Sweetgreen, Inc. (SG) - Q3 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended September 28, 2025. Sweetgreen, Inc. is a mission-driven restaurant brand operating 266 locations across 23 states and Washington, D.C. The company operates as a single reportable segment. During the quarter, the company opened 6 net new restaurants, bringing the total to 266. A significant subsequent event occurred on November 5, 2025, with the announcement of a definitive agreement to sell the Spyce Business (Infinite Kitchen technology) to Wonder Group, Inc.
Key Financial Metrics
| Metric | Q3 2025 (13 Weeks) | Q3 2024 (13 Weeks) | YTD 2025 (39 Weeks) | YTD 2024 (39 Weeks) |
|---|---|---|---|---|
| Revenue | $172.4 million | $173.4 million | $524.3 million | $515.9 million |
| Net Loss | $(36.1) million | $(20.8) million | $(84.3) million | $(61.3) million |
| Loss Per Share (Basic/Diluted) | $(0.31) | $(0.18) | $(0.72) | $(0.54) |
| Adjusted EBITDA | $(4.4) million | $6.8 million | $2.3 million | $19.3 million |
| Restaurant-Level Profit | $22.5 million | $34.9 million | $87.3 million | $105.0 million |
| Cash and Cash Equivalents | $130.0 million | $214.8 million (Dec 2024) | N/A | |
| Operating Cash Flow (YTD) | $(4.0) million | $37.3 million | ||
| Capital Expenditures (YTD) | $(76.1) million | $(57.7) million |
Material Changes vs. Prior Period
- Revenue Decline: Q3 2025 revenue decreased 0.6% year-over-year. This was driven by a 9.5% decline in Same-Store Sales, attributed to an 11.7% drop in traffic and product mix due to macroeconomic headwinds and the transition from the "Sweetpass+" loyalty program to the new "SG Rewards" program. Revenue was partially offset by $15.9 million from 35 net new restaurant openings.
- Widening Losses: Net loss increased 73.6% to $36.1 million in Q3 2025 compared to $20.8 million in Q3 2024. Adjusted EBITDA turned negative at $(4.4) million, down from $6.8 million in the prior year.
- Cost Pressures: Food, beverage, and packaging costs rose 10.9% (to 30.7% of revenue) due to higher protein costs (chicken/tofu), tariff impacts on packaging, and a one-time write-off of discontinued materials. Labor costs increased 5.5% due to wage rate increases and new store staffing.
- Impairment and Restructuring: The company recorded $4.6 million in impairment and closure costs in Q3 2025 (vs. $0.1 million in Q3 2024) related to four store locations. Restructuring charges were $1.1 million, primarily related to the vacated former corporate support center and New York office.
- Cash Flow: Operating cash flow turned negative for the YTD period at $(4.0) million, a significant shift from the $37.3 million positive flow in the prior year, driven by unfavorable working capital fluctuations and a $2.3 million cash payment for a Spyce milestone.
Guidance, Outlook, and Risks
- Spyce Sale: On November 5, 2025, Sweetgreen agreed to sell the Spyce Business to Wonder Group for $186.4 million ($100 million cash + $86.4 million equity). The deal is expected to close in late 2025 or early 2026. Sweetgreen will retain a license to use Infinite Kitchen technology.
- Expansion Plans: The company expects 37 net new restaurant openings in fiscal 2025 (including 18 Infinite Kitchen units) and 15-20 openings in fiscal 2026.
- Macro Risks: Management cites continued weakness in consumer spending, variability in return-to-office trends, and the impact of tariffs (approx. 50 basis points on food/packaging in Q3) as key headwinds. Tariffs on Infinite Kitchen units are expected to increase costs by ~5% post-sale.
- Liquidity: With $130 million in cash and no outstanding debt (credit facility expired Dec 2024), management believes current resources are sufficient for the next 12 months. However, the company noted that if positive operating cash flow is not achieved, additional financing may be required.
Investor Verification Checklist
- Spyce Transaction Closing: Verify the timeline and conditions for the $186.4 million sale to Wonder Group, including regulatory approvals and the final accounting treatment of the gain/loss.
- Traffic Recovery: Monitor Same-Store Sales trends to determine if the 9.5% decline is a temporary transition effect from the loyalty program change or a structural shift in consumer demand.
- Margin Trajectory: Assess whether food cost inflation (driven by tariffs and protein costs) and labor deleverage can be offset by menu price increases without further suppressing traffic.
- Cash Burn Rate: Review the sustainability of the negative operating cash flow given the high capital expenditure rate ($76.1M YTD) and the reliance on the pending Spyce sale proceeds to strengthen the balance sheet.
- Impairment Frequency: Evaluate the frequency of store impairments ($9.6M YTD) as a potential indicator of underperforming real estate assets or site selection challenges.