Sweetgreen, Inc. (SG) - Q2 2025 10-Q Summary
Business Context and Reporting Period
This report covers the quarterly period ended June 29, 2025. Sweetgreen, Inc. operates as a mission-driven restaurant brand serving healthy food. As of the period end, the company owned and operated 260 restaurants across 22 states and Washington, D.C. The company reported 9 net new restaurant openings in the quarter and 14 for the year-to-date period. The company operates as a single reportable segment.
Key Financial Metrics
| Metric (in thousands) | Q2 2025 (13 weeks) | Q2 2024 (13 weeks) | YTD 2025 (26 weeks) | YTD 2024 (26 weeks) |
|---|---|---|---|---|
| Revenue | $185,583 | $184,641 | $351,887 | $342,491 |
| Net Loss | $(23,158) | $(14,460) | $(48,197) | $(40,527) |
| Loss from Operations | $(26,423) | $(16,184) | $(54,960) | $(43,099) |
| Adjusted EBITDA | $6,415 | $12,357 | $6,699 | $12,470 |
| Restaurant-Level Profit | $35,125 | $41,519 | $64,812 | $70,056 |
| Cash and Cash Equivalents | $168,452 | $214,789 (Dec 2024) | $168,452 | $214,789 (Dec 2024) |
| Net Cash Used in Operating Activities | Not provided for Q2 | Not provided for Q2 | $(2,665) | $22,542 |
| Capital Expenditures | Not provided for Q2 | Not provided for Q2 | $(40,333) | $(32,682) |
Margins: Restaurant-Level Profit Margin was 18.9% for Q2 2025 (down from 22.5% in Q2 2024). Adjusted EBITDA Margin was 3.5% for Q2 2025 (down from 6.7% in Q2 2024).
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased slightly by 0.5% in Q2 2025 compared to Q2 2024, driven by incremental revenue from 33 net new openings since the prior year period. However, this was offset by a 7.6% decline in Same-Store Sales (compared to 9.3% growth in Q2 2024), attributed to a 10.1% decrease in traffic and product mix.
- Profitability Decline: Net loss widened significantly, increasing 60.2% year-over-year in Q2. Operating loss increased 63.3% due to higher operating costs and significant non-recurring charges.
- Impairment and Closure Costs: The company recorded $5.3 million in impairment and closure costs in Q2 2025 (compared to $0.1 million in Q2 2024) related to five store locations. Two of these locations were subsequently closed in July 2025.
- Restructuring Charges: Restructuring charges increased to $1.1 million in Q2 2025 from $0.5 million in Q2 2024, driven by severance costs and expenses related to vacating former office spaces.
- Cost Pressures: Food, beverage, and packaging costs as a percentage of revenue increased to 27.7% (from 27.0%) due to tariffs and higher cost product mix. Labor costs as a percentage of revenue rose to 27.5% (from 26.9%) due to wage rate increases and sales volume deleverage.
- Cash Flow: Operating cash flow turned negative for the first six months of 2025, using $2.7 million, compared to generating $22.5 million in the same period in 2024. This was primarily due to unfavorable working capital fluctuations and the Spyce milestone payment.
Guidance, Outlook, and Risks
- Expansion Plans: Management expects to open at least 40 new restaurants in fiscal year 2025, including at least 20 units featuring the "Infinite Kitchen" automation technology.
- Tariff Impact: The company realized a 40 basis point impact on food, beverage, and packaging costs in Q2 2025 due to tariffs. Management anticipates a similar impact in future periods. Additionally, new restaurant build-out costs are expected to increase by approximately 5% due to tariffs, with the impact beginning in Q4 2025.
- Liquidity: The company holds $168.5 million in cash and cash equivalents. Management believes this, combined with operating cash flows, is sufficient to fund operations for at least the next 12 months. The company has no outstanding debt as its credit facility expired in December 2024 and was not renewed.
- Risks: Key risks include continued declines in consumer spending, supply chain disruptions (specifically for packaging sourced from China), labor shortages, and the ability to successfully deploy Infinite Kitchen technology. The company also faces risks related to the volatility of the contingent consideration liability from the Spyce acquisition.
- Unusual Items: A $2.3 million cash payment was made in Q2 2025 related to the second milestone of the Spyce acquisition contingent consideration. The company also launched a new SG Rewards loyalty program nationwide in Q2 2025.
Investor Verification Checklist
- Verify the sustainability of the 7.6% decline in Same-Store Sales and the specific drivers of the 10.1% traffic decrease.
- Confirm the timeline and cost implications of the 5% tariff increase on new restaurant build-outs and Infinite Kitchen units starting in Q4 2025.
- Assess the impact of the $5.3 million impairment charge on future capital allocation and the performance of the remaining restaurant base.
- Monitor the negative operating cash flow trend and the company's ability to fund the planned 40 new openings without additional financing.
- Review the progress of the Infinite Kitchen deployment and its effect on labor optimization and unit economics.
- Track the resolution of the Spyce contingent consideration and its impact on future earnings volatility.