Sweetgreen (SG) 8 Nov 222022 Q3 Earnings call transcript

Good afternoon, ladies and gentlemen. Welcome to the Sweetgreen Q3 2022 Earnings Conference Call. [Operator Instructions] Please be advised that this call is being recorded.

[Operator Instructions]

And now at this time, I'd like to turn the conference over to Rebecca Nounou, Head of Investor Relations. ahead. go Please

good and Thank afternoon, you, everyone.

me and Co-Founder with Jonathan Neman, and Mitch are CEO; Reback, Here today Chief Officer. Financial

begin, we we a couple Before of have reminders.

our release at available earnings on Our investor.sweetgreen.com. is website

Actual a we will those comments forward-looking materially During this various results implied risks be differ as call, may or of of making a nature. result expressed uncertainties. from and

forward-looking annual filings, these report including and quarterly about on information statements and review publicly please no today, statements. more in filing risks, our Form we are of some Factors on obligation of to latest section or XX-K subsequently the report update our company's XX-Q. For titled on based Risk SEC These assume as the filed information Form forward-looking revise

be of measures, addition financial the will items we IR release performance which substitute measures available non-GAAP website. reconciliation certain on and our nearest to GAAP in in can of discussing A these press in prepared GAAP. for be afternoon's financial a found not measure this to U.S. with are accordance Additionally,

to the With my pleasure to off. turn that, Jonathan call over kick it's things to

Thank you, everyone. Rebecca. afternoon, And good

our a I to to by touch every connecting public by food, the As anniversary real want adding our gratitude we customer members Sweet our with offering building company, my who team healthier communities first begin incredible interaction. power near of as mission people to

revenue, were XX% channels. of $X.X million, XX% via We For the represented quarter. digital and growth AUVs the total digital opened the for quarter, X/X in those quarter. our representing restaurant-level same-store million our year-over-year restaurants Total sales of approximately coming we $XXX of margins were of own QX XX XX% sales and sales growth X%. reported with sales

quarter, a to our to and figure year. narrowing profitability. quarter adjusted loss of third improvement improved million this in on last path has demonstrate year, we was $X.X loss continue That time $XX.X from EBITDA each the Our million this

environment that While this value. of for high-quality believe and product we year we has the offers price have are the been entry, our a challenging proud macro how navigated excellent

are We through we on the uncertain and as discipline operational world relentlessly steer ahead. times focused in financial

Our strong with and network our each is States. our can organic source the supply difference passionate customers We most majority from some producers what share members distribution creates our the food we of local partners. make in sustainable of The proposition and XXX farmers, vast restaurant. of starts partners that a team help in United restaurants scratch every or highly the that value of the regarded This taste. day

a have year, in beginning all than We this bold our menu industry price the flat the majority the price we've year. under prices our core our while once of since $XX has raised and markets, more held of

sales the pandemic, years and acquisition X-plus During drove in simplifying our best-in-class our we while operating model. digital

by We continue wherever human customers enhance believing to deliver value are, experience, through not they meeting it. should technology replace the technology

brand is the at that call over basics, us build to highlight intimacy scale. the going of we a opening up, scale to ways intimacy best-in-class that are XX world we built we like the playbook relaunching the back Now I'd past the years. at helps few that

we community We on to have every transactions and local part our freshness. begun we fast retrain building them. partners connections labor First, refining in chefs, with experience on customer without members our training, and restaurants our a a incremental Three, It's of believe we service become touch. core hospitality. focus customer team one community through markets, values, farmers' authentic have compromising the creators By delight approach we how the and create add better every a of satisfaction. interaction we an and local we our it's our improving we take with with artists, opening model offer that focusing Sweet customers Two, great throughput so and to can drive with community.

In to driving becoming of national the sustainable to profitable and reintroducing a macro addition driving the long-term operational committed with we scale are excellence brand even growth at our increasing and intimacy uncertainty environment. playbook,

As reminder, has enhance with food; brand four, restaurant and healthier experiences increase pillars: communities create X volume; one, live in the allowing member to consumers footprint new drive digital a fast expand and a strategy us digital new relationships, and the more food; customer to through team own channels, markets make to real our experience Sweetgreen on of employer evolve X-star and leader industry as and three, frequency to existing add and focus solidify our two, our lives connect inspire reimagining choice. our

new from Let starting in each quarter few Upper the in pillars, early, XXX stores $X on QX, highlights XX a we of average To small chefs. these restaurants. the local we Detroit me share markets, expectations scale footprint. and tracking restaurants our these and In into and our while opened and restaurants, Minneapolis, launch we artists, playbook, exceeding X with AUV QX, to quarter million. with with influencers at Midwest, Indianapolis. Late above intimacy are the businesses, Thanks quarter these collaborated opened an the ending to

execute result, a our that able during we however, cluster These a to restaurants not playbook. are pandemic opened underperforming and, the as standards. have, small our to were We restaurants Southeast of

We have restaurants process begun through these the community of connection. reenergizing

week-on-week are growth. responses and We to see starting revenue positive

or in have meeting restaurants We nearby are already markets we these are confident that exceeding expectations. as

unlock we month, cost our the a Future been markets was receptive, first to invested the downloading customers, filled needs, of new additional have have and the restaurant in our Vista our area lower pickup Customers pickup new kitchens with which nearby. Vernon store to potential of was capital. digital-only footage opened experience D.C., and model. on City Last the kitchen smaller Mount relocation return with square app Washington, improved build-out

Infinite Kitchen. by Our Mount powered the learnings Vernon for restaurant restaurants our will provide future

year technology, visiting sometime the be restaurant ago be weeks X cannot a we next I we progress better restaurants team will opening they've excited know, consistent even in the can share with line our Kitchen. will Spyce, will that more experience, team. perfect acquired the while We last with speed automation elevating members. call feature we create serve that a These restaurants Boston you We all more portioning, As Infinite role few and our customer powered made. automated quality, our faster production food were of by the the year. will

major about are in also team to forward model. help calls. you We and elevating future with profitable a role experience We the a but transformative create look technology and for will scalable will automation members more that in customers confident play this sharing more us

be to a and digital to recessionary focus another first we will Schaumburg, especially believe toolkit relationships continues from be digital engagement and of food. important will our week, and to program owned format launch in we the on in well pull-through are to a our Next to to us. customer have coming of real Illinois. XXXX sales experience opening positioned look for connect Enhancing people scalable profitable we environment. with have our We this as incrementality is in lead priority With a more XX% channels, loyalty in

to their place users average our their and trial tripling reminder, than during XX-day frequency doubling QX a additional our in of trial, and Sweetpass Rewards spend Sweetpass through saw frequency aim gamified monthly cohorted frequency orders more X spend XXXX. almost experience. an as launched compared July, subscription As with we in to on their QX In an Challenges feature and drive a average the

into their least doubled of frequency and on into compared opted our challenge. digital a as a XX-day challenges not customers at back opt Looking one period, to digital customers did who spend who

We were components as a loyalty program. a piloted and implement as potential Rewards to and of we future will program. new loyalty Challenges challenges throughout Sweetpass new test Both and and continue learn QX iterate towards

Given lever and of will our both customer we pilots, next later powerful the engagement level be year. resonate believe growth a program strongly with

growth focus profitability to of our return. offices channels We BXB continue as and the on

to In $XXX Outpost, XX the are sales in exceed stores to catering addition from early begun tripled weekly stages QX. Average end pilot order values channel. new initial We've date the catering to promising and rapidly and of with start of in results. select we have growing

will awareness. as activity to opportunities we and marketing catering months, return group add markets additional begin our drive and and coming gatherings see outpost upward with trends growth pilot the office real to We Over increase. to

title, Our expanding our our channels brand's by World's Se mission it is who this and pastry such created treat restaurant. Treat as is footprint as or preservative has dessert X-time to version of expand renowned and our ethos Livingston food free access and access the that to Yesterday, our honors adding hidden real We refined Malcolm chef restaurants, sugar. we nationwide. our food. classic Per any the of menu. II, Crispy with treat of broadening expand Rice We the winner Noma, chef-in-residence at beloved It's highly a worked Best launched processed

new grain which XX% offerings, testing bowls turkey also test plates. in we're less heartier meatballs, California, and protein our emissions meatball. new organic carbon features a delicious have testing, currently traditional than Across The

will Thursday, City customer lab plant-based be at first-ever, our to for testing we food option. Finally, Meati, starting vegan a Culver desire this protein, address our high-protein

order root For their can bowls this Miso protein Meati nutrient-rich X in the mushroom try or bowl. month, customers new

working of a We goal planet. on who a the sustainable are to with partner the be positive proud impact shares creating

each customer and brand power members with mission team Our our build the interaction.

This as invest leads make in We only to well satisfaction and also increased continue their to not but easier better-run to training development. employee jobs innovate restaurants. as

of market, Given restaurants. are many improve there of opportunities tight a to labor namely, historically our number across factors, a stacking

the have in on impact than an year, call-outs recruiting become XX% While had we operating in has easier throughput remain earlier many staffed, locations. and somewhat and hours

to are shows work or out higher we to scheduled hours our In less than are call that tenure response, employees hours. those are have and working data shift to who who staffing XX Our models. fewer more scheduled work

On time of tracking has almost half. a this front, ATS hire launched our The system quarter. new to new by applicant reduced our the hiring we rollout

environment While our as to at hospitality easier, we members We've especially the get the seen training to hiring of in opens to refocused the had industry still success on back high. talent world demand during when scale digital-only switch we is up. our implementing remains as critical majority joined team have playbook, operations. customer pandemic our intimacy the Training for

and incorporating customers. to digital connecting out includes continue multiple ingredients. overwhelmingly newly from of and up automation to our real-time of do This a machine our proprietary which what by to do our a uses employees they Early rolled future consumption can predict to what tool, much best, cold with is and learning algorithm so points positive. to list tools generate we teams free our prepare leverage Finally, data prep how time feedback

of in category defining convenient are and early a healthy, delicious the We creating food. innings and of

playbook. proven tremendous have We a white the a national a brand following U.S., cult-like across space with and

well relentless continue a are drive discipline to invest for enabling long the while and capitalized to growth on We us business have in term. financial to focus our

I to their mission want our time. to to connecting commitment food one for work customer thank real Sweetgreen the whole of at and people a team

Mitch results. I'll to it our Now to hand QX over financial review

was afternoon, a quarter price million increase growth price of sales Thank of XX% from the the X%, have Total you, of X% includes broad then, growing $XXX This for Jonathan, good Since taken XXXX. million, XXXX, not up in our same-store everyone. quarter and revenue taken third $XX.X increase. year-over-year. we menu January in reflecting

cost revenue any line we percent As a of further XXXX, goods of as price stated if anticipate XXXX. labor with our previously, moves not in in do stayed and

grew QX million, up of total XXXX. made XX% revenue. is website was $X.X XX% Our $X.X our revenue from Apple Sweetgreen was in own QX Digital that revenue digital XX% and average total was of on in transaction million a the volume revenue year-over-year. dollars QX digital unit

guidance least restaurants new on a restaurants the this year. restaurants of achieve XX with XX restaurants we've for our The of XXX in to second quarter, half QX. at the XXX. track We this new opened We opened total To majority date, of ending XX quarter these opened remain of restaurants.

restaurant close During the made X decision to Texas. the in we quarter, fourth

quarter XX%, were from the XX% third in the XXXX. Restaurant-level of margins third quarter up in

figures, GAAP release. refer For a to the comparable earnings please of restaurant-level reconciliation margin to

beverage comparable the in with packaging Food, which XXXX. consistent were of is and costs revenue, XX% period

a in of was that expect we As beverage percent XXXX, with and our which be food, full of packaging sales, year revenue. costs XXXX XX% will to line continue for

QX. further pressures the and expect earlier recent weather build seen half we in XXXX disruptions have second inflationary calls, to impacting and on mentioned As of in impacts due tomatoes romaine we

of basis and margin revenue, improvement Labor our XX% from an XXX simplification in related costs model. of operating price of increases XXXX. points this improvement over was were comparable the the period year-over-year result and This of

costs revenue, related XXXX, with points full improvement and XXXX. of quarter expect to year better which a the XX% of be our to slightly menu XX% expenses was continue This We of line were will impact third as from XXX increases. due of in primarily percentage is labor basis revenue. Occupancy-related of price than revenue the an or improvement

expense for stock-based in increase is million $X.X in million public million quarter $XX.X increase to compared of expenses Due and cost was in in to to This Spyce the This in a increase minimal the primarily compensation a acquisition G&A million in million salary company and expense, primarily Our a $XX.X the in of was QX $XX.X $XX.X QX increase attributable $XXX,XXX in an investment for change the offset Spyce. XXXX, our quarter. in XXXX. Spyce by the benefits. was G&A timing decrease

$XX.X the in quarter G&A for to million Excluding these XXXX. was in compared $XX.X period million comparable items, the

was revenues improvement as increased XX% This XX%. a

we our profitability. G&A, We is for leverage to expect meaningful gain critical that in to path will which our continue

above. net $XX.X increase in in charges offset period taken The quarter compared profit in Our compensation change revenue of the and million and loss XXXX. the partially million stock-based was $XX.X $XX.X restaurant-level quarter $XX.X in the to million million a increase noted by for current primarily to restructuring attributable comparable is

is and Adjusted EBITDA sales, million, excluding compensation. for leverage loss This quarterly from of million. the narrowing quarter in the year-over-year improved was improvement stock-based loss a margins $XX.X restaurant-level higher of result $X.X G&A, the

charges costs approximately of of call, As balance related cash quarter. ended third million in million. disclosed reducing corporate a smaller support last restructuring our moving incurred to quarter our steps We to by $XX We $XXX our pretax took on to approximately center office and third staff with the we overhead a manage the X%.

uncertain We capital with position provide our strong these have and times. flexibility continue us during mission allows expand us a that to to

comments sales. I to now make few a quarter on would third like our

quarter post-Memorial throughout Day persisted October. trends First, the into the and

we and due call-outs some to closures an high-volume Second, of repair saw store unusually stores. affecting high issues and volume maintenance

Third, during cluster expected. than have ramping the opened small a slower we restaurants of Southeast, in pandemic, the

We with are our revisiting these at stores playbook. scale intimacy

confidence long-term end stores' these have We in markets.

the of right is these being at lower August, The we line In little hard the operating to to the be continues be environment light short. our guidance with possibility to gave expect external challenging, in a trends, we our of world now. predict of end top and

focused an the people environment the uncertain, While real the we doing over and We strategy right have the increasingly brand. mission on scale believe for macroeconomic long grows to are we what's long-term company create our best enduring run. to connecting of food

to We disciplined profitability. to and and are elevating the sales, drive our customer path committed experience G&A driving to to approach margins maintaining company's a

to to With the the call turn that, operator Q&A. back I'll start

first [Operator question of this afternoon John our Instructions] from JPMorgan. take Ivankoe We'll

me? Can you hear

Yes.

contrived model do and And is really calculation of question a so shortfall but even it new did listen, seat unit last than our the did the our a seem it's most the volumes. weekly we we relative So comp, the place to was that seem that can on to a revenue on sales expectations. based same-store in explain sales, average that more from perfectly in year's on but --

I wanted So see address, to as guess you did well? that for I you

have least not lower-performing starting. correct about that to the be about weaker? may different or I there of that the think mean problem system a guess, stores the that's may stores, talk I been than a to average been And the you stores closer stores talked happening? is there and at better? initiatives that initiatives, and what characterize, versus may but anything scale, you Is opened, would new what intimacy are I have that more that have And have about handful talk up slower at bring the

to John, from Sure. good hear you.

the your at not point, in to the pandemic, Southeast seen We've changes we So stores, to start. have we anticipating before stores traffic. mentioned slower of have about the mostly of pandemic demographics isolated prior the on right we really the signed shifts the or do in which calls onset a a cluster and had the some where

Sweetgreen And first educating first which them guests giving about being back. has that able digital, always bringing bringing classic then of it huge on has of that trial them that with is The our combination to of so and of that much our incredible playbook, in, a not run to playbook -- is do we business communities. them part that, how while frontline business been of as well as of really -- and really top our portion engage our

of of we And where of There's execute we're middle the problem. playbook. most to that's able a the cluster where the opened in of this seeing in pandemic kind -- weren't stores really right

the think the openings, incredibly ones with specifically you less we and look don't pandemic the where the very successful. if in pretty Upper markets we because starts of this As the I confident market much at have stores, to we're of been all -- that wane in stores. the do the estate have real problem successful they've Midwest, past has to

has to we how playbook. really go-to-market our It executed and do that with

stores. we've mentioned results So playbook begun playbook reengage seeing we nice on are as new as as really some call, that on to on really using the well and that

And our people we very, proven very are customer they experience I'll on very the once have a we've customer labor we're lot one just pandemic, that will being the environment, of in about the a we've little labor depths environment, but seen of I now which the bit at sticky. easing that expect execution made some a of say Sweetgreen, we challenges, of also in lot time. history, try challenging. focused in talk that a just the to the think

a that on we able slow, so stores we're always them. focus ramp to these when when proven And bit stores we've little start

look and we XXXX, XXXX of time we interesting for the averaging class John, million year at the class $X.X at their the modeling to see the IPO. of volume it's the that both to Mitch. continue we It's when gave target of X

So stronger. been we while have softer on many there have opened been that have stores have offsetting, the all some liked, have, than we stores would that

now to Andrew Charles next go Cowen. We at

for more were sustained guidance. a like it that guys you May Day wasn't looked expand it perhaps Labor as but improved through Looking to about October. post slowdown bit data original you your guys as Return-to-office in a bit robust thinking little in

it this to? kind challenges down versus of me? much So just -- the attribute dragging more the Southeast more what labor else is performance much how and excuse would you I side, mean this how macro side of staffing on is some or

in trends. we things office Day, sales Andrew, return combination Yes. a Memorial an and fill while you. saw the on stuff call about around from hear I'd traffic I'll good post to let increase of on certain lot Fridays Even the of general of talked and just travel, summer macro slowdown in. are start Mitch same. that the to the not last different Mondays a lot I'll definitely we around the days, A we've it's seen effects. office, in say heightened of erratic kind and

are patterns the across side. erratic think traffic execution on So that, there's board. the But some beyond I

they've to. we're of used fastest-growing And -- Sweetgreen digital year, about as our lines talked out of us this new during the members to the world team was the line the and never COVID and all year-over-year our throughput door channel and quarter-over-quarter. both the the really experienced Sweetgreen, were front that most We was for world

been expected be. a in where the huge the of on past we months nice but easier that of we well. starting already say, lot ways, some is I'd focused maybe our and to We're execution can we're, by macro throughput on making as seen definitely there. caught really we've some see say really as I green not that that off and throughput. the gains again, over customer That's on But So stuff not that service shoots some our guard say to side focus couple it and things customer and

comments. on little Jon's Andrew, let just me bit build a

our As we was very we happen August, said business. the Day on saw unusual what call in Memorial in post

prior consumer during general day our the by the strongest a the rule, we've we the summer different Sweetgreen pandemic. pandemic, down the whatever coming the end or strengthens in, was fall. What the of during week. of to phase some Monday very and out we're patterns have Historically, than call the currently As they of been slows followed seen were

summer essentially So about that urban slowdown. Friday the was very It's Monday almost part felt weekends to began of extension that travel, part double sales as hit it's environment. may to which approach we again, November, and saw an the due Jon reignited we talked addition the stores, what the to of due to and historical in but COVID. been grow of in We macro be again, pattern. counter interesting fall It's the same-store digits to and possible business the was

that Mitch, the maybe a X improvement, been X some just How And environment, then, or follow-up question. has you, sales are Okay. given November recognize days. only just you it's but

far to you your want But half versus earnings get ambitions prior on call? the XXXX your too of feeling, to don't obviously, now in first talk So profitable can you ahead turn yourself. about

at more margins store that path a for is topic it's that than one more G&A current successful, amount profitability environment, less time level relatively very in new it's a it on to the it's are say we simple not our than opening our we're The Sweetgreen. actually and of stores to important through on and focused is And tremendous spend very, think path at I good It's profitability ever. control our a that would leveraging important, us I one important model. that restaurant-level the expense. was. driving

significantly the will narrow half XXXX. adjusted are first In we completely our basis an losses EBITDA reassert and company focused And in profitable the on continue these, be we and that. to XXXX, will on of will

it. Got Okay.

Super. can in. Maybe more I sneak still So one track. on

one quick buildup. So

restaurant-level the wanted adjusted significantly may have modeling While we in margins were the sales little EBITDA a that than the at came the QX, especially we lighter than happy QX. better strong been and in in were

around just particular, path away sales question on helpful. as, program, Can this your how where you maybe portion of more the your you're enhance loyalty profitability of impact And the follow-up thinking for that. about in help margin to Mitch, to obviously, talk a food upcoming and there's free? giving this That's one could

think say through marginal I I around the than the of that on loyalty lower sale to of be the the Well, what that would at that up historical. margin back about driving the volume and more would leverage correct, gain you're incrementality really is a kind rate get AUVs We're box.

So we believe that although it will add and both to lower bottom the margin. the a top line, line at

We Garber next Jared to now of Goldman go Sachs.

back Mitch, maybe the that comments markets to last the I landlords of some come your with quarter you that around moment wanted just to were necessarily urban or I same of current you in some that had made during best think sort the working the not units were that are pandemic to the saw the open, maybe and line. performers on extent open at performing top

those what of with on have give update landlords conversations some those any So been can us you like?

not let Thank their for Central you, me you're correct in Manhattan, AUVs, anywhere Business particularly say first close that have question. Yes, Midtown Deep Jared, levels. the to XXXX District returned the that

they has in mark profitability The by of they While stores are were points grow, impacted line. growing it's the the XXX% off been has and to at several offset certainly before. they and the occupancy these been margin are continuing

rent that that The is in had structure. move We discussions modifying of of more attempt from landlords are kind fixed leases success area. with percentage a and to and to of with in and our those rent number some in in XXXX, have we order accommodate a level breakpoint a leases to

comfortable But their expectations original to how for year growth macro maintain about a how sense pressures, of that next be unit Great. thinking helpful. the unit I to That's should unit growth feel the growth, then as IPO. you mean, of into guide out guidance the it impressive wanted year guys throughout all growth the laid kind during we've companies and several you to we the And you've with get that down obviously, relates see seen year. despite unit ratchet and

Jared, good to you. hear from

year year. on at least We the that of So how we’re on depending stores, track this couple exceed a for XX up. by might ends

have XXXX already. signed leases for We XX

– of and kind cumulative XX still we’re targeting stores. So about it XX think between way the is we

XX. to And we’re XX XX, least. have for track at We odelled on

So we development feel pretty targets. the good about

more as we’re risk. existing a markets what for Luckily, well stores have year of deeper confident I’d and markets of our very and lot On that about the the And than going year more a as wide, stores good know to quality in so number a done lot real estate in first on to just stores, of is, markets. say doing harder well going This environment. incredibly – will path beyond next us. wide, top like we’ve is new works of the feel we been development where and focused team these this we challenging of our pipeline on our we opening to that not have. all, more year sequencing. new a of new a and the lot it as on focusing markets in be in existing knows was anyone market really opening profitability, And business going kudos

the Infinite things the closer outside opening Chicago. what get to week, Kitchen. finally our we’re of excited, our calling doing We also of or super automated kitchen couple pickup-only weeks We work concept formats. And a taste on exceptionally some pull-through in to new a drive-through of mentioned first come next us our D.C., ago bit launched a as well, of little been kitchen, gives we we’re

estate exciting really the the front on better real and good pipeline. just the getting So how development about at some and we and feel stuff we’re build restaurants these

of Blair. We Matt William next go now to Curtis

the the the to get store And or weakening occupancy. given Or any still guess, base? suburban revenue still to in sluggish? as more is stores in of you anticipated? want rebounding seen then would the I coin, back improvement other Because side that on office the the Have I that guidance. you urban you less are expect

on sales lot quarter we've the others you, markets have XX%. We've Suburban suburban some had that markets. moved about would same-store what say Sweetgreen faster and Thank in the I urban flat trends Yes, basically of in the a than that been in markets is growth third the seen seen. Matt. have market have

just quarter. range Okay. the a mean, then kind looking it I And at pretty of of the guidance for the fourth comp full for wide implies comps year,

embedded you how could same-store specific So more are the expectations And sales-wise? what comp? quarter be the October for went, fourth exactly in

post kind What line in pretty – of summer reiterate, said the Xst was we drop. with to gold summer maybe of I October earlier, believe, happening say the around Memorial is I then And November. what it trends peaked would business as of Day. much the Think

now to John Morgan at next go Stanley. Glass We

insights I guess that What just and again new you're what versus was dropped Is the saw data a of quantify Jon. or of I operating sort what it impact closures sort think is I'd of And up of how last follow what -- versus that on the data, the visit possible seeing of just to new to there mentioned, high-frequency or terms it quarter? what's customers. is store like hours? overall What reduced demand? have in quarter, you trends newer meaningful customers some that reduced Is terms on you're incremental lot of losing of your any tell frequency from you bands, does high-frequency right, you in last customers? customer changed? just low-frequency Or

to good hear from you. John,

I'll piece. the about of I'll the the talk Mitch let So part question, answer closures second

trend, to playbook. actually intimacy it's interesting, customer scale our terms So at it of and in the speaks

our about think -- acquire you lever acquisition frontline. traditionally, the biggest our we Sweetgreen would was in If

and by, went at So front of got the Sweetgreen efforts that COVID, that very first the together people we it's the of working and walking and community a lot really lines coming Throughout away. driving acquisition. for mobility kind through We saw. time, and virality trying digital by, obviously, our good

So digital us. primary became driver a for acquisition

pre-COVID do things To been rolled some were answer down around seen your speak how have annual off, or frequency used has question an during customers we acquisition or and, it, acquiring increases actually around sticky, kind measure this pretty why I frequency has And lot rewards challenges. Really, quarterly community. more it's call directly, like we we from of COVID. to we spend the very new that's out shut A seen actually remained steady spend actually to and that trends perspective. of shut as playbook

little some as that -- bringing brought slow up. And so recently, back. acquisition seen tick a it it bit us probably be back honest, But we a to we've in little of took we reacted

So retention Challenges. customer and Rewards flat, acquisition, new a slightly in of and up we with energized saw recently. drop that seen And we've kind

time, We operating break question in hours, of Frankly, by store the a outages me has and let highest had experienced. impacting X line caused probably things our store lines general issues. operating John, company back it closures ever R&M call-outs, the labor general like store groups. number the was about

significant In was course, store our half about Central highlighted, store due that, landlord of X for closures, closed that had addition the quarter by we to a problem. York New Grand to

they collectively, So in number pretty quarter. a all the up made significant kind of

We begin to quarter. them the have seen we as into fourth dissipate move

That's because get a of was? impact quantify some class talked done at, just can big you you you have one, I again how is that follow you maybe it just a what was Last quarter, about the And to from like Can in New trying again, comp Mitch, unrelated follow-up, I drag? stores, down. coming 'XX, as wouldn't it that of what York those if are follow-up. up, did

Southeast. the about talking we're Now

How quarter the just stores Southeast Does 'XX a New worse? of of stores? softer now those new be to want York continue class some last York Is better? introducing it it to we is open. New of in understand what in drag? sort And stores. element Is the about terms I being we're that a of to the talked to

John. Okay,

was closure the in you, specific, million $X.X tell get quarter. to of in the let probably probably the neighborhood number, So

the of an on 'XX, class terms as that's metrics. aggregate In of as track to our said, I class average

New significantly. stores out those grow of I York begun Some and grow to have called pretty that

For and stores challenged Trade most Hudson market the World the example, in of Southeast corridor. really confining Spring in kind Center, that of

once of class to 'XX speaks that that really up have us, begun and it the -- how with they has being end sticky. we to ramp customers of kind been we've John, is try Yes, model

And give food great longer, and a try know hit to we some a bit once right so get some but and built. experience, take the is them away people store the stores little we stores

that on class improvement nice some seen of we've so And 'XX.

Brian now We go next to Bittner at Oppenheimer.

you flat remarks that of beginning held question your first your is menu the on you've prepared Jonathan, price said core since in Just pricing. the year.

very was I That's price obviously in. January. in increase think your time we're last unique in this

can have just since about you you especially moving pricing So into are stiffened kind of elaborate lately? costs XXXX, on some how thinking you said strategically

should throughout have quarter we in the follow-up. us play to you fourth help then can how the factor Mitch, out understand And in XXXX? a just expect model price and And I

Yes.

did to on know because partners, in all just sources Sweetgreen a I every the since of mentioned from many in food I January. our -- of from I want organic just food On of sources As best reiterate. to country but hold the I top think world, sometimes use. that remarks, the majority day. want think the vast Sweetgreen really And make price we restaurants price scratch offers I from same single this, value our we my and we that, most locally take moment in -- of some of the the

see to saw And opportunity more, plant-based, you're we So the taken offer, more to The value product some are continued price to menu take take price competitors. have as improving. the is we our we've pressure, for relative do definitely And price, reason share. you're a our haven't high-quality And we although less some we very, expect competitors has partially some pressure. believe, that as this our less very commodity paying. seen than we had much getting an commodity is

we, of we and consumers people a how us hold in to environment talked have use some that. As to do saw really acquisition take more opportunity next customer take we're lot for an take to I being more share. but year, an price get We we our continue price, judicious and price expect more in to expect do and about just ways, opportunity. to challenging, for the

want environment, And in right we this to the value. make sure that offer we

One opportunity this we've is there of down. and the see that we begun the think an environment in things trade to is

that Given an for actually they places see recessionary this to what go, in be for we consumers they environment like opportunity the we that and value something from people trading the down Sweetgreen. many have

There's Brian, quarter. change no just our pricing following the up question. in fourth in on your

third. will it did exactly the So look it like in

You price the are price our XXXX, last and the move only correct, year. was for change the beginning that's of

your stores will I base, how said this year Spyce prepared I'm And the think regarding a Spyce couple of if that's think moving to these technology. are will going you of your have just capabilities heard Okay. these next product-making automation how the sorry success stores I much across is stores' correctly have thinking ability this in I'm off but actually forward? automated, remarks, you in is to scale important technology. that And the And asset so the overall be I of if the case, curious base the your stores

Yes.

we're format Let me this bit little tell as about you a the Kitchen. Infinite calling technology and this new

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of today portioning. top have we biggest some attractors around of the On accuracy are that,

As things you'd makes the perfectly. machine expect, these

technology thinking experience. the about team designed lot this the experience. super We store restaurants and how technology their of be also experience that the And are excited member around really about to really elevating excited side working about We our by and spent human what a this member team this does members we bringing in into are time designed team for side.

a transformational of perspective, financial a model that, On top it's from definitely perspective.

our of Kitchen line. test not majority automated assembly. in Infinite Kitchen. of around I clear, labor and our don't restaurant, will -- a excited of we're Infinite If takes or mentioned Kitchen, assembly We and you envision look at is And orders. Infinite -- this make the kitchen our towards all to stores, why that the Vernon us, frontline Because the we a those being restaurants, a variable prepare the in secondary kind It's for our Mount be production that. labor, about pickup half

orders. it be our So XXX% would of

stores got We're the excited and to to feeling for retrofits. they're but it technology and for roll be and the technology. be And about team to next should given not perfect We've new we industry. But -- And got will new be be it X it. test brand these customer that opening these They be pilots. with It's test only these. experience in confident the really and these in out 'XX, early. for to won't member pretty think builds. also will clear, the see beginning us this successful We'll X we're We've year. transformational see

those And are X stores right? in 'XX,

Correct.

to Jon at Citi. go we'll And now next Tower

quarter. a And the digital you but as may. at part rewards know digital revenue period if I ran the year-over-year. mix summer and program, during a of Just of -- for the not shift, few, I of did Curious, revenue least slip significant quarter-over-quarter a sequentially, percentage

So in modestly curious slipped why happening the I'm you maybe if could period. delve into it what's here,

good driver the we frontline great that's us. frontline a quarters, as I really a thing. It's acquisition traffic in We customer for that actually more future see see back. Yes. hope, coming because

experiencing and over and coming, through hope us expect them frontline digital. to actually to more then we see converting customers So our

So got just really it's that denominator you -- it's shift, but bigger, and really have grown. a it's that's that frontline the

So I'll say happen. to we encourage that

dead the then the a of for it. going now. quite And back bit right reasons pressure growth beat business obviously, like, to And of a unit different but to there's I'm back -- Okay. under does the just discussion, number over seem hate to going curious, is I a horse, it

on growth and/or and more those than knowing profitable of that but and some your those the on be the profitable, why to might markets new the more not at expense stores year you. higher going total to growth rate are which that to concentrating store volumes come take of are that you're consider curious So important opening next profitable be the how to growth it of going rate is Just historically? most

our an it's the In earlier pipeline focus on exactly that. when about and question, fewer I markets, talked

brand. and a It's areas where markets lot focus tested 'XX, in more pipeline. our In we were, of reducing lot we us new ways, So went markets to a in building us some year, demographics new much out that model, it proven really to on risk a see this you'll works. and know the the of from

is is said happening. you exactly what So what

that translate of rate? the growth number XX%-plus Right. But into potentially does to stores relative smaller

with like we I'll No. than tell the high have focus we're still on the focused it on is confidence. numbers and was bigger you of that, and honest bit the a kind the markets to that pipeline be where now hitting we're truth -- areas those

bigger point right have maybe more can on focused you driving really So growth but willing take would that now. it of been to risk, to we're if profitable the get kind

those it. that Kitchen Got are And frontline? to year, then Infinite service, stores they contemplating only? counter are on also the next are you're going to digital Or be open going

that multiple to we make So really sure I And on different today, that but we doesn't touch adding want can important. super Sweet we mentioned experience is as digitally, shared store. and much for number want -- customers order in the think, of order I've people what experience, be customers human to want will we know is in everybody haven't so to ways. order make times, to a sure We some say there can way

to deceiving you So maybe go a as from when concierge a say well. order ability human it's into our very in even today, store, if there's you high-touch experience and only go because to new digital digital-only

ordering So imagine plus of some digital concierge of part being sort and kiosks experience. that

if And me, guys call an mentioned give I update. you don't last inflation it if quarter. you you one for might but had me it. haven't, in commodity Got on yet, the the know

in we X%, average rate increase throughout to but the really no taken approximately in expect price line for we year it Now run is whole with year, our the significant what seen change from January. have the

And Griffin Bank next now we'll Katherine go America. to of of

drill further. bit little a issue into wanted call-out just to this, So the first, I

So us a why that, ran Sweetgreen number bowl. promotion $XX third expecting? then you long follow-up sort a as in I than one, higher remind a for were were to can of believe the call-outs X-week And you just again for quarter harvest

challenges of time? the a some just promotion curious, to given staffing I'm do that at you're So facing, why choose

Yes, I that. can take

significantly. during we What is we used quarter, time the our part higher our pandemic, we we QX, of stores were staffing So in moved shift we've during In in a terms with markets I'll had staffing, -- team part-time the a new saw full-time to. than more have and more that. of members a this challenging environment be of saw mix, full-time say what seen we to markets minimize higher and -- lot is that the where mix, we more labor call-outs a with with in mix,

time. So focus shift the full more a be to there's mix huge us for on how we

You people work. and there's you're are happens, want job. of a And Sweetgreen who primary your place committed the when as that career, more to

more the getting our team and volumes right under opens It's with members as high the so actually mix our to get they some and staffing and levels quite belt these we are omnichannel really just good. world model used do. And getting our the up tenure

So addressed by will the call-out mix we be issue, really, full the to really be more time. shifting believe

like actually promo, are and $XX the of we've said, we terms In staffed -- ready. we're I

give lapsed persisted were just to much users we really gotten getting of And lot feel environment. of November. referring were people October, this -- into and QX challenges little but in bit a a to throughout our place some value we a So better saw pulse the like have in opportunity a we to operations little reengage an and

reengaging results, We're very users of it for seems And the early. it's understanding results terms customer still what acquisition. did the but very and promising are it in

excited thanks the making to and whole promo that for huge happen. So team about the pretty

stickiest The not bowl the stickiest, it's it's We back. bowl, that people it one try find chose likely to harvest come only when call most bowl, best the we our reason We have. they're our harvest seller. the we

to be So results there not nice week, that we but nice have residual coming from results promotion. did it some last only expect

want heard follow there I could something. Sweetgreen. I trade some you on And then, expect it. I you be Jon, I you right. just said sure wanted believe Got to make into to up down

coming from? is you customers Sweetgreen? today And of from about, out risk the of you be So alternatively, what know that number those would one, talk sort customers where just can then trading

in it spend people fine $XXX high-quality, seen couple. or want $XX want environments they dining, We’ve general across the to but and a these maybe Yes. where $XX meal, industry casual still a for dining, dinner healthy they spend deciding they to don’t want for

not think environment, mean some expecting And customers their in sort in we’re in I we’re of we’re in recession. there. – some that. we’re clear so we’re some entering pretty tightening consumers belts of of sort or I we’ve seen some opportunities terms engaging the entering it’s – Listen, this

us But focus price on really value is offer. we what’s for and important our to what

seasonally. under We – We every scratch, is $XX And from I have local made that. food and value think bowl customers market. really our changes all really a delicious, in organic,

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environment, loyalty essentially we we’ve this been I’ll and for think huge very that without a driver. us running will So be recessionary a program. important say growth in also

go to RBC now Chris Carril We next Capital. of

just promotions know price going for just this given Just bowl targeted the positive promotion. the mentioned evaluating promotion. $XX the still just you forward, I you this point you up was tactical do harvest results point time? following Or very But and leveraging on more you're in mentioned? anticipate

always testing day. drive the traffic, it's the positive this just I'd end ways margin things. to we're at testing environment, of always say in sure that making We're

It And like buzz the in So does, worked markets. and it if out we'll with just our we're acquire play to it customers some seems results. well. create evaluating ways really different

us So the expect do out it expect I we proves numbers would things and in, it this. like -- some to more come if worked that

it. Got

which seasonality, years. would much for on we as down then, just full And on seems seen in a anything commentary really in margins else that of I is But is just about the we quickly due into in of presume haven't if over correct. or model, largely Okay. past with guidance should to to XQ, the the there from the -- to year like it sequentially suggest think respect plugging Mitch, have meaningful the XQ, based margins part our margins couple that step XQ I this specifically? XQ

traditionally margin around time. low quarter winter has for the built fourth the a No, and margin schedule Sweetgreen, been holiday largely

So there's really nothing else it. going through

And mentioned Okay. just retrofit builds Jonathan, technology thinking one, But Got for how that the stores the automated next to with on kitchen the the featuring then are it. you technology, new technology? year. will existing be opportunities last you about stores

Yes.

us, for like We I size we transformative where is, and where in beauty, size but we're big can there technology is where scale us. our at The growth invest this, small haven't front this most Goldilocks call our our we're of in gotten I technology enough in enough yet. and it, think, like of

we're do doing -- the terms technology positioned so could on a new very well And of I while builds. in think in work retrofit, focusing

the best. experience this deployed integrating it -- about is that is way way will the technology believe this thinking into really in be And and we believe holistic we a

And for positioned so well we're really that.

back all And afternoon. have ladies is to to we things closing for you any I'd comments. like Mr. gentlemen, that turn Neman, this and the questions

the how up how team a I very we’re the been lot restaurants, members. a the model to restaurant tightened But at field wanted and basics I Yes, throughout close connect touch now And a customer with pandemic, you playbook. so in getting operate. come just of about leaders, talking Thank in we We and on much. learned lot with at terms add say one we we’ve we intimacy our I’ve to energized how our to scale our time. up. I’ve back of to the suite got communities our time customers, meeting back spending

about excited year really we’re ahead. So the

We have a robust pipeline of MROs.

interesting from. We have plan, really which I to going are Infinite learn Kitchens think X be to

our going introducing lot be program, a to including a and from loyalty have exciting hearty on tests menu stuff perspective. on side, some going we of the cool We’re

made and and prospects So say, progress about environment, the to we’ve really looking excited beyond. about ‘XX but into out the challenging all excited

I soon. for just call for time everyone journey. want thank your on you on this to and Lastly, See joining all us today’s

much gentlemen, Goodbye. will like QX wish Ladies Neman. thank great you, earnings We'd to joining Sweetgreen's us, Thank you you and XXXX day. for so Mr. that all remainder of conference all call. a conclude and your