Sweetgreen’s 2024 Earnings: Growth Amid Challenges

Sweetgreen, Inc. ((SG)) has held its Q4 earnings call. Read on for the main highlights of the call.

Sweetgreen, Inc. Reports Strong 2024 Performance Amid Challenges Ahead

The recent earnings call for Sweetgreen, Inc. reflected a robust performance in 2024, characterized by significant revenue growth, successful expansion of Infinite Kitchens, and positive adjusted EBITDA. However, the call also highlighted challenges anticipated in Q1 2025 due to external factors and a net loss for the quarter, which present some concerns for the company moving forward.

Strong Revenue Growth

Sweetgreen reported a remarkable sales growth of over 15% in 2024, reaching $676.8 million. This marks the fourth consecutive year of double-digit revenue growth since the company’s IPO in 2021, showcasing its strong market presence and effective growth strategies.

Expansion of Infinite Kitchens

The company ended 2024 with 12 Infinite Kitchens, which have been instrumental in delivering significant labor savings and improved cost of goods sold (COGS) compared to traditional restaurant models. This expansion highlights Sweetgreen’s commitment to operational efficiency and innovation.

Positive Adjusted EBITDA

For the first time in its history, Sweetgreen achieved a full year of positive adjusted EBITDA, with a $21.5 million improvement over the previous year. This milestone underscores the company’s financial health and operational improvements.

Menu Innovation and Guest Favorites

Sweetgreen’s introduction of grass-fed, pasture-raised steak has driven customer traffic, while the anticipated addition of Ripple Fries in 2025 is expected to further enhance the menu and attract more guests.

Operational Improvements

The company achieved a restaurant-level margin expansion of over 200 basis points year-over-year to 19.6% in 2024, thanks to improvements in labor optimization and deployment practices, reflecting its focus on operational efficiency.

Net Loss for the Quarter

Despite the positive annual performance, Sweetgreen reported a net loss of $29 million for the fourth quarter, compared to a $27.4 million loss in the prior year. This was attributed to increased impairment and pre-opening costs.

Impact of External Challenges

Extreme weather and wildfires in Los Angeles caused significant disruptions, leading to negative double-digit comps in the LA market in early 2025. These external challenges have posed difficulties for the company in maintaining its growth trajectory.

Q1 2025 Challenges

Looking ahead, Sweetgreen expects a decline in same-store sales between 5% and 3% for Q1 2025, with a projected adjusted EBITDA loss between $3 million and $1 million. These challenges highlight the external pressures impacting the company’s short-term outlook.

Forward-Looking Guidance

Sweetgreen remains optimistic about its future, planning to open at least 40 new restaurants in 2025, half of which will feature Infinite Kitchens. The company aims to drive growth through menu innovation, including the introduction of Ripple Fries, and the launch of a new loyalty program, SG Rewards. Despite challenges such as the wildfires in Southern California, Sweetgreen is focused on revolutionizing fast food through innovation and strategic expansion.

In summary, Sweetgreen, Inc.’s earnings call highlighted a strong performance in 2024 with significant growth and operational improvements. However, the company faces challenges ahead in Q1 2025 due to external factors. Despite these hurdles, Sweetgreen remains committed to its strategic pillars, aiming for continued growth and innovation in the fast-food industry.