ended March 29, 2026 increased compared to the thirteen weeks ended March 30, 2025, primarily due to deleverage from lower sales volume.

Other Restaurant Operating Costs

(dollar amounts in thousands)

As a percentage of revenue, other restaurant operating costs for the thirteen weeks ended March 29, 2026 increased compared to the thirteen weeks ended March 30, 2025, primarily due to lower sales volume.

Operating Expenses

General and Administrative

(dollar amounts in thousands)

General and administrative expenses on a dollar basis decreased for the thirteen weeks ended March 29, 2026 compared to the thirteen weeks ended March 30, 2025, primarily due to a $4.4 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 $1.9 million decrease in management salary and benefits expense.

As a percentage of revenue, general and administrative expenses for the thirteen weeks ended March 29, 2026 decreased compared to the thirteen weeks ended March 30, 2025, primarily due to the net effect of the fluctuations noted above.

Depreciation and Amortization

(dollar amounts in thousands)

As a percentage of revenue, depreciation and amortization for the thirteen weeks ended March 29, 2026 increased compared to the thirteen weeks ended March 30, 2025, primarily related to the increase in the total depreciable base, driven by our acceleration of new restaurant growth in the back half of fiscal year 2025 as well as the change in sales volume.

Pre-Opening Costs

(dollar amounts in thousands)

24

As a percentage of revenue, pre-opening costs for the thirteen weeks ended March 29, 2026 decreased compared to the thirteen weeks ended March 30, 2025 due to the timing and volume of new restaurant growth as well as the change in sales volume.

Impairment and Closure Costs

(dollar amounts in thousands)

Impairment and closure costs on a dollar basis increased for the thirteen weeks ended March 29, 2026 compared to the thirteen weeks ended March 30, 2025, due to an increase in closure costs, including lease-related expenses, amortization of operating lease assets, and other costs associated with restaurants closed during and prior to the first fiscal quarter of 2026.

Loss on Disposal of Property and Equipment

(dollar amounts in thousands)

Loss on disposal of property and equipment on a dollar basis increased for the thirteen weeks ended March 29, 2026 compared to the thirteen weeks ended March 30, 2025, primarily due to the disposal of equipment at closed or relocated stores.

Restructuring Charges

(dollar amounts in thousands)

Restructuring charges for both the thirteen weeks ended March 29, 2026 and March 30, 2025 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 common area maintenance charges. Additionally, during the thirteen weeks ended March 30, 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.

Interest Income and Interest Expense

(dollar amounts in thousands)

25

Interest income, net, decreased for the thirteen weeks ended March 29, 2026 compared to the thirteen weeks ended March 30, 2025, primarily due to a lower cash balance and lower interest rate in our money market accounts.

Gain on Disposal of Business

(dollar amounts in thousands)

During the thirteen weeks ended March 29, 2026 we completed the sale of Spyce and certain assets relating to the kitchen automation technology known as the “Infinite Kitchen” and other related kitchen automation technology to certain subsidiaries of Wonder for total consideration of $186.4 million, made up of cash of $100 million and Series C preferred stock of Wonder with an implied value of $86.4 million. In connection therewith, we recorded a pre-tax gain of $160.6 million.

Other Expense (Income)

(dollar amounts in thousands)

Other expense for the thirteen weeks ended March 29, 2026 increased compared to the thirteen weeks ended March 30, 2025, primarily due to a change in the fair value of our contingent consideration liability in the prior year period, which was issued as part of the Spyce acquisition in the third quarter of fiscal year 2021. The contingent consideration liability was fully extinguished upon payment of the final milestone during the thirteen weeks ended March 29, 2026.

Income Tax Expense

(dollar amounts in thousands)

The effective income tax rates for the thirteen weeks ended March 29, 2026 and March 30, 2025 were 1.4% and —%, respectively, primarily due to the full valuation allowance on our net deferred tax assets. Income tax expense for the period increased due to the gain recognized from the Spyce sale completed in early 2026.

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 inclement weather (generally the winter months, though inclement weather conditions may occur in certain markets at any time of the year). In addition, a core part of our menu, salads, has proven to be more popular among consumers in the warmer months. In recent years, the prevalence of hybrid and remote work arrangements have made seasonality in our business less predictable, and we have experienced negative revenue impacts around national holidays. Additionally, we have seen extreme weather conditions and natural disasters cause disruptions to our operations from time to time.

Our results are also influenced by a variety of other factors, including the amount and timing of non-cash stock-based compensation expense, litigation, settlement and other legal costs, impairment charges and other non-operating items, and the timing of marketing or promotional activities. Quarterly performance may also be affected by the number and timing of Net New Restaurant Openings and any restaurant closures during the period.

New restaurants typically operate at higher costs in the periods immediately following opening due to pre-opening expenses, training costs, and initial operating inefficiencies. As a result, our operating results for any particular quarter are not necessarily indicative of results to be expected for any other quarter or for a full fiscal year.

Liquidity and Capital Resources

Sources and Material Cash Requirements

To date, we have funded our operations through proceeds received from common stock and preferred stock issuances and debt incurrences, and through cash flow from operations. During the thirteen weeks ended March 29, 2026, we completed the sale of Spyce to Wonder for total consideration of $186.4 million, consisting of $100 million in cash and shares of Series C Preferred Stock of Wonder with an implied value of $86.4 million. As of March 29, 2026 and December 28, 2025, we had $156.8 million and $89.2 million in cash and cash equivalents, respectively. Based on our current operating plan, we believe our existing cash and cash equivalents 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 funding the current operations in our restaurants and Sweetgreen Support Center, new restaurant development, including the deployment of Infinite Kitchen technology, initiatives to improve the customer experience in our restaurants, and general corporate needs. Additionally, during the thirteen weeks ended March 29, 2026, we made a cash payment of approximately $5.4 million related to the third Spyce milestone payment. See Note 3, Fair Value, in the accompanying condensed consolidated financial statements included in Part I, Item 1 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.

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 9, 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 thirteen weeks ended March 29, 2026, we incurred approximately $12.4 million in capital expenditures. We expect capital expenditures to decrease in 2026, primarily related to the volume of expected new store openings and Infinite Kitchens.

Our prior revolving credit facility expired pursuant to its terms at the end of 2024. We did not renew such 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.

Cash Flows

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

(amounts in thousands)

Operating Activities

For the thirteen weeks ended March 29, 2026, cash used in operating activities increased by $4.0 million compared to the thirteen weeks ended March 30, 2025. This change was primarily due to a $9.8 million decrease in income after excluding non-cash items, including the net effect of the gain recognized on the sale of Spyce, as well as a $5.4 million Spyce milestone payment, partially offset by the $11.1 million impact of other favorable working capital fluctuations, driven by the timing of rent expense, payroll, and prepaid expenses.

Investing Activities

For the thirteen weeks ended March 29, 2026, cash provided by investing activities was $85.2 million, an increase of $104.3 million compared to the thirteen weeks ended March 30, 2025. The change was primarily driven by the $100.0 million of cash consideration received from the Spyce sale.

Financing Activities

For the thirteen weeks ended March 29, 2026, cash used in financing activities increased by $1.8 million compared to the thirteen weeks ended March 30, 2025, primarily due to a decrease in proceeds from stock option exercises.

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 judgments 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 28, 2025.

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 28, 2025.

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 March 29, 2026 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 28, 2025 (“Annual Report”). There have been no material changes from the risk factors described in our Annual Report.