10q10k10q10k.net

What changed in Sweetgreen, Inc.'s 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of Sweetgreen, Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+536 added−565 removedSource: 10-K (2024-02-29) vs 10-K (2023-02-23)

Top changes in Sweetgreen, Inc.'s 2023 10-K

536 paragraphs added · 565 removed · 438 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

48 edited+14 added−9 removed38 unchanged
Biggest changeWe are honored to have received a 100% score in the Human Rights Campaign’s (“HRC”) 2022 Corporate Equality Index and to be recognized as one of the HRC’s Best Places to Work for LGBTQ+ Equality.
Biggest changeTo that end, we provide all employees with cultural competency and unconscious bias training and measure workforce representation quarterly. In 2023, Newsweek recognized us as one of "America's Best Workplaces for Diversity." Moreover, we are proud to have achieved a 100% score in the Human Rights Campaign's Corporate Equality Index for two consecutive years.
As we expand into new geographic markets and further develop our digital channels (including our Owned Digital Channels), we will face competition from these restaurants as well as new competitors that strive to compete with our market segments, particularly as many of our competitors have increased their digital presence over the last few years, including by enabling delivery and take-out through their digital applications.
As we expand into new geographic markets and further develop our digital channels (including our Owned Digital Channels), we face competition from these restaurants as well as new competitors that strive to compete with our market segments, particularly as many of our competitors have increased their digital presence over the last few years, including by enabling delivery and take-out through their digital applications.
During fiscal year 2022, we began piloting our Catering program with a goal of serving event and group customers in an additional format through which they prefer to order. Bulk orders of salads, warm bowls, sides and drinks can be ordered for delivery together and are prepared at select locations.
During fiscal year 2022, we began piloting our Catering program with a goal of serving event and group customers in an additional format through which they prefer to order. Bulk orders of salads, warm bowls, sides and drinks can be ordered for delivery together and are prepared at select locations. In-Store.
Recently, as consumer behavior trends have changed due in part to the COVID-19 pandemic and the emergence of hybrid or remote work environments, the seasonality in our business has been less predictable than in prior years and we have seen an increase and prolonged negative impact on our revenue around national holidays.
As consumer behavior trends have changed due in part to the COVID-19 pandemic and the emergence of hybrid or remote work environments, the seasonality in our business has been less predictable than in prior years and we have seen an increase and prolonged negative impact on our revenue around national holidays.
We launched our Native Delivery Channel in January 2020, and believe it offers a superior customer experience to our Marketplace Channel, with lower menu item pricing than our Marketplace Channel, greater delivery radii than our Marketplace Channel in many locations, enhanced customization features, access to our seasonal menu items and ingredients, and access to exclusive promotions via sweetgreen Rewards and Challenges.
We launched our Native Delivery Channel in January 2020, and believe it offers a superior customer experience to our Marketplace Channel, generally with lower menu item pricing than our Marketplace Channel, greater delivery radii than our Marketplace Channel in many locations, enhanced customization features, access to our seasonal menu items and ingredients, and access to exclusive promotions via Sweetgreen Rewards and Challenges.
Among our competitors are a number of multi-unit, multi-market, fast-food, or fast-casual restaurant concepts, some of which are expanding nationally, including companies like Chipotle, McDonald's, Panera Bread, and Shake Shack, as well as other quick service salad and health food concepts.
Among our competitors are a number of multi-unit, multi-market, fast-food, or fast-casual restaurant concepts, some of which are expanding nationally, including companies like Chipotle, CAVA, McDonald's, Panera Bread, and Shake Shack, as well as other quick service salad and health food concepts.
The CCPA and EU GDPR are examples of the increasingly stringent and evolving regulatory frameworks related to personal information processing that may increase our compliance obligations and exposure for any noncompliance.
The CCPA and GDPR are examples of the increasingly stringent and evolving regulatory frameworks related to personal information processing that may increase our compliance obligations and exposure for any noncompliance.
Several states within the United States have enacted or proposed data privacy and security laws. For example, Virginia, Colorado, Connecticut, and Utah have passed comprehensive data privacy and security law.
Several states within the United States have enacted or proposed data privacy and security laws. For example, Virginia, Colorado, Connecticut, and Utah have passed comprehensive data privacy and security laws.
Historically, our revenue has been lower in the first and fourth quarters of the year due, in part, to the holiday season and the fact that fewer people eat out during periods of inclement weather (generally the winter months, though inclement 12 Table of Contents weather conditions may occur in certain markets at any time of the year) than during periods of mild to warm weather (the spring, summer, and fall months).
Historically, our revenue has been lower in the first and fourth quarters of the year due, in part, to the holiday season and the fact that fewer people eat out during periods of inclement weather (generally the winter months, though inclement weather conditions may occur in certain markets at any time of the year) than during periods of mild to warm weather (the spring, summer, and fall months).
In particular, we will face increasing competition from delivery kitchens, food aggregators and food delivery marketplaces (such as DoorDash, GrubHub, Uber Eats, and others), grocery stores (particularly those that focus on freshly prepared and organic food), and other companies that are enabling the delivery of food to customers, including delivery marketplaces that we partner with to deliver sweetgreen food to customers.
In particular, we face increasing competition from delivery kitchens, food aggregators and food delivery marketplaces (such as DoorDash, GrubHub, Uber Eats, ezCater, Sharebite, and others ), grocery stores (particularly those that focus on freshly prepared and organic food), and other companies that are enabling the delivery of food to customers, including delivery marketplaces that we partner with to deliver Sweetgreen food to customers.
Additionally, we face the risk that new or existing competitors will copy, and potentially improve upon, our business model, menu options, technology, presentation, or ambience, among other things. 11 Table of Contents Trademarks and Other Intellectual Property We protect our intellectual property primarily through a combination of trademarks, domain names, copyrights, and trade secrets.
Additionally, we face the risk that new or existing competitors will copy, and potentially improve upon, our business model, menu options, technology, presentation, or ambience, among other things. Trademarks and Other Intellectual Property We protect our intellectual property primarily through a combination of trademarks, domain names, copyrights, and trade secrets.
At sweetgreen, the best leaders come from within—we develop a talent-rich pipeline by having a clear promotional track for team members to become a Head Coach (our title for a store manager) within as few as three years. During fiscal year 2022, 55% of open restaurant leadership roles were filled with promotions of existing employees.
At Sweetgreen, the best leaders come from within—we develop a talent-rich pipeline by having a clear promotional track for team members to become a Head Coach (our title for a store manager) within as few as three years. During fiscal year 2023, 47% of open restaurant leadership roles were filled with promotions of existing employees.
Foreign data privacy and security laws (including but not limited to the EU GDPR and UK GDPR) impose significant and complex compliance obligations on entities that are subject to those laws.
Foreign data privacy and security laws (including but not limited to the GDPR) impose significant and complex compliance obligations on entities that are subject to those laws.
Such obligations may include, without limitation, the Federal Trade Commission Act, the Telephone Consumer Protection Act of 1991, the Children’s Online Privacy Protection Act of 1998, the Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003, the California Consumer Privacy Act of 2018 (“CCPA”), the Canadian Personal Information Protection and Electronic Documents Act, Canada’s Anti-Spam Legislation, the European Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), the EU GDPR as it forms part of United Kingdom (“UK”) law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (“UK GDPR”), the ePrivacy Directive, and the Payment Card Industry Data Security Standard (“PCI DSS”).
Such obligations may include, without limitation, the Federal Trade Commission Act, the Telephone Consumer Protection Act of 1991, the Children’s Online Privacy Protection Act of 1998, the Controlling the Assault of Non-Solicited Pornography And Marketing Act of 2003, the California Consumer Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CPRA”), (collectively, “CCPA”), the Canadian Personal Information Protection and Electronic Documents Act, Canada’s Anti-Spam Legislation, the European Union’s General Data Protection Regulation 2016/679 (“EU GDPR”), the EU GDPR as it forms part of United Kingdom (“UK”) law by virtue of section 3 of the European Union (Withdrawal) Act 2018 (“UK GDPR”) (EU GDPR and UK GDPR collectively as “GDPR”), the ePrivacy Directive, and the Payment Card Industry Data Security Standard (“PCI DSS”).
Domestically, we registered our core marks (“sweetgreen,” “SG,” and the sweetgreen logo) and certain other marks, such as “SG Outpost” and “sweetgreen Outpost.” Internationally, we currently have registered our core sweetgreen and SG marks, along with selected other marks, in foreign jurisdictions including Australia, Canada, China, the European Union, Hong Kong, Japan, Mexico, South Korea, and the United Kingdom.
Domestically, we registered our core marks (“Sweetgreen,” “SG,” and the Sweetgreen logo) and certain other marks, such as “SG Outpost,” “Sweetgreen Outpost,” and “SweetPass.” Internationally, we currently have registered our core Sweetgreen mark, along with selected other marks, in foreign jurisdictions including Australia, Canada, China, the European Union, Hong Kong, Japan, Mexico, South Korea, and the United Kingdom.
These marks are registered in multiple international trademark classes, including for restaurant services and related goods and services. We are currently pursuing additional trademark and trade dress registrations in the United States and abroad and will continue to pursue additional trademark registrations to the extent we believe they would be beneficial and cost-effective .
Most of our marks are registered in multiple international trademark classes, including for restaurant services and related goods and services. We are currently pursuing additional trademark and trade dress registrations in the United States and abroad and will continue to pursue additional trademark registrations to the extent we believe they would be beneficial and cost-effective .
We believe our seasonal menu rotation, which celebrates the strength of our regional supply chain by highlighting 7 Table of Contents fresh local ingredients, increases order frequency by introducing new flavor combinations for our customers to sample. • On our Owned Digital Channels, we offer exclusive menu items, including seasonal digital exclusives and curated “collections” relevant to each customer.
We believe our seasonal menu rotation, which celebrates the strength of our regional supply 7 Tab le o f Contents chain by highlighting fresh local ingredients, increases order frequency by introducing new flavor combinations for our customers to sample. • On our Owned Digital Channels, we offer exclusive menu items, including seasonal digital exclusives and curated “collections” relevant to each customer.
The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report sweetgreen files with, or furnishes to, the SEC. 14 Table of Contents
The information on our website (or any webpages referenced in this Annual Report on Form 10-K) is not part of this or any other report Sweetgreen files with, or furnishes to, the SEC. 14 Tab le o f Contents
In addition, stringent and varied requirements of local regulators with respect to zoning, land use, and environmental factors could delay or prevent development of new restaurants in particular locations. Our operations are subject to the U.S. Occupational Safety and Health Act, which governs worker health and safety, as well as rules and regulations regarding COVID-19, the U.S.
In addition, stringent and varied requirements of local regulators with respect to zoning, land use, and environmental factors could delay or prevent development of new restaurants in particular locations. Our operations are subject to the U.S. Occupational Safety and Health Act, which governs worker health and safety, the U.S.
Outpost. Our Outpost Channel enables office workers, hospital workers, or building residents to get their custom sweetgreen order delivered directly to an outpost station at their location during a dedicated time window each day, with lower customer fees than our delivery channels. As of the end of fiscal year 2022, we had 768 live Outpost locations. In-Store.
Outpost and Catering. Our Outpost and Catering Channel enables office workers or building residents to get their custom Sweetgreen order delivered directly to an outpost station at their location during a dedicated time window each day, with lower customer fees than our delivery channels. As of the end of fiscal year 2023, we had 821 live Outpost locations.
For fiscal year 2022 , 41% of our revenue was from our Owned Digital Channels, as compared to 46% from our Owned Digital Channels in fiscal year 2021. When including orders placed on our Marketplace Channel, this digital share increases to 62% of our fiscal year 2022 revenue, as compared to 67% of our revenue in fiscal year 2021.
For fiscal year 2023 , 36% of our revenue was from our Owned Digital Channels, as compared to 41% from our Owned Digital Channels in fiscal year 2022. When including orders placed on our Marketplace Channel, this digital share increases to 59% of our fiscal year 2023 revenue, as compared to 62% of our revenue in fiscal year 2022.
Customers place their order through our mobile app or website and pick it up from their chosen sweetgreen location at the time most convenient for them. Native Delivery.
Customers place their order through our mobile app or website and pick it up from their chosen Sweetgreen location at the time most convenient for them. 8 Tab le o f Contents Native Delivery.
Since our inception, we have undertaken to strategically and proactively develop our trademark portfolio by registering our trademarks and service marks in the United States and various strategic foreign jurisdictions.
Since our inception, we have undertaken to strategically and proactively develop our 11 Tab le o f Contents trademark portfolio by registering our trademarks and service marks in the United States and various strategic foreign jurisdictions.
Our Real Estate We opened 36 Net New domestic, company-owned restaurants in fiscal year 2022. As we continue to expand, we are confident that our compelling restaurant-level economics will continue to work across geographies and market types.
Our Real Estate We opened 35 Net New Restaurants in fiscal year 2023. As we continue to expand, we are confident that our compelling restaurant-level economics will continue to work across geographies and market types.
Our bold vision is to be as ubiquitous as traditional fast food, but with the transparency and quality that consumers increasingly expect. As of December 25, 2022 , we owned and operated 186 restaurants in 16 states and Washington, D.C.
Our bold vision is to be as ubiquitous as traditional fast food, but with the transparency and quality that consumers increasingly expect. As of December 31, 2023 , we owned and operated 221 restaurants in 18 states and Washington, D.C.
Our Core Menu • Our core menu features 11 curated, signature items which are offered year-round in all of our locations. • In addition to our core menu items, our single most popular item is the “custom” salad or bowl, which can include millions of combinations from 40-plus ingredients prepared fresh in each of our restaurants every day, as well as our made-from-scratch dressings. • We keep our menu fresh by curating a smaller seasonal menu five times per year.
Our Core Menu • Our core menu features 13 curated, signature items which are offered year-round in all of our locations, including our latest addition of protein plates. • In addition to our core menu items, our single most popular item is the “custom” salad or bowl, which can include millions of combinations from 40-plus ingredients prepared fresh in each of our restaurants every day, as well as our made-from-scratch dressings. • We keep our menu fresh by curating a smaller seasonal and limited time offer menu throughout the year.
In addition, a core part of our menu, salads, has proven to be more popular among consumers in the warmer months.
In addition, a core part of our menu, salads, has proven to be more 12 Tab le o f Contents popular among consumers in the warmer months.
We have obtained a registration of the sweetgreen.com domain name as well. We have procedures in place to monitor for potential infringement of our intellectual property, and it is our policy to take appropriate action to enforce our intellectual property, taking into account the strength of our claim, likelihood of success, cost, and overall business priorities.
We have procedures in place to monitor for potential infringement of our most important intellectual property, and it is our policy to take appropriate action to enforce our intellectual property, taking into account the strength of our claim, likelihood of success, cost, and overall business priorities.
In 2022, we were named as one of Fast Company’s Brands That Matter, which recognized companies and nonprofits that have had an undeniable impact on business and culture. Since inception, we have collaborated with some of the world’s best chefs, athletes, musicians and thought leaders in our communities to help us amplify the power of healthy food.
In 2023, we were named one of Fast Company’s Brands That Matter, which recognized companies and nonprofits that have undeniably impacted business and culture. 9 Tab le o f Contents Since inception, we have collaborated with some of the world’s best chefs, athletes, musicians and thought leaders in our communities to help us amplify the power of healthy food.
We pay competitive wages and believe we offer best-in-class benefits relative to the industry, including medical, dental, and vision insurance for eligible employees and their spouses or domestic partners, paid time off, paid parental leave, and equity incentives for our Head Coaches. In 2022, we were again recognized by Newsweek in their Top 100 Most Loved Workplaces rankings.
We pay competitive wages and believe we offer best-in-class benefits relative to the industry, including medical, dental, and vision insurance for eligible employees and their spouses or domestic partners, paid time off, paid parental leave, and equity incentives for our Head Coaches. In 2023, Built In included Sweetgreen in their “U.S.
See the section titled “Risk Factors—Risks Related to Our Intellectual Property and Information Technology” for additional information about the laws and regulations to which we may become subject and about the risks to our business associated with such laws and regulations. 13 Table of Contents Corporate Information We were founded in November 2006 and incorporated in October 2009 in Delaware.
See the section titled “Risk Factors—Risks Related to Our Intellectual Property and Information Technology” for additional information about the laws and regulations to which we may become subject and about the risks to our business associated with such laws and regulations.
Available Information sweetgreen’s Annual Report on Form 10-K reports, along with all other reports and amendments filed with or furnished to the SEC, are publicly available free of charge on the Investor Relations section of our website at investor.sweetgreen.com or at www.sec.gov as soon as reasonably practicable after these materials are filed with or furnished to the SEC.
Securities and Exchange Commission (the “SEC”), are publicly available free of charge on the Investor Relations section of our website at investor.sweetgreen.com or at www.sec.gov as soon as reasonably practicable after these materials are filed with or furnished to the SEC.
Our Technology Our Customer-Facing Digital Platform We have a five-channel model that is designed to make it easy for our customers to order sweetgreen how they want, whenever they want. 8 Table of Contents Pick-Up.
We continue to learn from these pilots and are incorporating our findings into more of our future restaurant openings. Our Technology Our Customer-Facing Digital Platform We have a five-channel model that is designed to make it easy for our customers to order Sweetgreen how they want, whenever they want. Pick-Up.
Our Restaurant Team Structure and the Pathway to Opportunity We believe we have designed a transparent and structured career learning path. By providing opportunities for advancement, professional development, and ultimately leadership, we have been able to promote high-performing talent and by extension scale our sweetgreen culture.
By providing opportunities for advancement, professional development, and ultimately leadership, we have been able to promote high-performing talent and by extension scale our Sweetgreen culture.
The CPRA will, among other things, give California residents the ability to limit use of certain sensitive personal information, establish restrictions on personal information retention, expand the types of data breaches that are subject to the CCPA’s private right of action, and establish a new California Privacy Protection Agency to implement and enforce the new law.
In addition, the California Privacy Rights Act of 2020 (the “CPRA”), which became effective January 1, 2023, expanded the CCPA by, among other things, giving California residents the ability to limit use of certain sensitive personal information, establishing restrictions on personal information retention, expanding the types of data breaches that are subject to the CCPA’s private right of action, and establishing a new California Privacy Protection Agency to implement and enforce the new law.
Also, the CCPA provides for civil penalties and a private right of action for data breaches which may include an award of statutory damages. In addition, the California Privacy Rights Act of 2020 (“CPRA”), effective January 1, 2023, will expand the CCPA.
Also, the CCPA provides for civil penalties and a private right of action for data breaches which may include an award of statutory damages.
Despite a strategic focus on our Owned Digital Channels, our In-Store Channel is core to our platform and serves as a critical path to attract new customers via our iconic physical locations. Customers can pay digitally using the “scan-to-pay” feature on our mobile app. Marketplace.
In addition to a strategic focus on our Owned Digital Channels, our In-Store Channel is core to our platform and serves as a critical path to attract new customers via our iconic physical locations. Digital scan-to-pay was eliminated during fiscal year 2023.
These investments include leveraging systems that manage daily inventory in our restaurants to ensure freshness, guides prep work, optimizes our meal assembly process, and manages our team members’ output to enhance our order fulfillment times. Our Marketing Strategy Our brand is designed to inspire consumers to live healthier lives without compromising their values.
These investments include leveraging systems that manage inventory in our restaurants to ensure freshness, guide prep work, optimize our meal assembly process, and manage our team members’ output to enhance our order fulfillment times.
Our investment in a sophisticated marketing technology stack enables us to better understand our customers—how they first discover sweetgreen, what they order, and what makes them return.
Our investment in a sophisticated marketing technology stack enables us to better understand our customers—how they first discover Sweetgreen, what they order, and what makes them return. We also use our restaurants as the face of our brand to attract new customers and as a canvas to execute national brand campaigns, menu launches, and local initiatives.
Our goal is to connect food and culture to amplify our mission both in our restaurants and on our digital platform. We use a c arefully crafted combination of brand, retail, and performance marketing to build awareness and generate sales.
By connecting food and culture to amplify our mission, we use a carefully crafted combination of brand, retail, and digital marketing to build awareness, generate sales, and drive brand love.
In 2022, we also partnered with Phoenix Suns (NBA) all-star Devin Booker to further the campaign. 9 Table of Contents In order to drive customers from awareness to consideration to conversion, we have invested in robust customer relationship management capabilities and paid media strategies across search, social media, and search engine optimization, as well as implemented mobile push notifications through our app.
To drive customers from awareness to consideration to conversion, we have invested in robust customer relationship management capabilities and paid media strategies across search, social media, and search engine optimization, as well as implemented customized digital experiences through our app.
Additionally, as a result of the acquisition of Spyce, we have two issued patents and five patent applications pending in the United States, and one issued patent in the People’s Republic of China. We i ntend to pursue additional patent protection (including in respect of Spyce’s automation technology) to the extent we believe it would be beneficial and cost-effective.
We i ntend to pursue additional patent protection (including in respect of Spyce’s automation technology) to the extent we believe it would be beneficial and cost-effective. We have obtained a registration of the Sweetgreen.com domain name as well.
We continue to test new restaurant design concepts to bring sweetgreen into a wider variety of neighborhoods. We have thoughtfully designed all of our restaurants to both reflect the culture and feel of our local communities and to support our multiple digital channels including exterior pick-up windows and curbside pick-up for digital orders.
We have thoughtfully designed all of our restaurants to both reflect the culture and feel of our local communities and to support our multiple digital channels including exterior pick-up windows and mobile pickup lanes for digital orders. We recently launched our second automated restaurant pilot with the opening of our Huntington Beach location.
Our principal executive offices, which we refer to as our sweetgreen Support Center, are located at 3102 36th Street, Los Angeles, CA 90018, and our telephone number is (323) 990-7040. Our website address is www.sweetgreen.com. Our Class A common stock is listed on the New York Stock Exchange under the symbol “SG”.
Corporate Information 13 Tab le o f Contents We were founded in November 2006 and incorporated in October 2009 in Delaware. Our principal executive offices, which we refer to as our Sweetgreen Support Center, are located at 3102 36th Street, Los Angeles, CA 90018, and our telephone number is (323) 990-7040. Our website address is www.sweetgreen.com.
Employees As of December 25, 2022 , we had a total of 5,952 employees, 353 of whom worked at our sweetgreen Support Center and 5,599 of whom worked in our restaurants. 10 Table of Contents Our Impact Our mission to build healthier communities by connecting people to real food also extends to our goal of building a healthier and more equitable society.
Employees As of December 31, 2023 , we had a total of 6,186 employees, 309 of whom worked at our Sweetgreen Support Center and 5,877 of whom worked in our restaurants. 10 Tab le o f Contents Our Impact Our mission to build healthier communities by connecting people to real food extends to positively impacting the lives of our customers, team members, and citizens of the communities we serve.
We utilize a rigorous, data-driven real estate selection process to identify new restaurant sites with both high anticipated foot traffic and proximity to workplaces and residences that support our multi-channel approach. We have incorporated additional capacity, including secondary lines, in the majority of our restaurants so they can flex to handle fluctuations in order volumes.
We utilize a rigorous, data-driven real estate selection process to identify new restaurant sites with both high anticipated foot traffic and proximity to workplaces and residences that support our multi-channel approach. We continue to test new restaurant design concepts to bring Sweetgreen into a wider variety of trade areas and markets.
Below are just a few select examples of the many ways in which we contribute to our local communities: • Donations from New Restaurant Openings: For every meal sold on the opening day of each of our new restaurants, we provide a meal-for-meal donation to a local food access non-profit partner to help alleviate food insecurity in the community.
Below are select examples of the ways we give back to our local communities. • Donating Healthy Meals: During each new restaurant opening, we distribute fresh Sweetgreen meals to local charities such as food pantries and soup kitchens to help alleviate food insecurity in the community.
Our contribution funded the 2022 National Young Farmers Survey, a survey conducted every five years to better understand the changing U.S. agricultural landscape and the needs of working farmers. Competition We face significant competition from restaurants in the fast-casual dining and traditional fast-food segments of the restaurant industry.
In 2023, our restaurant teams collectively volunteered over 5,000 hours to local events such as food distributions and community gardens. Competition We face significant competition from restaurants in the fast-casual dining and traditional fast-food segments of the restaurant industry.
Removed
We recently launched our first digital pick-up kitchen as well as our drive-thru concept. We continue to explore other design features and incorporating automation into our designs.
Added
In addition, our Outpost and Catering Channel includes our catering offerings, which refer to sales to customers made through our catering website for pickup at one of our restaurants or delivery to a customer specified address.
Removed
During fiscal year 2021 we announced our partnership with Naomi Osaka. Naomi is sweetgreen’s first ever national athlete ambassador and youngest investor. Together, our goal is to shift the paradigm of food sponsorships and create a positive impact on how the next generation connects to healthy eating.
Added
P rior to the elimination of digital scan-to-pay, c ustomers could pay digitally using the “scan-to-pay” feature on our mobile app.
Removed
We also use our restaurants, which are the face of our brand and a powerful acquisition tool for new customers, as a canvas to execute national brand campaigns, seasonal menu launches, and local promotions to maintain the direct relationship with our customers.
Added
Purchases made in our In-Store Channel via cash or credit card are referred to as “Non-Digital” transactions, and purchases made in our In-Store Channel via digital scan-to-pay, prior to its elimination, were included as part of our Owned Digital Channels. Marketplace.
Removed
We also saw our average Head Coach tenure grow from two to three years. Commitment to Diversity and Inclusion We are committed to holding ourselves accountable to have gender and ethnic representation at all levels of our organization.
Added
In 2021, we acquired a kitchen automation technology company, Spyce, and have further developed and deployed Spyce’s kitchen automation technology, which we refer to as the Infinite Kitchen. We deployed units of the Infinite Kitchen in two of our restaurants during fiscal year 2023, and expect to deploy additional Infinite Kitchen units in new and existing Sweetgreen restaurants.
Removed
Specifically, we have an internal Diversity, Equity, and Inclusion (“DEI”) council and have an associated set of DEI-related goals that have been embedded into our leadership principles. We also require annual DEI training for all Senior Leaders, People Managers, Individual Contributors, and Field Leadership.
Added
In 2023, our Infinite Kitchen was named as one of Time’s Best Inventions, which recognizes 200 extraordinary inventions that changed the way we live, work, play, and think about what’s possible. Our Marketing Strategy Our brand has been designed to inspire consumers to live healthier.
Removed
In 2022, we were named in Mogul’s Top 100 Workplaces for Diverse Representation and Top 100 Companies with the Best Diversity, Equity, Inclusion and Belonging Initiatives.
Added
Combined with an expansive menu strategy spanning beyond salads into hearty entrée options and dayparts, our goal is to shift the paradigm of what’s possible when it comes to convenient food at scale and positively impact how the next generation connects to healthy eating.
Removed
These opening day donations, which typically amount to around 600 meals on average per new restaurant, are the beginning of a long-term relationship with our local communities. • Impact through Brand Partnerships: At sweetgreen, we partner with like-minded individuals seeking to positively impact people and the planet.
Added
Best Places to Work” list, and Forbes recognized Sweetgreen as one of “America’s Best Midsized Employers.” Our Restaurant Team Structure and the Pathway to Opportunity We believe we have designed a transparent and structured career learning path.
Removed
In 2022, we collaborated with two athletes, tennis Champion Naomi Osaka and basketball star Devin Booker, for our summer brand campaign. In celebration of our partnerships, we donated to Naomi’s nonprofit initiative, Play Academy, created by Laureus Sport for Good and Nike, and to Devin’s nonprofit cause, the Devin Booker Starting Five, under Phoenix Suns Charities.
Added
We also saw our average Head Coach tenure grow from 36 to 40 months. Commitment to Diversity and Inclusion We believe that diversity, equity, and inclusion give us a competitive edge.
Removed
Both organizations provide grants to local nonprofit organizations promoting better lives for underserved youths and families. • Supporting the next generation of farmers: In 2022, we once again donated to the National Young Farmers Coalition, an organization supporting young and diverse growers and producers across the country.
Added
It allows us to tap into a wider pool of knowledge, skills, and experiences, which in turn enhances our ability to innovate, attract and retain top talent, and improve our team dynamics. We are committed to representation at all levels and a culture of inclusion where all individuals, regardless of their background, can contribute.
Added
Additionally, for every meal purchase on opening day, we donate a meal to a local nonprofit impact partner to distribute to someone in need.
Added
Together, through our new restaurant opening meal donation program, we donate up to 100,000 meals annually. • Fundraising for Local Charities: Our restaurants are more than just places to eat; they are community hubs where we make a positive impact.
Added
One way we do this is by hosting fundraisers to support causes that our customers care about, such as parent-teacher associations and youth sports leagues. • Volunteering as a Team: We empower our team members to volunteer with causes they are passionate about by offering up to 5 hours of paid volunteer time off for eligible employees annually.
Added
Additionally, as a result of the acquisition of Spyce Food Co. (“Spyce”), we have two issued patents and four patent applications pending in the United States, and one issued patent in the People’s Republic of China.
Added
Our Class A common stock is listed on the New York Stock Exchange under the symbol “SG”. Available Information Sweetgreen’s Annual Report on Form 10-K reports, along with all other reports and amendments filed with or furnished to the U.S.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

241 edited+50 added−61 removed342 unchanged
Biggest changeSuch incidents include actual or perceived breaches of data privacy, claims by current or former employees, particularly claims of discrimination or harassment, contaminated or unsafe food, including allergens, product recalls, workforce reductions, store employees or other food handlers infected with communicable diseases, including COVID-19, failure to follow proper safety protocols, customer complaints, or other potential incidents discussed in this risk factors section. 20 Table of Contents Customer demand for our products and our reputation could diminish significantly if we, our employees, delivery partners, or other business partners fail to preserve the quality of our products, do not provide orders in a timely fashion, act or are perceived to act in an unethical, illegal, racially biased, unequal, or socially irresponsible manner, including with respect to the sourcing, content, or sale of our products, service and treatment of customers at our restaurants, or the use of customer data for general or direct marketing or other purposes.
Biggest changeCustomer demand for our products and our reputation could diminish significantly if we, our employees, delivery partners, or other business partners fail to preserve the quality of our products, do not provide orders in a timely fashion, act or are perceived to act in an unethical, illegal, racially biased, unequal, or socially irresponsible manner, including with respect to the sourcing, content, or sale of our products, our employment practices, service and treatment of customers at our restaurants, or the use of customer data for general or direct marketing or other purposes.
And, for those locations where we are able to secure an attractive restaurant site, our progress in opening new restaurants may occur at an uneven rate. If we do not open new restaurants in the future according to our current plans, the delay could have an adverse effect on our business, financial condition, and results of operations.
For those locations where we are able to secure an attractive restaurant site, our progress in opening new restaurants may occur at an uneven rate. If we do not open new restaurants in the future according to our current plans, the delay could have an adverse effect on our business, financial condition, and results of operations.
In 2010, the PPACA, which required health care coverage for many uninsured individuals and expanded coverage the coverage of those already insured, was signed into law in the United States. The PPACA requires us to offer healthcare benefits to all full-time employees (including full-time hourly employees) that meet certain minimum requirements of coverage and affordability, or face penalties.
In 2010, the PPACA, which required health care coverage for many uninsured individuals and expanded the coverage of those already insured, was signed into law in the United States. The PPACA requires us to offer healthcare benefits to all full-time employees (including full-time hourly employees) that meet certain minimum requirements of coverage and affordability, or face penalties.
We are also subject to risk if there is a shortage of delivery drivers in any of our markets for any period of time, which could result in a failure to meet our customers’ expectations and have a negative impact on our sales. We also partner with each of the national third-party delivery providers to provide food on their marketplaces.
We are also subject to risk if there is a shortage of delivery drivers in any of our markets for any period of time, which could result in a failure to meet our customers’ expectations and have a negative impact on our sales. We partner with each of the national third-party delivery providers to provide food on their marketplaces.
Obtaining adequate insurance is particularly challenging for companies based in California with thousands of non-exempt employees, and retentions for certain of our insurance policies (including our employment practices liability insurance insurance) are quite high.
Obtaining adequate insurance is particularly challenging for companies based in California with thousands of non-exempt employees, and retentions for certain of our insurance policies (including our employment practices liability insurance) are quite high.
Business incidents, whether isolated or recurring and whether originating from us or our business partners, from any of our third-party spokespersons that represent the brand, or even from unrelated food services businesses, if customers associate those businesses with our own operations, that erode customer trust can significantly reduce brand value, potentially trigger boycotts of our restaurants or result in civil or criminal liability and can have a negative impact on our financial results.
Business incidents, whether isolated or recurring and whether originating from us or our business partners, from any of our employees or third-party spokespersons that represent the brand, or even from unrelated food services businesses, if customers associate those businesses with our own operations, that erode customer trust can significantly reduce brand value, potentially trigger boycotts of our restaurants or result in civil or criminal liability and can have a negative impact on our financial results.
We are obligated under long-term, non-cancelable leases for almost all of our restaurants and both phases of our sweetgreen Support Center. Our restaurant leases generally require us to pay a proportionate share of real estate taxes, insurance, common area maintenance charges and other operating costs. Certain of our restaurant leases also provide for contingent rental payments based on sales thresholds.
We are obligated under long-term, non-cancelable leases for all of our restaurants and both phases of our Sweetgreen Support Center. Our restaurant leases generally require us to pay a proportionate share of real estate taxes, insurance, common area maintenance charges and other operating costs. Certain of our restaurant leases also provide for contingent rental payments based on sales thresholds.
Various federal, state, and labor laws govern the relationship with our employees and impact operating costs. These laws include employee classification as exempt or non-exempt for overtime and other purposes, minimum wage requirements, predictive scheduling, wage and hour requirements, unemployment tax rates, workers’ compensation rates, immigration status, laws governing the employment of minors, and other wage and benefit requirements.
Various federal, state, and labor laws govern the relationship with our employees and impact operating costs. These laws include employee classification as exempt or non-exempt for overtime and other purposes, predictive scheduling, wage and hour requirements, unemployment tax rates, workers’ compensation rates, immigration status, laws governing the employment of minors, and other wage and benefit requirements.
Pandemics or disease outbreaks such as the ongoing COVID-19 pandemic have impacted and are likely to continue to impact our business and results of operations, in particular due to the negative impact on in-restaurant foot traffic and working from the office, difficulties staffing our restaurants, challenges in obtaining supplies, and increasing commodity costs.
Pandemics or disease outbreaks such as the COVID-19 pandemic have impacted and are likely to continue to impact our business and results of operations, in particular due to the negative impact on in-restaurant foot traffic and working from the office, difficulties staffing our restaurants, challenges in obtaining supplies, and increasing commodity costs.
As the number of restaurants increases, as our Native Delivery, Outpost, and Marketplace Channels expand and as we grow into new markets, we expect to increase our investment in advertising and consider additional promotional activities. Accordingly, in the future, we will incur greater marketing expenditures, resulting in greater financial risk and a greater impact on our company.
As the number of restaurants increases, as our Native Delivery, Outpost and Catering, and Marketplace Channels expand and as we grow into new markets, we expect to increase our investment in advertising and consider additional promotional activities. Accordingly, in the future, we will incur greater marketing expenditures, resulting in greater financial risk and a greater impact on our company.
These liabilities and costs could have an adverse effect on our business, financial condition, and results of operations for our Outpost business and/or make it cost prohibitive for SG Logistics to deliver orders using its driver network, particularly in geographic areas where we do not have significant volume.
These liabilities and costs could have an adverse effect on our business, financial condition, and results of operations for our Outpost and Catering business and/or make it cost prohibitive for SG Logistics to deliver orders using its driver network, particularly in geographic areas where we do not have significant volume.
Many of our efforts to generate revenue, particularly our investment in our Native Delivery, Outpost, and Marketplace Channels are new and unproven, and any failure to adequately increase revenue or contain the related costs of these channels could prevent us from attaining or increasing profitability, particularly if these channels are not as successful as we forecast.
Many of our efforts to generate revenue, particularly our investment in our Native Delivery, Outpost and Catering, and Marketplace Channels are new and unproven, and any failure to adequately increase revenue or contain the related costs could prevent us from attaining or increasing profitability, particularly if these channels are not as successful as we forecast.
If we are unable to operate our Native Delivery, Outpost, and Marketplace Channels effectively and achieve scale, or if these lower margin channels increase as a total percent of company sales relative to higher margin ordering channels, we may not be able to achieve profitability in the near term or at all.
If we are unable to operate our Native Delivery, Outpost and Catering, and Marketplace Channels effectively and achieve scale, or if these lower margin channels increase as a total percent of company sales relative to higher margin ordering channels, we may not be able to achieve profitability in the near term or at all.
We intend to continue to make significant investments to support our business growth, including with respect to investments in expansion of our restaurant footprint and our multiple distribution channels, the introduction of new store formats and technology to enhance our operating efficiency, each of which might require additional funds to respond to business challenges or opportunities.
We intend to continue to make significant investments to support our business growth, including with respect to investments in expansion of our restaurant footprint and our multiple distribution channels, the introduction of new store formats, and the development of technology to enhance our operating efficiency, each of which might require additional funds to respond to business challenges or opportunities.
The restaurant industry is subject to various federal, state, and local government regulations, including those relating to design and construction of restaurants and the sale of food and alcoholic beverages. Such regulations are subject to change from time to time. For example, during the COVID-19 pandemic, the timeline for obtaining licenses and permits has increased significantly.
The restaurant industry is subject to various federal, state, and local government regulations, including those relating to design and construction of restaurants and the sale of food and alcoholic beverages. Such regulations are subject to change from time to time. For example, during the COVID-19 pandemic, the timeline for obtaining licenses and permits increased significantly.
Among our competitors are a number of multi-unit, multi-market, fast-food, or fast-casual restaurant concepts, some of which are expanding nationally, including companies like Chipotle, McDonald's, Panera Bread, and Shake Shack, as well as other quick service salad and health food concepts.
Among our competitors are a number of multi-unit, multi-market, fast-food, or fast-casual restaurant concepts, some of which are expanding nationally, including companies like Chipotle, CAVA, McDonald's, Panera Bread, and Shake Shack, as well as other quick service salad and health food concepts.
Additionally, due to the fact that our Native Delivery, Outpost, and Marketplace Channels require the payment of third-party delivery fees in order to fulfill deliveries, sales through these channels have historically had lower margins than our In-Store and Pick-Up Channels, particularly in California.
Additionally, due to the fact that our Native Delivery, Outpost and Catering, and Marketplace Channels require the payment of third-party delivery fees in order to fulfill deliveries, sales through these channels have historically had lower margins than our In-Store and Pick-Up Channels, particularly in California.
There is no assurance that federal or state health care reform will not adversely affect our business, financial condition, and results of operations, and we cannot predict how future federal or state legislative, judicial, or administrative changes relating to healthcare reform will affect our business.
Additionally, there is no assurance that federal or state health care reform will not adversely affect our business, financial condition, and results of operations, and we cannot predict how future federal or state legislative, judicial, or administrative changes relating to healthcare reform will affect our business.
For example, orders through our Native Delivery, Outpost, and Marketplace Channels are susceptible to delivery delays, or orders being cancelled by couriers, which are largely as a result of our reliance on third-party fulfillment services and are outside of our control.
For example, orders through our Native Delivery, Outpost and Catering, and Marketplace Channels are susceptible to delivery delays, or orders being cancelled by couriers, which are largely as a result of our reliance on third-party fulfillment services and are outside of our control.
Changes in commodity and other operating costs, particularly due to climate change, could adversely affect our results of operations. The profitability of our restaurants depends in part on our ability to anticipate and react to changes in commodity costs, including food, paper, supplies, fuel, utilities and distribution, and other operating costs.
Changes in commodity and other operating costs, particularly due to climate change, could adversely affect our results of operations. The profitability of our restaurants depends in part on our ability to anticipate and react to changes in commodity costs, including food, paper, supplies, fuel, utilities, and other operating costs.
In the event of a dispute with a distributor or supplier, we may not have adequate contractual recourse, and any insurance maintained by our distributors and/or suppliers may not be sufficient to cover the cost of a potential claim.
In the event of a dispute with a distributor or supplier, we may not have adequate contractual recourse, and any insurance maintained by our distributors and/or suppliers, or by us, may not be sufficient to cover the cost of a potential claim.
We may not have valid arbitration agreements with all current or former employees, and the arbitration agreements that are in place may not protect us from certain claims in certain states (including Private Attorney General Act claims in California).
We may not have valid arbitration agreements with all current or former employees, and the arbitration agreements that are in place may not protect us from certain claims in certain states (including Private Attorney General Act (“PAGA”) claims in California).
Additionally, our restaurants and locations must be able to support growth of not only our In-Store and Pick-Up Channels, but also, depending on location, orders through our Native Delivery, Outpost, and Marketplace Channels.
Additionally, our restaurants and locations must be able to support growth of not only our In-Store and Pick-Up Channels, but also, depending on location, orders through our Native Delivery, Outpost and Catering, and Marketplace Channels.
We have made payments to settle these types of lawsuits and/or investigations in the past, and additional lawsuits or investigations could have an adverse effect on our business, brand and reputation, financial condition, and results of operations.
We have made payments to settle these types of lawsuits and/or investigations in the past, and current and additional lawsuits or investigations could have an adverse effect on our business, brand and reputation, financial condition, and results of operations.
We have increased our pricing several times in the past few years (including in fiscal years 2022 and 2021) and may increase prices further in the future due to the increased costs of labor or ingredients or other factors, which could negatively affect the loyalty of our existing customers and cause them to reduce their spending with us or impact our ability to acquire new customers, particularly as we expand our footprint into new geographies where customers might have greater price sensitivity.
We have increased our pricing several times in the past few years (including in fiscal years 2023 and 2022) and may increase prices further in the future due to the increased costs of labor or ingredients or other factors, which could negatively affect the loyalty of our existing customers and cause them to reduce their spending with us or impact our ability to acquire new customers, particularly as we expand our footprint into new geographies where customers might have greater price sensitivity.
We have taken, and will continue to take, a number of steps in order to reduce our turnover, but we cannot be certain that our turnover rates will decrease, and they may continue to increase in the future.
We have taken, and will continue to take, a number of steps in order to reduce our turnover, but we cannot be certain that our turnover rates will continue to decrease, and they may instead increase in the future.
In addition, adverse weather conditions, particularly in the winter months in some of our largest markets such as New York City, Boston, the Washington, D.C./Virginia/Maryland metropolitan region and Chicago, or unexpected adverse weather conditions in markets such as Georgia, Texas or Florida, may also impact customer traffic at our restaurants, and, in more severe cases, cause temporary restaurant closures, sometimes for prolonged periods, which could have an adverse impact on our revenues.
In addition, adverse weather conditions, particularly in the winter months in some of our largest markets such as New York City, Boston, the Washington, D.C./Virginia/Maryland metropolitan region and Chicago or unexpected adverse weather conditions in markets such as Los Angeles, Georgia, Texas or Florida, may also impact customer traffic at our restaurants, and, in more severe cases, cause temporary restaurant closures, sometimes for prolonged periods, which could have an adverse impact on our revenues.
Competition within our industry for acquisitions of businesses, technologies in areas such as automation and logistics (such as our recent acquisition of Spyce), and assets (including retail spaces) may become intense, and we have limited experience in acquisitions.
Competition within our industry for acquisitions of businesses, technologies in areas such as automation and logistics (such as our acquisition of Spyce), and assets (including retail spaces) may become intense, and we have limited experience in acquisitions.
Our success is also dependent, in part, upon protecting our other intellectual property and proprietary information using a combination of copyright, trade secret, and other intellectual property laws, and confidentiality agreements with our employees and others.
Our success is also dependent, in part, upon protecting our other intellectual property and proprietary information using a combination of copyright, trade secret, patent, and other intellectual property laws, and confidentiality agreements with our employees and others.
We also rely on a number of third parties to support and operate our critical business systems and process sensitive, proprietary, and confidential information, such as LevelUp, our account management provider, the payment processors that process customer credit card payments, and other third-party providers of services including cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions.
We also rely on a number of third parties to support and operate our critical business systems and process sensitive, proprietary, and confidential information, such as Stripe, our account management provider, the payment processors that process customer credit card payments, and other third-party providers of services including cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions.
The CCPA provides for civil penalties of up to $7,500 per violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
The CCPA provides for civil penalties of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
We are still evaluating the impact of our recent IPO on a potential change in ownership, and the corresponding impact on our ability to use NOLs and other tax attributes.
We are still evaluating the impact of our IPO on a potential change in ownership, and the corresponding impact on our ability to use NOLs and other tax attributes.
Moreover, to optimize our organizational structure, including in response to the COVID-19 pandemic and recent macroeconomic conditions and their impact on our business, since the beginning of fiscal year 2020, we have undergone reductions in workforce at our sweetgreen Support Center, including most recently in the third quarter of fiscal year 2022 and may in the future implement other reductions in workforce or restructurings.
Moreover, to optimize our organizational structure, including in response to the COVID-19 pandemic and recent macroeconomic conditions and their impact on our business, since the beginning of fiscal year 2020, we have undergone reductions in workforce at our Sweetgreen Support Center, including in the third quarter of fiscal year 2022 and may in the future implement other reductions in workforce or restructurings.
In particular, we will face increasing competition from delivery kitchens, food aggregators and food delivery marketplaces (such as DoorDash, GrubHub, Uber Eats, and others), grocery stores (particularly those that focus on freshly prepared and organic food), and other companies that are enabling the delivery of food to customers, including delivery marketplaces that we partner with to deliver sweetgreen food to customers.
In particular, we will face increasing competition from delivery kitchens, food aggregators and food delivery marketplaces (such as DoorDash, GrubHub, Uber Eats, ezCater, Sharebite and others), grocery stores (particularly those that focus on freshly prepared and organic food), and other companies that are enabling the delivery of food to customers, including delivery marketplaces that we partner with to deliver Sweetgreen food to customers.
Managing our growth effectively will require us to continue to enhance these systems, procedures and controls and to hire, train and retain managers and team members.
Managing our growth effectively will require us to continue to enhance these systems, procedures and controls and to hire, train, and retain qualified managers and team members.
Additionally, our agreements with our material third-party partners, such as LevelUp and DoorDash, require us to maintain adequate security measures and not subject their confidential information to a security incident. If we were to breach those contractual obligations, we could be responsible for indemnifying our partners for any losses associated with such an incident.
Additionally, our agreements with our material third-party partners, such as Stripe and DoorDash, require us to maintain adequate security measures and not subject their confidential information to a security incident. If we were to breach those contractual obligations, we could be responsible for indemnifying our partners for any losses associated with such an incident.
If LevelUp or any future third-party payment processing or account management partner, experiences any significant downtime, is unable to provide certain of its services or has a data security incident, it could have an adverse effect on our business, financial condition, and results of operations.
If Stripe, or any future third-party payment processing or account management partner, experiences any significant downtime, is unable to provide certain of its services or has a data security incident, it could have an adverse effect on our business, financial condition, and results of operations.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights and preferences determined by our board of directors that may be senior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the chair of our board of directors, or our chief executive officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed only upon the vote of at least 66 2/3% of the voting power of our then-outstanding shares of capital stock; • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of at least 66 2/3% of the voting power of our then-outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.
Our amended and restated certificate of incorporation and amended and restated bylaws include provisions that: • authorize our board of directors to issue, without further action by the stockholders, shares of undesignated preferred stock with terms, rights and preferences determined by our board of directors that may be senior to our common stock; • require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent; • specify that special meetings of our stockholders can be called only by our board of directors, the chair of our board of directors, or our chief executive officer; • establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our board of directors; • prohibit cumulative voting in the election of directors; • provide that our directors may be removed only upon the vote of at least 66 2/3% of the voting power of our then-outstanding shares of capital stock; 49 Tab le o f Contents • provide that vacancies on our board of directors may be filled only by a majority of directors then in office, even though less than a quorum; and • require the approval of our board of directors or the holders of at least 66 2/3% of the voting power of our then-outstanding shares of capital stock to amend our bylaws and certain provisions of our certificate of incorporation.
In addition, there can be no assurance that we will generate revenue growth in an amount sufficient to offset inflationary or other cost pressures, particularly with the high rates of inflation in fiscal years 2022 and 2021.
In addition, there can be no assurance that we will generate revenue growth in an amount sufficient to offset inflationary or other cost pressures, particularly with the high rates of inflation in fiscal years 2023 and 2022.
Developing and delivering these new or upgraded products, menu items, services, channels, or features may increase our expenses, as this process is costly and we may experience difficulties in developing and delivering these new or upgraded products, menu items, services, channels, or features, which may prevent us from achieving or maintaining profitability.
Developing and delivering these new or upgraded products, menu items, services, channels, technology or features may increase our expenses, as this process is costly and we may experience difficulties in developing and delivering these new or upgraded offerings, which may prevent us from achieving or maintaining profitability.
For example, several jurisdictions in which we operate, including New York City, Philadelphia, Chicago, Seattle, and San Francisco, have implemented fair workweek legislation, which impose complex requirements related to scheduling for certain restaurant and retail employees that are often difficult to comply with, and the regulations with respect to such requirements have changed and may continue to change from time to time.
For example, several jurisdictions in which we operate, including but not limited to New York City, Philadelphia, Chicago, Seattle, and San Francisco, have implemented fair workweek legislation, which impose complex requirements related to scheduling for certain restaurant and retail employees that are often difficult to comply with, and the regulations with respect to such requirements have changed and may continue to change from time to time.
Additionally, the commodity markets, including markets for key items, such as chicken, kale, and avocado, will likely continue to increase over time and may also become volatile due to climate conditions and other macroeconomic conditions, all of which are beyond our control and, in many instances, extreme and unpredictable (such as more frequent and/or severe fires and hurricanes).
Additionally, prices in certain of the commodity markets, including markets for key items, such as chicken, kale, and avocado, will likely continue to increase over time and may also become volatile due to climate conditions and other macroeconomic and geopolitical conditions, all of which are beyond our control and, in many instances, extreme and unpredictable (such as more frequent and/or severe fires and hurricanes).
Additionally, as a result of continued inflation, we experienced an increase in wage rates and costs of goods sold during fiscal year 2022, which has had a negative impact on our Restaurant Level Profit.
Additionally, as a result of continued inflation, we experienced an increase in wage rates and costs of goods sold during fiscal year 2023, which has had a negative impact on our Restaurant Level Profit.
To continue to attract and retain digital customers, we will need to continue to invest in the development of new products, menu items, services, channels, and features that add value for customers, and that differentiate us from our competitors.
To continue to attract and retain customers, we will need to continue to invest in the development of new products, menu items, services, channels, technology and features that add value for customers, and that differentiate us from our competitors.
In addition, as a result of the most recent presidential and congressional elections in the United States, there could be significant changes in tax law and regulations that could result in additional federal income taxes being imposed on us.
In addition, as a result of presidential and congressional elections in the United States, there could be significant changes in tax law and regulations that could result in additional federal income taxes being imposed on us.
All outstanding shares of our Class B common stock are beneficially owned by our founders, Jonathan Neman, Nicolas Jammet, and Nathaniel Ru, who collectively represent approximately 58% of the voting power of our outstanding capital stock.
All outstanding shares of our Class B common stock are beneficially owned by our founders, Jonathan Neman, Nicolas Jammet, and Nathaniel Ru, who collectively represent approximately 56% of the voting power of our outstanding capital stock.
We may be unable to continue to access these technologies and content on commercially reasonable terms, or at all. 24 Table of Contents Changes in food and supply costs or failure to receive frequent deliveries of food ingredients and other supplies could have an adverse effect on our business, financial condition, and results of operations.
We may be unable to continue to access these technologies and content on commercially reasonable terms, or at all. Changes in food and supply costs or failure to receive frequent deliveries of food ingredients and other supplies could have an adverse effect on our business, financial condition, and results of operations.
If we 25 Table of Contents cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and other items at our restaurants such as packaging or paper products, which could cause a restaurant to remove items from its menu.
If we cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and other items at our restaurants such as packaging or paper products, which could cause a restaurant to remove items from its menu.
Additionally, all outstanding shares of our Class B common stock will convert automatically into shares of our Class A common stock on the final conversion date, defined as the earlier of (i) the nine-month anniversary of the death or permanent disability of the last of the founders; (ii) the last trading day of the fiscal year during which the 10th anniversary of the effectiveness of the registration statement filed in connection with our initial public offering occurs, or (iii) the date specified by a vote of the holders of a majority of the outstanding shares of Class B common stock; provided, however, that the final conversion date may be extended by the affirmative vote of the holders of the majority of the voting power of the then-outstanding shares of Class A common stock not held by a founder or an affiliate or permitted transferee of a founder and entitled to vote generally in the election of directors, voting together as a single class.
Additionally, all outstanding shares of our Class B common stock will convert automatically into shares of our Class A common stock on the final conversion date, defined as the earlier of (i) the nine-month anniversary of the death or permanent disability of the last of the founders; (ii) the last trading day of the fiscal year during which the 10th anniversary of the effectiveness of the registration statement filed in connection with our initial public offering occurs, or (iii) the date specified by a vote of the holders of a majority of the outstanding shares of Class B common stock; provided, however, that the final conversion date may be extended by the affirmative vote of the holders of the majority of the voting power of the then-outstanding shares of Class A common stock 47 Tab le o f Contents not held by a founder or an affiliate or permitted transferee of a founder and entitled to vote generally in the election of directors, voting together as a single class.
Compliance with these regulations become increasingly more complicated as we expand into additional markets. We primarily partner with a third-party vendor to manage the disposal of our waste and are reliant on them to ensure that our waste is transferred, recycled, or disposed of in accordance with our standards and applicable regulations.
Compliance with these regulations become increasingly more complicated as we expand into additional markets. We primarily partner with third-party vendors to manage the disposal of our waste and are reliant on them to ensure that our waste is transferred, recycled, or disposed of in accordance with our standards and applicable regulations.
These obligations may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process 42 Table of Contents personal information on our behalf. Despite our efforts, we may not be successful in complying with the rapidly evolving data privacy and security requirements discussed above.
These obligations may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal information on our behalf. Despite our efforts, we may not be successful in complying with the rapidly evolving data privacy and security requirements discussed above.
This could decrease the effectiveness of our marketing and adverting strategies and decrease our level of customer acquisition and/or retention, may cause us to find new avenues to market and advertise, and may cause us to increase our marketing and advertising expenditures.
This could decrease the effectiveness of our marketing and adverting strategies and decrease our level of customer acquisition and/or retention, may cause us to seek new avenues to market and advertise, and may cause us to increase our marketing and advertising expenditures.
For example, we recently implemented the Plan pursuant to which we vacated the premises for the former sweetgreen Support Center and moved to a smaller office space adjacent to its existing location, and in connection with which we incurred $14.4 million of restructuring expense during fiscal year 2022.
For example, we recently implemented the Plan pursuant to which we vacated the premises for the former Sweetgreen Support Center and moved to a smaller office space adjacent to its existing location, and in connection with which we incurred $7.4 million and $14.4 million of restructuring expense during fiscal year 2023 and 2022, respectively.
Furthermore, if we are unable to renew existing leases in key metropolitan areas where we operate or such leases are terminated, any inability to 31 Table of Contents operate in such metropolitan area, as well as the publicity concerning any such termination or non-renewal, could adversely affect our business, financial condition, and results of operations.
Furthermore, if we are unable to renew existing leases in key metropolitan areas where we operate or such leases are terminated, any inability to operate in such metropolitan area, as well as the publicity concerning any such termination or non-renewal, could adversely affect our business, financial condition, and results of operations.
For example, since the fourth fiscal quarter of 2022, as a result of extreme weather conditions, we have experienced supply chain disruptions for key ingredients, such as romaine, arugula and tomatoes, which resulted in higher prices for those products or resulted in temporarily discontinuing those products in certain geographic markets.
For example, during the fourth fiscal quarter of 2022, as a result of extreme weather conditions, we experienced supply chain disruptions for key ingredients, such as romaine, arugula and tomatoes, which resulted in higher prices for those products or resulted in temporarily discontinuing those products in certain geographic markets.
If we or the third parties we work with suffer, or are perceived to have suffered, a security incident, we may experience a loss of customer and partner confidence in the security of our platform and damage to our 40 Table of Contents brand, reduced demand for our offerings, and disruption of normal business operations.
If we or the third parties we work with suffer, or are perceived to have suffered, a security incident, we may experience a loss of customer and partner confidence in the security of our platform and damage to our brand, reduced demand for our offerings, and disruption of normal business operations.
Since the initial publication of SOFR, daily changes in the rate have, on occasion, been more volatile than daily changes in comparable benchmark or market rates, and SOFR over time may bear little or no 33 Table of Contents relation to the historical actual or historical indicative data.
Since the initial publication of SOFR, daily changes in the rate have, on occasion, been more volatile than daily changes in comparable benchmark or market rates, and SOFR over time may bear little or no relation to the historical actual or historical indicative data.
Under the Tax Act, as amended by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), net operating losses arising in taxable years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five taxable years preceding the tax year of such loss, but net operating losses arising in taxable years beginning after December 31, 2020 may not be carried back.
Under the Tax Cuts and Jobs Act enacted in 2017 (the “Tax Act”), as amended by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), net operating losses arising in taxable years beginning after December 31, 2017 and before January 1, 2021 may be carried back to each of the five taxable years preceding the tax year of such loss, but net operating losses arising in taxable years beginning after December 31, 2020 may not be carried back.
Further, during the COVID-19 pandemic, our in-restaurant foot traffic has significantly declined, our Outpost Channel has significantly diminished, and our Native Delivery and Marketplace Channels have significantly increased.
Further, during the COVID-19 pandemic, our in-restaurant foot traffic significantly declined, our Outpost Channel significantly diminished, and our Native Delivery and Marketplace Channels significantly increased.
Current macroeconomic conditions, such as inflation and increasing interest rates, which have become more challenging during 2022 and which we expect to continue to be challenging in fiscal year 2023, increase the risk of a potential economic downturn.
Current macroeconomic conditions, such as inflation and higher interest rates, which have become more challenging during 2023 and 2022 and which we expect to continue to be challenging in fiscal year 2024, increase the risk of a potential economic downturn.
We have recently experienced an increase in freight related surcharges, an increase in food costs, and supply shortages from our vendors as a result of increased inflation and higher gas prices, which we expect to continue into fiscal year 2023.
We have recently experienced an increase in freight related surcharges, an increase in food costs, and supply shortages from our vendors as a result of inflation and higher gas prices, which we expect to continue into fiscal year 2024.
If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and any 32 Table of Contents acquisitions we complete could be viewed negatively by customers, employees, or investors or result in the incurrence of significant other liabilities.
If we do complete acquisitions, we may not ultimately strengthen our competitive position or achieve our goals, and any acquisitions we complete could be viewed negatively by customers, employees, or investors or result in the incurrence of significant other liabilities.
Further, environmental laws, and the administration, interpretation, and enforcement thereof, are subject to change and may become more stringent in the future, each of which could make our waste management more complex and have an adverse effect on our business, financial condition, and results of operations. 37 Table of Contents The effect of changes to healthcare laws in the United States may increase the number of employees who choose to participate in our healthcare plans, which may significantly increase our healthcare costs and negatively impact our financial results.
Further, environmental laws, and the administration, interpretation, and enforcement thereof, are subject to change and may become more stringent in the future, each of which could make our waste management more complex and have an adverse effect on our business, financial condition, and results of operations. 37 Tab le o f Contents The effect of changes to healthcare laws in the United States may increase the number of employees who choose to participate in our healthcare plans, which may significantly increase our healthcare costs and negatively impact our financial results.
For fiscal years 2022 and 2021, approximately 32% and 33%, respectively, of our revenue was generated from our restaurants located in the New York City metropolitan area. As a result, adverse economic or other conditions in any of these areas could have an adverse effect on our overall results of operations.
For fiscal years 2023 and 2022, approximately 28% and 32%, respectively, of our revenue was generated from our restaurants located in the New York City metropolitan area. As a result, adverse economic or other conditions in any of these areas could have an adverse effect on our overall results of operations.
Operating our business and platform involves the collection, use, storage, and transmission of sensitive, proprietary, and confidential information, including personal information of customers, personnel, business contacts, and others, and our sensitive, proprietary and confidential business information.
Operating our business and platform involves the collection, use, storage, and transmission of sensitive, proprietary, and confidential information, including personal information of customers, our personnel, the personnel of our business partners, and others.
We rely on our restaurant-level employees to consistently provide high-quality food and positive experiences to our customers, which we refer to as the “sweet touch.” In addition, our ability to continue to open new restaurants depends on our ability to recruit, train and retain high-quality restaurant team members to 22 Table of Contents manage, lead and work in our restaurants.
We rely on our restaurant-level employees to consistently provide high-quality food and positive experiences to our customers, which we refer to as the “sweet touch.” In addition, our ability to continue to open new restaurants depends on our ability to recruit, train and retain high-quality restaurant team members to manage, lead and work in our restaurants.
Such changes may include responses to scientific 29 Table of Contents studies on the health effects of particular food items or federal, state, and local regulations that impact the ingredients and nutritional content of the food and beverages we offer.
Such changes may include responses to scientific studies on the health effects of particular food items or federal, state, and local regulations that impact the ingredients and nutritional content of the food and beverages we offer.
We were previously under investigation by the NYC Department of Consumer and Worker Protection for fair workweek violations for one of our New York City locations, and we may in the future be subject to similar investigations. Other jurisdictions where we operate are considering enacting similar legislation.
We are currently under investigation by the NYC Department of Consumer and Worker Protection for fair workweek violations for one of our New York City locations, and we may in the future be subject to similar investigations in New York City or other locations. Other jurisdictions where we operate are considering enacting similar legislation.
In addition, because we try to locally source as much of our supply chain as practicable, we may have difficulty sourcing our ingredients from local suppliers and distributors that are in close proximity to our new markets and that meet our quality standards and are appropriate for our distribution model and Food Ethos.
In addition, because we try to locally source as many of our food ingredients as practicable, we may have difficulty sourcing our ingredients from local suppliers and distributors that are in close proximity to our new markets and that meet our quality standards and are appropriate for our distribution model and Food Ethos.
For these reasons, we may not be able to realize a tax benefit from the use of our NOLs and tax credits. We may expand our independent contractor driver network with respect to our expanding delivery program. The status of the drivers as independent contractors, rather than employees, may be challenged.
For these reasons, we may not be able to realize a tax benefit from the use of our NOLs and tax credits. We use an independent contractor driver network with respect to our food delivery program. The status of the drivers as independent contractors, rather than employees, may be challenged.
The market price of our Class A common stock has been and is likely to continue to be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition or results of operations; • variance in our financial performance from expectations of securities analysts; • changes in our projected operating and financial results; • actual or anticipated effects of the COVID-19 pandemic on our business; • announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • announcements or concerns regarding real or perceived quality or food safety issues with our products or similar products of our competitors; • our involvement in litigation; • future sales of our common stock by us or our stockholders, • novel and unforeseen market forces and trading strategies; • changes in senior management or key personnel; 46 Table of Contents • the trading volume of our Class A common stock; and • changes in the anticipated future size and growth rate of our market.
The market price of our Class A common stock has been and is likely to continue to be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control, including: • actual or anticipated fluctuations in our financial condition or results of operations; 46 Tab le o f Contents • variance in our financial performance from expectations of securities analysts; • changes in our projected operating and financial results; • announcements by us or our competitors of significant business developments, acquisitions, or new offerings; • announcements or concerns regarding real or perceived quality or food safety issues with our products or similar products of our competitors; • our involvement in litigation; • future sales of our common stock by us or our stockholders, • novel and unforeseen market forces and trading strategies; • changes in senior management or key personnel; • the trading volume of our Class A common stock; and • changes in the anticipated future size and growth rate of our market.
The operators of these platforms and application stores have broad discretion to impose technical requirements and change or 26 Table of Contents interpret their policies in a manner unfavorable to us and our partners, such as by imposing fees associated with access to their platforms, restricting how we collect, use, and share data, and limiting our ability to track users.
The operators of these platforms and application stores have broad discretion to impose technical requirements and change or interpret their policies in a manner unfavorable to us and our vendors, such as by imposing fees associated with access to their platforms, restricting how we collect, use, and share data, and limiting our ability to track users.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements (including the requirement to provide for reasonable accommodations for those with disabilities), and the consequences of litigation relating to current or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other costs of doing business and, therefore, have an adverse effect on our business, financial condition, and results of operations.
The impact of current laws and regulations, the effect of future changes in laws or regulations that impose additional requirements (including the requirement to provide for reasonable accommodations for those with disabilities), and the consequences of litigation relating to current or future laws and regulations, or our inability to respond effectively to significant regulatory or public policy issues, could increase our compliance and other 34 Tab le o f Contents costs of doing business and, therefore, have an adverse effect on our business, financial condition, and results of operations.
We have experienced an increase in credential stuffing activity in which malicious third parties try to access an online service by using credentials compromised in security incidents suffered by different services.
We have experienced an increase in what we believe to be credential stuffing activity, in which malicious third parties try to access an online service by using credentials compromised in security incidents suffered by different services.
One of the key means of achieving our growth strategy for the foreseeable future will be through opening new restaurants and operating those restaurants on a profitable basis. In fiscal year 2022, we had 36 Net New Restaurant Openings, and in fiscal year 2021 we had 31 Net New Restaurant Openings.
One of the key means of achieving our growth strategy for the foreseeable future will be through opening new restaurants and operating those restaurants on a profitable basis. In fiscal year 2023 , we had 35 Net New Restaurant Openings, and in fiscal year 2022 we had 36 Net New Restaurant Openings.
We can only partially address future 27 Table of Contents price risk due to climate change through hedging and other activities, and therefore increases in commodity costs, particularly due to climate change, could have an adverse impact on our ability to achieve or maintain profitability.
We can only partially address future price risk due to climate change through hedging and other activities, and therefore increases in commodity costs, particularly due to climate change, could have an adverse impact on our ability to achieve or maintain profitability.
Shortages or interruptions in the availability of certain supplies caused by unanticipated demand, our inability to accurately forecast our supply needs, problems in production or distribution (including any imbalances and freight supply and demand), food contamination, inclement weather, the COVID-19 pandemic, or other conditions could adversely affect the availability and cost of food and supplies or the quality of our ingredients (including requiring distributors to provide substitute products, which may not be of equal quality), which could harm our operations and expose us to risk.
Shortages or interruptions in the availability of certain supplies caused by unanticipated demand, our inability to accurately forecast our supply needs, problems in production or distribution, food contamination, inclement weather, or other conditions could adversely affect the availability and cost of food and supplies or the quality of our ingredients (including requiring distributors to provide substitute products, which may not be of equal quality), which could harm our operations and expose us to risk.
Our strategy includes public relations, digital and social media, targeted promotions (including free delivery), and in-store messaging, which require less marketing spend as compared to traditional marketing programs.
Our strategy includes public relations, digital and social media, targeted promotions (including reduced delivery fees), and in-store messaging, which require less marketing spend as compared to traditional marketing programs.
For example, we use DoorDash as our preferred third-party delivery partner to power our Native Delivery Channel, and if DoorDash, or any future third-party delivery partner fails to fulfill its obligations or delivers unsatisfactory delivery service, for instance, by delivering orders late, by not having sufficient couriers to fulfill our orders, or by having a system outage, the risks of which may be increased during our transition to DoorDash on our Native Delivery Channel, we will not be able to provide the proper delivery services to our customers through our native application, which is likely to lead to customer dissatisfaction and higher refunds or credits.
For example, we use DoorDash as our preferred third-party delivery partner to power our Native Delivery Channel, and if DoorDash, or any future third-party delivery partner fails to fulfill its obligations or delivers unsatisfactory delivery service, for instance, by delivering orders late, by not having sufficient couriers to fulfill our orders, or by having a system outage, we will not be able to provide the proper delivery services to our customers through our native application, which is likely to lead to customer dissatisfaction and higher refunds or credits.
Additionally, we, our advertisers and our partners are subject to or affected by the technical requirements, terms of service, and policies of the third-party operating system platforms and application stores on which our mobile application depends, including those operated by Apple and Google.
Additionally, we and certain of our vendors are subject to or affected by the technical requirements, terms of service, and/or policies of the third-party operating system platforms and application stores on which our mobile application depends, including those operated by Apple and Google.

… 272 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+0 added−0 removed1 unchanged
Biggest changeITEM 2. PROPERTIES As of December 25, 2022, we operated 186 restaurants. Our main office is located at 3102 36th Street, Los Angeles, CA 90018. We lease our main office and all of the properties on which we operate restaurants.
Biggest changeITEM 2. PROPERTIES As of December 31, 2023, we operated 221 restaurants. Our main office is located at 3102 36th Street, Los Angeles, CA 90018. We lease our main office and all of the properties on which we operate restaurants.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeHowever, an increase in the number of these claims, or one or more successful claims under which we incur greater liabilities than we currently anticipate, could materially and adversely affect our business, financial position, results of operations, and cash flows. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 54 Table of Contents PART II
Biggest changeHowever, an increase in the number of these claims, or one or more successful claims under which we incur greater liabilities than we currently anticipate, could materially and adversely affect our business, financial position, results of operations, and cash flows.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

4 edited+0 added−0 removed7 unchanged
Biggest changeStock Performance Graph The following performance graph shows a comparison from November 18, 2021 (the date our Class A common stock commenced tradin g on the New York Stock Exchange) through December 25, 2022, of the cumulative total return for our Class A common stock, the NYSE Composite Index and the S&P 600 Restaurants Index. 55 Table of Contents November 18, 2021 December 26, 2021 March 27, 2022 June 26, 2022 September 25, 2022 December 25, 2022 sweetgreen $ 100.00 $ 112.00 $ 115.71 $ 47.61 $ 60.00 $ 31.54 NYSE $ 100.00 $ 99.10 $ 98.10 $ 86.53 $ 80.60 $ 88.73 S&P Restaurant 600 Index $ 100.00 $ 97.51 $ 91.79 $ 68.95 $ 70.45 $ 76.42 This graph assumes an initial investment of $100 on November 18, 2021.
Biggest changeStock Performance Graph The following performance graph shows a comparison from November 18, 2021 (the date our Class A common stock commenced trading on the New York Stock Exchange) through December 31, 2023, of the cumulative total return for our Class A common stock, the NYSE Composite Index and the S&P 600 Restaurants Index. 56 Tab le o f Contents November 18, 2021 December 26, 2021 June 26, 2022 December 25, 2022 June 25, 2023 December 31, 2023 Sweetgreen $ 100.00 $ 112.00 $ 47.61 $ 31.54 $ 38.86 $ 40.36 NYSE $ 100.00 $ 99.10 $ 86.53 $ 88.73 $ 90.37 $ 98.45 S&P Restaurant 600 Index $ 100.00 $ 97.51 $ 68.95 $ 76.42 $ 89.44 $ 88.75 This graph assumes an initial investment of $100 on November 18, 2021.
We raised aggregate net proceeds of $384.7 million, after deducting underwriting discounts and commis sions of $26.4 million and offering costs of approximately $7.5 million subject to certain cost reimbursements. 56 Table of Contents There has been no material change in the planned use of proceeds from the IPO as described in our final prospectus dated November 17, 2021 and filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on November 19, 2021.
We raised aggregate net proceeds of $384.7 million, after deducting underwriting discounts and commis sions of $26.4 million and offering costs of approximately $7.5 million subject to certain cost reimbursements. 57 Tab le o f Contents There has been no material change in the planned use of proceeds from the IPO as described in our final prospectus dated November 17, 2021 and filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on November 19, 2021.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Class A common stock is listed on the New York Stock Exchange under the symbol “SG.” Holders of Record As of February 17, 2023, there were approximately 466 stockholders of record of our Class A common stock.
ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our Class A common stock is listed on the New York Stock Exchange under the symbol “SG.” Holders of Record As of February 26, 2024, there were approximately 474 stockholders of record of our Class A common stock.
The number of record does not include persons who held shares of our Class A common stock in nominee or “street name” accounts through brokers. As of February 17, 2023, there were approximately 10 stockholders of record of our Class B common stock that are affiliated with our three founders.
The number of record does not include persons who held shares of our Class A common stock in nominee or “street name” accounts through brokers. As of February 26, 2024, there were approximately 13 stockholders of record of our Class B common stock that are affiliated with our three founders.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

136 edited+33 added−54 removed105 unchanged
Biggest changeThe 2020 Credit Facility contains customary events of default, including, without limitation, failure to pay the outstanding loans or accrued interest on the due date. 80 Table of Contents Cash Flows The following table summarizes our cash flows for the periods indicated: Fiscal Year Ended (in thousands) December 25, 2022 December 26, 2021 December 27, 2020 Net cash used in operating activities (43,169) (64,529) (90,352) Net cash used in investing activities (102,023) (97,548) (58,405) Net cash provided by financing activities 4,632 531,611 2,145 Net increase (decrease) in cash and cash equivalents and restricted cash $ (140,560) $ 369,534 $ (146,612) Operating Activities For fiscal year 2022, cash used in operating activities decreased $21.4 million compared to fiscal year 2021, primarily due to a $25.8 million reduction in loss after excluding non-cash items , partially offset by $4.4 million of unfavorable working capital fluctuation.
Biggest changeCash Flows The following table summarizes our cash flows for the periods indicated: Fiscal Year Ended (in thousands) December 31, 2023 December 25, 2022 December 26, 2021 Net cash provided by (used in) operating activities 26,480 (43,169) (64,529) Net cash used in investing activities (95,665) (102,023) (97,548) Net cash (used in) provided by financing activities (5,199) 4,632 531,611 Net increase (decrease) in cash and cash equivalents and restricted cash $ (74,384) $ (140,560) $ 369,534 Operating Activities For fiscal year 2023, cash provided by (used in) operating activities increased $69.6 million compared to fiscal year 2022, primarily due to a $54.1 million reduction in loss after excluding non-cash items, a $15.6 million 80 Tab le o f Contents favorable working capital fluctuation, which is primarily related to the timing of payroll and other payments in the ordinary course of business, and a $3.4 million receipt of our ERC.
While we have historically been able to partially offset inflation and other increases, such as wage increases and increases in cost of goods sold, in the costs of core operating resources by gradually increasing menu prices or other customer fees, such as service fees and delivery fees, coupled with more efficient purchasing practices, productivity improvements, and greater economies of scale, there can be no assurance that we will be able to continue to do so in the current macroeconomic environment or in the future.
While we have historically been able to partially offset inflation and other increases in the costs of core operating resources, such as wage increases and increases in cost of goods sold, by gradually increasing menu prices or other customer fees, such as service fees and delivery fees, coupled with more efficient purchasing practices, productivity improvements, and greater economies of scale, there can be no assurance that we will be able to continue to do so in the current macroeconomic environment or in the future.
Occupancy and Related Expenses Occupancy and related expenses consist of restaurant-level occupancy expenses (including rent, common area maintenance (”CAM”), and real estate taxes), and exclude occupancy expenses associated with unopened restaurants, which are recorded separately in pre-opening costs.
Occupancy and Related Expenses Occupancy and related expenses consist of restaurant-level occupancy expenses (including rent, common area maintenance (”CAM”) expenses, and real estate taxes), and exclude occupancy expenses associated with unopened restaurants, which are recorded separately in pre-opening costs.
Historically, our revenue has been lower in the first and fourth quarters of the year due, in part, to the holiday season and the fact that fewer people eat out during periods of inclement weather (generally the winter months, though inclement weather conditions may occur in certain markets at any time of the year) than during periods of mild to warm weather (the spring, summer, and fall months).
Historically, our revenue has been lower in the first and fourth fiscal quarters of the year due, in part, to the holiday season and the fact that fewer people eat out during periods of inclement weather (generally the winter months, though inclement weather conditions may occur in certain markets at any time of the year) than during periods of mild to warm weather (the spring, summer, and fall months).
Common Stock Valuations Prior to our IPO, given the absence of a public trading market for our common stock, and in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation (the Practice Aid), our board of directors exercised its reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of fair value of our common stock, including: • independent third-party valuations of our common stock; • the prices at which we sold shares of our preferred stock; • the rights, preferences and privileges of our preferred stock relative to those of our common stock; 84 Table of Contents • our capital resources and financial condition; • the likelihood and timing of achieving a liquidity event, such as an initial public offering or sale of the company, given prevailing market conditions; • our historical operating and financial performance as well as our estimates of future financial performance; • valuations of comparable companies; • the hiring of key personnel; • the relative lack of marketability of our common stock; • industry information such as market growth and volume and macro-economic events; and • additional objective and subjective factors relating to our business.
Common Stock Valuations Prior to our IPO, given the absence of a public trading market for our common stock, and in accordance with the American Institute of Certified Public Accountants Accounting and Valuation Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation (the Practice Aid), our board of directors exercised its reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of fair value of our common stock, including: • independent third-party valuations of our common stock; • the prices at which we sold shares of our preferred stock; • the rights, preferences and privileges of our preferred stock relative to those of our common stock; • our capital resources and financial condition; • the likelihood and timing of achieving a liquidity event, such as an initial public offering or sale of the company, given prevailing market conditions; • our historical operating and financial performance as well as our estimates of future financial performance; • valuations of comparable companies; • the hiring of key personnel; • the relative lack of marketability of our common stock; • industry information such as market growth and volume and macro-economic events; and • additional objective and subjective factors relating to our business.
Impairment and Closure Costs Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Impairment closure costs $ 2,542 $ 4,915 (48 %) As a percentage of total revenue 1 % 1 % — % During fiscal year 2022 we recognized non-cash impairment charges of $2.0 million related to the property and equipment of three of our restaurants, and non-cash impairment charges of $0.4 million related to the operating lease assets of three of our restaurants, as well as $0.1 million of closure costs related to one store previously operated by Spyce.
Impairment and Closure Costs Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Impairment of long-lived assets $ 2,542 $ 4,915 (48 %) As a percentage of total revenue 1 % 1 % — % During fiscal year 2022, we recognized non-cash impairment charges of $2.0 million related to the property and equipment of three of our restaurants, and non-cash impairment charges of $0.4 million related to the operating lease assets of three of our restaurants, as well as $0.1 million of closure costs related to one store previously operated by Spyce.
This included a $13.0 million non-cash restructuring expense, due to a reduction of our real estate footprint by vacating the premises of the existing sweetgreen Support Center and moving to a smaller office space adjacent to the existing location, of which $6.8 million related to impairment of the long-lived assets, $5.8 million and $0.4 million related to impairment of our operating lease asset and closure costs, respectively, associated with the sweetgreen Support Center, $0.6 million of severance and related benefits from workforce reductions affecting 70 Table of Contents approximately 5% of employees at the sweetgreen Support Center, $0.6 million of costs related to abandoning certain potential future restaurant sites in an effort to streamline our future new restaurant openings, and $0.2 million of other related expenses.
This included a $13.0 million non-cash restructuring expense due to a reduction of our real estate footprint by vacating the premises of the existing Sweetgreen Support Center and moving to a smaller office space adjacent to the existing location, of which $6.8 million related to impairment of the long-lived assets, $5.8 million, and $0.4 million related to impairment of our operating lease asset and closure costs, respectively, associated with the Sweetgreen Support Center, $0.6 million of severance and related benefits from workforce reductions affecting approximately 5% of employees at the Sweetgreen Support Center; $0.6 million of costs related to abandoning certain potential future restaurant sites in an effort to streamline our future new restaurant openings, and $0.2 million of other related expenses.
(5) Spyce acquisition costs includes one-time costs we incurred in order to acquire Spyce including, severance payments, retention bonuses, and valuation and legal expenses. For additional information, see Note 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. (6) Restructuring charges are expenses that are paid in connection with reorganization of our operations.
(6) Spyce acquisition costs includes one-time costs we incurred in order to acquire Spyce including, severance payments, retention bonuses, and valuation and legal expenses. For additional information, see Note 6 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K. (7) Restructuring charges are expenses that are paid in connection with reorganization of our operations.
This included a $13.0 million non-cash restructuring expense, due to a reduction of our real estate footprint by vacating the premises of the existing sweetgreen Support Center and moving to a smaller office space adjacent to the existing location, of which $6.8 million related to impairment of the long-lived assets, $5.8 million and $0.4 million related to impairment of our operating lease asset and closure costs, respectively, associated with the sweetgreen Support Center, $0.6 million of severance and related benefits from workforce reductions at the sweetgreen Support Center, $0.6 million of costs related to abandoning certain potential future restaurant sites in an effort to streamline our future new restaurant openings, and $0.2 million of other related expenses.
This included a $13.0 million non-cash restructuring expense, due to a reduction of our real estate footprint by vacating the premises of the existing Sweetgreen Support Center and moving to a smaller office space adjacent to the existing location, of which $6.8 million related to impairment of the long-lived assets, $5.8 million and $0.4 million related to impairment of our operating lease asset and closure costs, respectively, associated with the Sweetgreen Support Center, $0.6 million of severance and related benefits from workforce reductions affecting approximately 5% of employees at the Sweetgreen Support Center, $0.6 million of costs related to abandoning certain potential future restaurant sites in an effort to streamline our future new restaurant openings, and $0.2 million of other related expenses.
The unfavorable working capital fluctuations were due to a $11.1 million increase in cash outflow primarily related to timing of accrued payroll and benefits, including payment of deferred social security taxes, timing of rent payments previously deferred as part of COVID negotiations with landlords, timing of payment of legal settlements, and timing of payments in the ordinary course of business.
The unfavorable working capital fluctuations were due to an $11.1 million increase in cash outflow primarily related to timing of accrued payroll and benefits, including payment of deferred social security taxes, timing of rent payments previously deferred as part of COVID negotiations with landlords, timing of payment of legal settlements, and timing of payments in the ordinary course of business.
This is because excluding an entire fiscal month for these restaurants which represented a significant portion of our restaurant fleet, would result in a Same-Store Sales Change figure that is not representative of our business as a whole. This exclusion impacted the calculation of Same-Store Sales Change for these restaurants for fiscal year 2021 and 2020.
This is because excluding an entire fiscal month for these restaurants which represented a significant portion of our restaurant fleet, would result in a Same-Store Sales Change figure that is not representative of our business as a whole. This exclusion impacted the calculation of Same-Store Sales Change for these restaurants for fiscal year 2021.
(4) Other expense includes the change in fair value of the contingent consideration and the change in fair value of the warrant liability. For additional information, see Notes 1 and 3 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
(5) Other expense includes the change in fair value of the contingent consideration and the change in fair value of the warrant liability. For additional information, see Notes 1 and 3 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
In a 53-week fiscal year, the first, second, and third fiscal quarters each include 13 weeks of operations, and the fourth fiscal quarter includes 14 weeks of operations. Fiscal year 2022 and 2021 results for AUV and Same-Store Sales Change have been adjusted.
In a 53-week fiscal year, the first, second, and third fiscal quarters each include 13 weeks of operations, and the fourth fiscal quarter includes 14 weeks of operations. Fiscal year 2023 and 2022 results for AUV and Same-Store Sales Change have been adjusted.
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 during the relevant measurement period.
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 per iod, other than any restaurants that had a material, temporary closure during the relevant measurement period.
Prior to our IPO, the fair value of the Company’s common stock was determined by considering a number of objective and subjective factors 83 Table of Contents including: contemporaneous third-party valuations of our common stock, sales of our redeemable convertible preferred stock to outside investors in arms-length transactions (including our IPO), the Company’s operating and financial performance, the lack of marketability, and the general and industry-specific economic outlook, amongst other factors.
Prior to our IPO, the fair value of the Company’s common stock was determined by considering a number of objective and subjective factors including: contemporaneous third-party valuations of our common stock, sales of our redeemable convertible preferred stock to outside investors in arms-length transactions (including our IPO), the Company’s operating and financial performance, the lack of marketability, and the general and industry-specific economic outlook, amongst other factors.
Further, as a result of temporary closures of 19 restaurants due to the COVID-19 pandemic during the second and third fiscal quarters of 2020, Same-Store Sales Change has been adjusted for fiscal years 2021 and 2020.
Further, as a result of temporary closures of 19 restaurants due to the COVID-19 pandemic during the second and third fiscal quarters of 2020, Same-Store Sales Change has been adjusted for fiscal year 2021.
Financing Activities 81 Table of Contents For fiscal year 2022, cash provided by financing activities decreased $527.0 million compared to fiscal year 2021, primarily due to net proceeds of $384.7 million from sales of our shares in the IPO received in fiscal year 2021, after deducting underwriting discounts and commissions and offering expenses and proceeds received from the issuance of preferred stock, net of issuance cost, of $113.8 million.
For fiscal year 2022, cash provided by financing activities decreased $527.0 million compared to fiscal year 2021, primarily due to net proceeds of $384.7 million from sales of our shares in the IPO received in fiscal year 2021, after deducting underwriting discounts and commissions and offering expenses and proceeds received from the issuance of preferred stock, net of issuance cost, of $113.8 million.
Recently, as consumer behavior trends have changed due in part to the COVID-19 pandemic and the emergence of hybrid or remote work environments, the seasonality in our business has been less predictable than in prior years and we have seen an increase and prolonged negative impact on our revenue around national holidays.
Recently, as consumer behavior trends have changed due in part to the emergence of hybrid or remote work environments, the seasonality in our business has been less predictable than in prior years and we have seen an increase and prolonged negative impact on our revenue around national holidays.
(2) Loss on disposal of property and equipment includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment. (3) Includes costs related to impairment of long-lived and operating lease assets and store closures.
(3) Loss on disposal of property and equipment includes the loss on disposal of assets related to retirements and replacement or write-off of leasehold improvements or equipment. (4) Includes costs related to impairment of long-lived and operating lease assets and store closures.
As a percentage of revenue, depreciation and amortization for fiscal year 2022 was flat compared to fiscal year 2021, primarily due to comparatively higher revenue in fiscal year 2022, offset by the increases noted above.
As a percentage of revenue, depreciation and amortization for fiscal year 2023 was flat compared to fiscal year 2022, primarily due to comparatively higher revenue in fiscal year 2023, offset by the increases noted above.
We do not recognize breakage income because of our requirements to escheat unredeemed gift card balances. Delivery. All of our restaurant locations offer a delivery option. Delivery services are fulfilled by third-party service providers whether delivery is ordered through our Native Delivery Channel or Marketplace Channel.
We do not recognize breakage income because of our requirements to escheat unredeemed gift card balances. Delivery. The majority of our restaurant locations offer a delivery option. Delivery services are fulfilled by third-party service providers whether delivery is ordered through our Native Delivery Channel or Marketplace Channel.
For additional information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted in the fiscal years ended December 25, 2022 and December 26, 2021, see Note 12 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For additional information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options granted in the fiscal years ended December 31, 2023 and December 25, 2022, see Note 12 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We expect revenue to increase as we focus on opening additional restaurants, diversify and expand our menu, make investments in our Owned Digital Channels to attract new customers and increase order frequency in our existing customers, as well as any increases in the price of our menu items. 62 Table of Contents Gift Cards .
We expect revenue to increase as we focus on opening additional restaurants, diversify and expand our menu, make investments in our Owned Digital Channels to attract new customers and increase order frequency in our existing customers, as well as any increases in the price of our menu items. Gift Cards .
Loss on Disposal of Property and Equipment Loss on disposal of property and equipment includes the net book value of assets that have been retired and consists primarily of furniture, equipment and fixtures that were replaced in the normal course of business. 64 Table of Contents Restructuring Charges Restructuring charges are expenses that are paid in connection with the reorganization of our operations.
Loss on Disposal of Property and Equipment Loss on disposal of property and equipment includes the net book value of assets that have been retired and consists primarily of furniture, equipment and fixtures that were replaced in the normal course of business. Restructuring Charges Restructuring charges are expenses that are paid in connection with the reorganization of our operations.
As we have no outstanding debt, we estimate this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. If the 82 Table of Contents estimate of our incremental borrowing rate was changed, our operating lease assets and liabilities could differ materially.
As we have no outstanding debt, we estimate this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. If the estimate of our incremental borrowing rate was changed, our operating lease assets and liabilities could differ materially.
The amendment also increased the revolving facility cap by $10.0 million, to allow for the Company to borrow up to $45.0 million in the aggregate principal amount under the refinanced revolving facility.
The amendment also increased the revolving facility cap by $10.0 million, to allow for us to borrow up to $45.0 million in the aggregate principal amount under the refinanced revolving facility.
Assumptions used in these forecasts are consistent with internal planning, and include revenue growth rates, gross margins, and operating expense in relation to the current economic environment and our incremental borrowing rate, future expectations, 85 Table of Contents competitive factors in its various markets, inflation, revenue trends and other relevant economic factors that may impact the store under evaluation.
Assumptions used in these forecasts are consistent with internal planning, and include revenue growth rates, gross margins, and operating expense in relation to the current economic environment and our incremental borrowing rate, future expectations, competitive factors in its various markets, inflation, revenue trends and other relevant economic factors that may impact the store under evaluation.
For additional information, see Note 15 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
For additional information, see Note 13 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
Therefore, Same-Store Sales Change for fiscal years 2021 and 2020 is not comparable to Same-Store Sales Change for fiscal year 2022. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and closures.
Therefore, Same-Store Sales Change for fiscal year 2021 is not comparable to Same-Store Sales Change for fiscal year 2023 and 2022. This measure highlights the performance of existing restaurants, while excluding the impact of new restaurant openings and closures.
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. Our fiscal year is a 52- or 53-week period that ends on the Sunday closest to the last day of December.
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. Our fiscal year is a 52- or 53-week period that ends on the last Sunday of the calendar year.
As a result of the change, we recorded a $19.8 million and $14.3 million rec lassification from other occupancy and related expenses to other restaurant operating costs for fiscal years 2022 and 2021, respectively.
As a result of the change, we recorded a $19.8 million and $14.3 million reclassification from other occupancy and related expenses to other restaurant operating costs for fiscal years 2022 and 2021, respectively.
Subsequent to the IPO, our board of directors determines the fair market value of our Class A common stock based on its closing price as reported on the date of grant on the New York Stock Exchange. As a result, no common stock valuation was required during the fiscal year ended December 25, 2022.
Subsequent to the IPO, our board of directors determines the fair market value of our Class A common stock based on its closing price as reported on the date of grant on the New York Stock Exchange. As a result, no common stock valuation was required during the fiscal year ended December 31, 2023.
As it excludes general and administrative expense, which is primarily attributable to our sweetgreen Support Center, we evaluate Restaurant-Level Profit and Restaurant-Level Profit Margin as a measure of profitability of our restaurants.
As it excludes general and administrative expense, which is primarily attributable to our corporate headquarters, which we refer to as our Sweetgreen Support Center, we evaluate Restaurant-Level Profit and Restaurant-Level Profit Margin as a measure of profitability of our restaurants.
Any material changes in the sum of our undiscounted cash flow estimates resulting from different assumptions used as of December 25, 2022 for those store asset groups included in our evaluation could result in a material change in the long-lived asset impairment charge for fiscal year 2022.
Any material changes in the sum of our undiscounted cash flow estimates resulting from different assumptions used as of December 31, 2023 for those store asset groups included in our evaluation could result in a material change in the long-lived asset impairment charge for fiscal year 2023.
Some of these limitations are: • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Restaurant-Level Profit and Adjusted EBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • Restaurant-Level Profit and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; 77 Table of Contents • Restaurant-Level Profit and Adjusted EBITDA do not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to us; • Restaurant-Level Profit and Adjusted EBITDA do not consider the potentially dilutive impact of stock-based compensation; • Restaurant-Level Profit is not indicative of overall results of the Company and does not accrue directly to the benefit of stockholders, as corporate-level expenses are excluded; • Adjusted EBITDA does not take into account any income or costs that management determines are not indicative of ongoing operating performance, such as stock-based compensation, loss on disposal of property and equipment, Spyce acquisition costs, amortization of cloud-based software implementation costs, certain other expenses, and, in certain periods, impairment and closure costs, and restructuring charges; and • other companies, including those in our industry, may calculate Restaurant-Level Profit and Adjusted EBITDA differently, which reduces their usefulness as comparative measures.
Some of these limitations are: • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Restaurant-Level Profit and Adjusted EBITDA do not reflect all cash capital expenditure requirements for such replacements or for new capital expenditure requirements; • Restaurant-Level Profit and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; • Restaurant-Level Profit and Adjusted EBITDA do not reflect the impact of the recording or release of valuation allowances or tax payments that may represent a reduction in cash available to us; • Restaurant-Level Profit and Adjusted EBITDA do not consider the potentially dilutive impact of stock-based compensation; • Restaurant-Level Profit is not indicative of overall results of the Company and does not accrue directly to the benefit of stockholders, as corporate-level expenses are excluded; • Adjusted EBITDA does not take into account any income or costs that management determines are not indicative of ongoing operating performance, such as stock-based compensation; loss on disposal of property and equipment; certain other expenses; Spyce acquisition costs; enterprise resource planning system (“ERP”) implementation and related costs; legal settlements; and, in certain periods, impairment and closure costs and restructuring charges; and • other companies, including those in our industry, may calculate Restaurant-Level Profit and Adjusted EBITDA differently, which reduces their usefulness as comparative measures.
For additional information, see Note 13 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. 65 Table of Contents Results of Operations Comparison of Fiscal Year 2022 and Fiscal Year 2021 The following table summarizes our results of operations for fiscal year 2022 and fiscal year 2021: Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Dollar Change Percentage Change Revenue $ 470,105 $ 339,874 $ 130,231 38 % Restaurant operating costs (exclusive of depreciation and amortization presented separately below): Food, beverage, and packaging 130,136 93,699 36,437 39 % Labor and related expenses 147,474 110,368 37,106 34 % Occupancy and related expenses 45,238 35,863 9,375 26 % Other restaurant operating costs 77,971 59,539 18,432 31 % Total cost of restaurant operations 400,819 299,469 101,350 34 % Operating expenses: General and administrative 187,367 125,040 62,327 50 % Depreciation and amortization 46,471 35,549 10,922 31 % Pre-opening costs 11,523 9,193 2,330 25 % Impairment and closure costs 2,542 4,915 (2,373) (48 %) Loss on disposal of property and equipment 278 107 171 160 % Restructuring charges 14,442 — 14,442 N/A Total operating expenses 262,623 174,804 87,819 50 % Loss from operations (193,337) (134,399) (58,938) 44 % Interest income (5,143) (450) (4,693) 1043 % Interest expense 83 87 (4) (5 %) Other expense 819 18,992 (18,173) (96 %) Loss from operations before income taxes (189,096) (153,028) (36,068) 24 % Income tax expense 1,345 147 1,198 N/A Net loss $ (190,441) $ (153,175) $ (37,266) 24 % Revenue Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Revenue $ 470,105 $ 339,874 38 % Average Unit Volume $ 2,905 $ 2,623 11 % Same-Store Sales Change 13 % 25 % (12 %) The increase in revenue in fiscal year 2022 was primarily due to $88.1 million of incremental revenue associated with 67 Net New Restaurant Openings during fiscal years 2021 and 2022.
Comparison of Fiscal Year 2022 and Fiscal Year 2021 The following table summarizes our results of operations for fiscal year 2022 and fiscal year 2021: Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Dollar Change Percentage Change Revenue $ 470,105 $ 339,874 $ 130,231 38 % Restaurant operating costs (exclusive of depreciation and amortization presented separately below): Food, beverage, and packaging 130,136 93,699 36,437 39 % Labor and related expenses 147,474 110,368 37,106 34 % Occupancy and related expenses 45,238 35,863 9,375 26 % Other restaurant operating costs 77,971 59,539 18,432 31 % Total cost of restaurant operations 400,819 299,469 101,350 34 % Operating expenses: General and administrative 187,367 125,040 62,327 50 % Depreciation and amortization 46,471 35,549 10,922 31 % Pre-opening costs 11,523 9,193 2,330 25 % Impairment and closure costs 2,542 4,915 (2,373) (48 %) Loss on disposal of property and equipment 278 107 171 160 % Restructuring charges 14,442 — 14,442 N/A Total operating expenses 262,623 174,804 87,819 50 % Loss from operations (193,337) (134,399) (58,938) 44 % Interest income (5,143) (450) (4,693) 1043 % Interest expense 83 87 (4) (5 %) Other expense 819 18,992 (18,173) (96 %) Loss from operations before income taxes (189,096) (153,028) (36,068) 24 % Income tax provision 1,345 147 1,198 N/A Net loss $ (190,441) $ (153,175) $ (37,266) 24 % Revenue 73 Tab le o f Contents Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Revenue $ 470,105 $ 339,874 38 % Average Unit Volume $ 2,905 $ 2,623 11 % Same-Store Sales Change 13 % 25 % (12 %) The increase in revenue in fiscal year 2022 was primarily due to $88.1 million of incremental revenue associated with 67 Net New Restaurant Openings during fiscal years 2021 and 2022.
Other restaurant operating costs as a percentage of revenue are expected to increase in line with growth in our Native Delivery, Outpost, and Marketplace 63 Table of Contents Channels, as these channels require us to pay third-party delivery fees.
Other restaurant operating costs as a percentage of revenue are expected to increase in line with growth in our Native Delivery, Outpost and Catering , and Marketplace Channels, as these channels require us to pay third-party delivery fees.
The assumptions underlying these valuations represent our board of directors’ best estimates at the time they were made, which involve inherent uncertainties and the application of the judgment of our board of directors. As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different.
The assumptions underlying these valuations represent our board of directors’ best estimates at the time they were made, which involve inherent uncertainties and the application of the judgment of our board of directors. 84 Tab le o f Contents As a result, if factors or expected outcomes change and we use significantly different assumptions or estimates, our stock-based compensation expense could be materially different.
During 61 Table of Contents fiscal year 2022, we excluded six restaurants from our Same-Store Sales Change to reflect the temporary closure of such restaurants, which d id not result in a material change to Same-Store Sales Change.
During fiscal year 2022, we excluded six restaurants from our Same-Store Sales Change to reflect the temporary closure of such restaurants, which d id not result in a material change to Same-Store Sales Change for 2022.
Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of revenue. Restaurant-Level Profit, Restaurant-Level Profit Margin, Adjusted EBITDA, and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.
Restaurant-Level Profit, Restaurant-Level Profit Margin, Adjusted EBITDA, and Adjusted EBITDA Margin have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP.
Real Estate Selection We utilize a rigorous, data-driven real estate selection process to identify the location and timing of opening new restaurants, both in new and existing U.S. markets and in urban and suburban areas, with both 58 Table of Contents high anticipated foot or vehicle traffic and proximity to workplaces, residences and other restaurant and retail businesses that support our multi-channel approach, including our Native Delivery, Marketplace Delivery and Outpost Channels.
Real Estate Selection 59 Tab le o f Contents We utilize a rigorous, data-driven real estate selection process to identify the location and timing of opening new restaurants, both in new and existing U.S. markets and in urban and suburban areas, with both high anticipated foot or vehicle traffic and proximity to workplaces, residences and other restaurant and retail businesses that support our multi-channel approach, including our Native Delivery, Marketplace Delivery and Outpost and Catering Channels.
Intangible assets are amortized over their estimated useful lives using the straight-line method which approximates the pattern in which the economic benefits are consumed. Contingent Consideration Due to certain conversion features, the contingent consideration issued as part of the Spyce acquisition is considered a liability in accordance with ASC 480.
Intangible 85 Tab le o f Contents assets are amortized over their estimated useful lives using the straight-line method which approximates the pattern in which the economic benefits are consumed. Contingent Consideration Due to certain conversion features, the contingent consideration issued as part of the Spyce acquisition is considered a liability in accordance with ASC 480.
Additionally, as a result of temporary closures of restaurants due to civil disturbances that occurred during one week in fiscal year 2020 we excluded only one week from the calculation of Same-Store Sales Change for fiscal years 2021 and 2020 (and we excluded the corresponding week from the corresponding fiscal periods in the prior fiscal year).
Additionally, as a result of temporary closures of restaurants due to civil disturbances that occurred during one week in fiscal year 2020 we excluded only one week from the calculation of Same-Store Sales Change for fiscal year 2021.
(2) Restructuring charges are expenses that are paid in connection with reorganization of our operations.
(3) Restructuring charges are expenses that are paid in connection with reorganization of our operations.
At this time, we do not believe that there is a reasonable likelihood that there will be a material change in the future estimates or assumptions that we use to calculation our impairment charge. The Company recorded non-cash impairment charges of $15.0 million during the fiscal year ended December 25, 2022.
At this time, we do not believe that there is a reasonable likelihood that there will be a material change in the future estimates or assumptions that we use to calculation our impairment charge. The Company recorded non-cash impairment charges of $4.3 million and $15.0 million during the fiscal years ended December 31, 2023 and December 25, 2022.
We also sell gift cards that do not have an expiration date. Upon sale, gift cards are recorded as unearned revenue and included within gift card liability in the accompanying consolidated balance sheets. The revenue from gift cards is recognized when redeemed by customers.
We also sell gift cards that do not have an expiration date. Upon sale, gift cards are recorded as unearned revenue and included within gift card liability in the accompanying consolidated balance sheets. The 65 Tab le o f Contents revenue from gift cards is recognized when redeemed by customers.
A Monte Carlo simulation model requires the use of various assumptions, including the underlying stock price, volatility, expiration term, and the risk-free interest rate as of the valuation date, corresponding to the length of time remaining in the performance period, and expected dividend yield.
A Monte Carlo simulation model requires the use of various assumptions, including the underlying stock price, volatility, expiration term, and the risk-free interest rate as of the valuation date, corresponding to the length of time remaining in the performance period, 83 Tab le o f Contents and expected dividend yield.
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 December 25, 2022, we owned and operated 186 restaurants in 16 states and Washington, D.C.
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 December 31, 2023, we owned and operated 221 restaurants in 18 states and Washington, D.C.
Included within public company office systems is $0.2 million of expense related to the amortization of costs associated with the implementation of our cloud computing arrangement in relation to our new enterprise resource planning system (“ERP”), which was implemented during fiscal year 2022.
Included within public company office systems is $0.2 million of expense related to the amortization of costs associated with the implementation of our cloud computing arrangement in relation to our new ERP, which was implemented during fiscal year 2022.
In particular, Restaurant-Level Profit and Adjusted EBITDA should not be viewed as substitutes for, or superior to, loss from operations or net loss prepared in accordance with GAAP as a measure of profitability.
In particular, Restaurant-Level Profit and Adjusted EBITDA should not be 62 Tab le o f Contents viewed as substitutes for, or superior to, loss from operations or net loss prepared in accordance with GAAP as a measure of profitability.
Credit Facility On December 14, 2020, we entered into a First Amended and Restated Revolving Credit, Delayed Draw Term Loan and Security Agreement (as subsequently amended, as discussed below, the “2020 Credit Facility”) with EagleBank.
Credit Facility On December 14, 2020, we entered into a First Amended and Restated Revolving Credit, Delayed Draw Term Loan and Security Agreement (as subsequently amended, as discussed below, the “2020 Credit Facility”) with 79 Tab le o f Contents EagleBank.
Without these adjustments, Same-Store Sales Change would have been 29% and (32%) for fiscal years ended December 26, 2021 and December 27, 2020, respectively. 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.
Without these adjustments, Same-Store Sales Change would have been 29% for the fiscal year ended December 26, 2021. 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.
As a result of the change, we recorded a $19.8 million and $14.3 million 67 Table of Contents rec lassification from other occupancy and related expenses to other restaurant operating costs for fiscal years 2022 and 2021, respectively.
As a result of the change, we recorded a $19.8 million and $14.3 million reclassification from other occupancy and related expenses to other restaurant operating costs for fiscal years 2022 and 2021, respectively.
Fiscal year 2022 was a 52-week period that ended December 25, 2022, fiscal year 2021 was a 52-week period that ended December 26, 2021, and fiscal year 2020 was a 52-week period that ended December 27, 2020. In a 52-week fiscal year, each fiscal quarter includes 13 weeks of operations.
Fiscal year 2023 was a 53-week period that ended December 31, 2023, fiscal year 2022 was a 52-week period that ended December 25, 2022, and fiscal year 2021 was a 52-week period that ended December 26, 2021. In a 52-week fiscal year, each fiscal quarter includes 13 weeks of operations.
Restructuring charges Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Restructuring charges $ 14,442 $ — N/A As a percentage of total revenue 3 % — % 3 % During fiscal year 2022, we implemented the Plan to manage operating expenses at our sweetgreen Support Center, and incurred total pre-tax restructuring and related charges of approximately $14.4 million.
Restructuring charges Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Restructuring charges $ 7,437 $ 14,442 (49 %) As a percentage of total revenue 1 % 3 % (2 %) During fiscal year 2022, we implemented the Plan to manage operating expenses at our Sweetgreen Support Center and incurred total pre-tax restructuring and related charges of approximately $14.4 million.
The amount of impairment charges related to the vacated sweetgreen Support Center’s property and equipment and operating lease assets was $6.8 million and $5.8 million, respectively, and was recorded in restructuring charges within the consolidated statement of operations.
During the fiscal year ended December 25, 2022, the amount of impairment charges related to the vacated Sweetgreen Support Center’s property and equipment and operating lease assets was $6.8 million and $5.8 million, respectively, and was recorded in restructuring charges within the consolidated statement of operations.
We made the policy election to combine lease and non-lease components, and we also consider fixed common area maintenance (“CAM”) part of our fixed future lease payments. Fixed CAM is also included in our operating lease liability.
Operating lease liabilities represent the present value of lease payments not yet paid. We made the policy election to combine lease and non-lease components, and we also consider fixed common area maintenance (“CAM”) part of our fixed future lease payments. Fixed CAM is also included in our operating lease liability.
Throughout our history, our customers have demonstrated a willingness to pay a premium for a craveable, convenient, and healthier alternative to traditional fast-food and fast-casual offerings.
Our customers have in the past demonstrated a willingness to pay a premium for a craveable, convenient, and healthier alternative to traditional fast-food and fast-casual offerings.
Additionally, in November 2021, we completed our IPO, from which we received net proceeds of $384.7 million from sales of our shares of Class A common stock, after deducting underwriting discounts and commissions and offering expenses. As of December 25, 2022 and December 26, 2021, we had $331.6 million and $472.0 million in cash and cash equivalents, respectively.
Additionally, in November 2021, we completed our IPO, from which we received net proceeds of $384.7 million from sales of our shares of Class A common stock, after deducting underwriting discounts and commissions and offering expenses. As of December 31, 2023 and December 25, 2022, we ha d $257.2 million and $331.6 million in cash and cash equivalents, respectively.
Macroeconomic Conditions, Inflation, the Impact of the COVID-19 Pandemic and Supply Chain Constraints Consumer spending on food outside the home fluctuates with macroeconomic conditions. Consumers tend to allocate higher spending to food outside the home when macroeconomic conditions are stronger, and rationalize spending on food outside the home during weaker economies.
Macroeconomic Conditions, Inflation, and Supply Chain Constraints Consumer spending on food outside the home fluctuates with macroeconomic conditions. Consumers tend to allocate higher spending to food outside the home when macroeconomic conditions are stronger, and reduce spending on food outside the home during weaker economies.
Due to the fact that our Native Delivery, Outpost, and Marketplace Channels require the payment of third-party fees in order to fulfill deliveries, sales through these channels have historically negatively impacted our margins.
There have been historical fluctuations in the mix of sales between our various channels. Due to the fact that our Native Delivery, Outpost and Catering , and Marketplace Channels require the payment of third-party fees in order to fulfill deliveries, sales through these channels have historically negatively impacted our margins.
Had we arrived at different assumptions of underlying stock price or volatility our stock-based compensation expense and results of operations may be materially different. During fiscal year 2022, we recorded $78.7 million of stock-based compensation expense. During fiscal year 2021, we recorded $28.9 million of stock based compensation expense.
Had we arrived at different assumptions of underlying stock price or volatility our stock-based compensation expense and results of operations may be materially different. During fiscal year 2023, we recor ded $49.5 million of stock-based compensation expense. During fiscal year 2022, we recorded $78.7 million of stock based compensation expense.
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; provided, that for any restaurant that has had a temporary closure (which historically has been defined as a closure of at least five days during which the restaurant would have otherwise been open) during any 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.
No restaurants were excluded from the Comparable Restaurant Base as of the end of fiscal year 2021. 61 Tab le o f Contents 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 the 53rd week in any 53-week fiscal year; provided, that for any restaurant that has had a temporary closure (which historically has been defined as a closure of at least five days during which the restaurant would have otherwise been open) during any 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.
Adjusted EBITDA and Adjusted EBITDA Margin We define Adjusted EBITDA as net loss adjusted to exclude interest income, interest expense, provision for income taxes, depreciation and amortization, stock-based compensation expense, loss on disposal of property and equipment, Spyce acquisition costs, amortization of cloud-based software implementation costs, other expense, and in certain periods, impairment and closure costs, and restructuring charges.
Adjusted EBITDA and Adjusted EBITDA Margin We define Adjusted EBITDA as net loss adjusted to exclude income tax expense, interest income, interest expense, depreciation and amortization, stock-based compensation expense, loss on disposal of property and equipment, other (income) expense, Spyce acquisition costs, ERP implementation and related costs, and, in certain periods, impairment and closure costs, restructuring charges and legal settlements.
We excluded two restaurants from our Comparable Restaurant Base to reflect the temporary closure of such restaurants in fiscal year 2022. Such exclusions did not result in a material change to AUV.
No restaurants were excluded from the Comparable Restaurant Base as of the end of fiscal year 2023. W e excluded two restaurants from our Comparable Restaurant Base to reflect the temporary closure of such restaurants in fiscal year 2022. Such exclusions did not result in a material change to AUV.
In fiscal years 2022, 2021, and 2020, we h ad 36, 31, and 15 Net N ew Restaurant Openings, respectively, bringing our total count as of December 25, 2022 to 186 restaurants in 16 states and Washington, D.C.
In fiscal years 2023, 2022, and 2021, we h ad 35, 36, and 31 Net N ew Restaurant Openings, respectively, bringing our total count as of December 31, 2023 to 221 restaurants in 18 states and Washington, D.C.
Pre-Opening Costs Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Pre-opening costs $ 11,523 $ 9,193 25 % As a percentage of total revenue 2 % 3 % (1 %) The increase in pre-opening costs for fiscal year 2022 was primarily due to the 36 Net New Restaurant Openings during fiscal year 2022, as compared to 31 Net New Restaurant Openings during fiscal year 2021, as well as the timing of such openings. 69 Table of Contents As a percentage of revenue, pre-opening costs decreased as a percentage of total revenue in fiscal year 2022 compared to fiscal year 2021, due to comparatively higher revenue in fiscal year 2022, partially offset by the increases in costs noted above.
As a percentage of revenue, depreciation and amortization for fiscal year 2022 was flat compared to fiscal year 2021, primarily due to comparatively higher revenue in fiscal year 2022, offset by the increases noted above. 76 Tab le o f Contents Pre-Opening Costs Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Pre-opening costs $ 11,523 $ 9,193 25 % As a percentage of total revenue 2 % 3 % (1 %) The increase in pre-opening costs for fiscal year 2022 was primarily due to the 36 Net New Restaurant Openings during fiscal year 2022, as compared to 31 Net New Restaurant Openings during fiscal year 2021.
Adjusted EBITDA Margin is Adjusted EBITDA as a percentage of revenue. 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 our Total Digital Channels. Our Owned Digital Revenue Percentage is the percentage of our revenue attributed to purchases made through our Owned Digital Channels.
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 our Total Digital Channels. Our Owned Digital Revenue Percentage is the percentage of our revenue attributed to purchases made through our Owned Digital Channels.
These factors resulted in slower sales growth than anticipated during fiscal year 2022. Sales Channel Mix Our revenue is derived from sales of food and beverage to customers through our five sales channels: In-Store Channel, Pick-Up Channel, Native Delivery Channel, Marketplace Channel, and Outpost Channel. There have been historical fluctuations in the mix of sales between our various channels.
These factors resulted in slower sales growth than anticipated during fiscal year 2023. Sales Channel Mix Our revenue is derived from sales of food and beverage to customers through our five sales channels: In-Store Channel, Pick-Up Channel, Native Delivery Channel, Marketplace Channel, and Outpost and Catering Channel.
Depreciation and Amortization Depreciation and amortization include the depreciation of fixed assets, including leasehold improvements and equipment, and the amortization of external costs and certain internal costs directly associated with developing computer software applications for internal use.
Depreciation and Amortization Depreciation and amortization include the depreciation of fixed assets, including leasehold improvements and equipment, and the amortization of external costs, certain internal costs directly associated with developing computer software applications for internal use, and developed technology acquired as part of our Spyce acquisition.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” and in other parts of 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 set forth in the sections titled “Risk Factors” and “Special Note Regarding Forward-Looking Statements” and in other parts of this report.
Without these adjustments, AUV would have been $2.0 million as of December 27, 2020. (2) Our results for the fiscal year ended December 25, 2022, have been adjusted to reflect the temporary closures of 6 restaurants. Such adjustments did not have a material impact on our Same-Store Sales Change.
Such adjustments did not have a material impact on our Same-Store Sales Change for 2023. Our results for the fiscal year ended December 25, 2022, have been adjusted to reflect the temporary closures of 6 restaurants. Such adjustments did not have a material impact on our Same-Store Sales Change for 2022.
These increases were partially offset by the $1 .5 million negative impact from temporary restaurant closures, increased discounts and relocations of restaurants in fiscal year 2022. 66 Table of Contents Restaurant Operating Costs Food, Beverage, and Packaging Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Food, beverage, and packaging $ 130,136 $ 93,699 39 % As a percentage of total revenue 28 % 28 % — % The increase in food, beverage, and packaging costs for fiscal year 2022 was primarily due to a $33.3 million increase in food and beverage costs, a $2.9 million increase in packaging costs and a $0.3 million increase in freight and gas surcharges associated with deliveries from our distribution partners.
Restaurant Operating Costs Food, Beverage, and Packaging Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Food, beverage, and packaging $ 130,136 $ 93,699 39 % As a percentage of total revenue 28 % 28 % — % The increase in food, beverage, and packaging costs for fiscal year 2022 was primarily due to a $33.3 million increase in food and beverage costs, a $2.9 million increase in packaging costs and a $0.3 million increase in freight and gas surcharges associated with deliveries from our distribution partners.
Our results for the fiscal years ended December 26, 2021 and December 27, 2020 have been adjusted to reflect the temporary closures of (i) 19 restaurants in fiscal year 2020 due to the COVID-19 pandemic, (ii) 56 restaurants in fiscal year 2020 due to civil disturbances that occurred during one week in fiscal year 2020 and (iii) 64 restaurants in fiscal year 2021 due to the civil disturbances that occurred in fiscal year 2020 referred to in clause (ii) above (which includes 8 additional restaurants that had not been operating long enough to be part of the Comparable Restaurant Base for the fiscal year 2020 calculations).
Our results for the fiscal year ended December 26, 2021 have been adjusted to reflect the temporary closures of 64 restaurants in fiscal year 2021 due to civil disturbances that occurred in fiscal year 2020 (which includes 8 additional restaurants that had not been operating long enough to be part of the Comparable Restaurant Base for the fiscal year 2020 calculations).
The expected term for options granted to nonemployees is equal to the remaining contractual life of the options.
The 82 Tab le o f Contents expected term for options granted to nonemployees is equal to the remaining contractual life of the options.
Such adjustment did not result in a material change to AUV. Our results for the fiscal year ended December 27, 2020 have been adjusted to reflect the material, temporary closures of 19 restaurants due to the COVID-19 pandemic by excluding such restaurants from the Comparable Restaurant Base.
Our results for the fiscal year ended December 25, 2022 have been adjusted to reflect the temporary closures of two restaurants which were excluded from the Comparable Restaurant Base. Such adjustment did not result in a material change to AUV.
As a percentage of revenue, the decrease in labor and related expenses for fiscal year 2022 was primarily due to the impact of menu price increases, described above, greater sales leverage associated with the recovery from the COVID-19 pandemic and simplification of our operating model, partially offset by an increase in prevailing wages as a result of continued wage rate inflation in the industry.
The increase was also due to an increase in prevailing wage rates in many of our markets as a result of continued wage rate inflation in the industry and an increase in bonus expense, including a non-recurring retention bonus paid during the first quarter of fiscal year 2022, as we focus on employee retention. 74 Tab le o f Contents As a percentage of revenue, the decrease in labor and related expenses for fiscal year 2022 was primarily due to the impact of menu price increases, described above, greater sales leverage associated with the recovery from the COVID-19 pandemic and simplification of our operating model, partially offset by an increase in prevailing wages as a result of continued wage rate inflation in the industry.
After the recent amendment on December 13, 2022, under the 2020 Credit Facility, interest accrues on the outstanding loan balance and is payable monthly at a rate of the adjusted one-month term SOFR, plus 2.90%, with a floor on the interest rate at 3.75%.
Under the 2020 Credit Facility, interest accrues on the outstanding loan balance and is payable monthly at a rate of the adjusted one-month term Secured Overnight Financing Rate, plus 2.90%, with a floor on the interest rate at 3.75%. As of December 31, 2023 and December 25, 2022, we had no outstanding balance under the 2020 Credit Facility.
Fiscal years 2020 and 2021 have been adjusted to reflect the temporary closures of (i) 19 restaurants in fiscal year 2020 due to the COVID-19 pandemic, (ii) 56 restaurants in fiscal year 2020 due to civil disturbances that occurred during one week in fiscal year 2020 and (iii) 64 restaurants in fiscal year 2021 due to the civil disturbances that occurred in fiscal year 2020 referred to in clause (ii) above (which includes 8 additional restaurants that had not been operating long enough to be part of the Comparable Restaurant Base for the fiscal year 2020 calculations ) .
Fiscal year 2021 has been adjusted to reflect the temporary closures of 64 restaurants in fiscal year 2021 due to civil disturbances that occurred in fiscal year 2020 (which includes 8 additional restaurants that had not been operating long enough to be part of the Comparable Restaurant Base for the fiscal year 2020 calculations ) .
The following table sets forth a reconciliation of our net loss to Adjusted EBITDA, as well as the calculation of net loss margin and Adjusted EBITDA Margin for each of the periods indicated: 78 Table of Contents Fiscal Year Ended (dollar amounts in thousands December 25, 2022 December 26, 2021 December 27, 2020 Net loss $ (190,441) $ (153,175) $ (141,224) Non-GAAP adjustments: Income tax expense 1,345 147 — Interest income (5,143) (450) (1,018) Interest expense 83 87 404 Depreciation and amortization 46,471 35,549 26,851 Stock-based compensation (1) 78,736 28,897 4,912 Loss on disposal of property and equipment (2) 278 107 891 Impairment and closure costs (3) 2,542 4,915 1,456 Other expense (4) 819 18,992 245 Spyce acquisition costs (5) 646 1,832 — Restructuring charges (6) 14,442 — — ERP implementation and related costs (7) 288 — — Adjusted EBITDA $ (49,934) $ (63,099) $ (107,483) Net loss margin (41) % (45) % (64) % Adjusted EBITDA Margin (11) % (19) % (49) % (1) Includes non-cash, stock-based compensation.
The following table sets forth a reconciliation of our net loss to Adjusted EBITDA, as well as the calculation of net loss margin and Adjusted EBITDA Margin for each of the periods indicated: 64 Tab le o f Contents Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 (1) December 25, 2022 (1) December 26, 2021 (1) Net loss $ (113,384) $ (190,441) $ (153,175) Non-GAAP adjustments: Income tax expense 379 1,345 147 Interest income (12,942) (5,143) (450) Interest expense 128 83 87 Depreciation and amortization 59,491 46,471 35,549 Stock-based compensation (2) 49,532 78,736 28,897 Loss on disposal of property and equipment (3) 687 278 107 Impairment and closure costs (4) 624 2,542 4,915 Other expense (5) 3,475 819 18,992 Spyce acquisition costs (6) 472 646 1,832 Restructuring charges (7) 7,437 14,442 — ERP implementation and related costs (8) 881 288 — Legal settlements (9) 425 $ — $ — Adjusted EBITDA $ (2,795) $ (49,934) $ (63,099) Net loss margin (19)% (41)% (45)% Adjusted EBITDA Margin —% (11)% (19)% (1) We operate on a 52/53 week fiscal year end that ends on the last Sunday of the calendar year.

… 143 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+1 added−3 removed12 unchanged
Biggest changeWe continue to assess the current environment, work with our suppliers and distributors and create certain contingency plans to mitigate any negative impact. Changing Interest Rates We are exposed to interest rate risk through fluctuations of interest rates on our investments through our cash in our money market accounts.
Biggest changeAdditionally, since the beginning of 2023, we have been experiencing supply chain disruptions for our bowls and plates which has resulted in use of alternative packaging solutions. We continue to assess the current environment, work with our suppliers and distributors and create certain contingency plans to mitigate any negative impact.
For example, in the fourth quarter of fiscal year 2022, as a result of extreme weather conditions, we experienced supply chain disruptions for key ingredients, such as romaine, arugula and tomatoes, which resulted in higher prices for those products or result in temporarily discontinuing those products in certain geographic markets.
For example, in the fourth quarter of fiscal year 2022, as a result of extreme weather conditions, we experienced supply chain disruptions for key ingredients, such as romaine, arugula and 86 Tab le o f Contents tomatoes, which resulted in higher prices for those products or result in temporarily discontinuing those products in certain geographic markets.
In addition, there can be no assurance that we will generate positive Same Store Sales Change in an amount sufficient to offset inflationary or other cost pressures. Macroeconomic Risks and the Impact of the COVID-19 Pandemic Current macroeconomic conditions, such as inflation and increasing interest rates, increase the risk of an economic downturn.
In addition, there can be no assurance that we will generate positive Same Store Sales Change in an amount sufficient to offset inflationary or other cost pressures. Macroeconomic Risks Current macroeconomic conditions, such as inflation and higher interest rates, increase the risk of an economic downturn. An economic downturn could increase unemployment and lower consumer confidence.
As of December 25, 2022 and December 26, 2021, we had $331.6 million and $472.0 million of cash and cash equivalents consisting of bank accounts and money market funds and $0.1 million and $0.3 million of restricted cash relating to certificates of deposit that are collateral for letters of credit to our lease agreements and cash from the Spyce acquisition.
As of December 31, 2023 and December 25, 2022, we ha d $257.2 million and $331.6 million of cash and cash equivalents, respectively, consisting of bank accounts and money market funds, and $0.1 million and $0.1 million, respectively, o f restricted cash relating to certificates of deposit that are collateral for letters of credit to our lease agreements and cash from the Spyce acquisition.
A hypothetical 10% change in interest rates would not have had a material impact on our results of operations for fiscal years 2022 and 2021. 87 Table of Contents Effects of Inflation We have a substantial number of hourly employees who are paid wage rates at or based on the applicable federal, state, or local minimum wage, and increases in the minimum wage, and other upward pressure on wage rates, including inflation will increase our labor costs.
Effects of Inflation We have a substantial number of hourly employees who are paid wage rates at or based on the applicable federal, state, or local minimum wage, and increases in the minimum wage, and other upward pressure on wage rates, including inflation will increase our labor costs.
Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates.
Due to the short-term nature of our investments, we have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in interest rates. A hypothetical 10% change in interest rates would not have had a material impact on our results of operations for fiscal years 2023 and 2022.
Changes in interest rates affect the interest income we earn, and therefore impact our cash flows and results of operations.
Changing Interest Rates We are exposed to interest rate risk through fluctuations of interest rates on our investments through our cash in our money market accounts. Changes in interest rates affect the interest income we earn, and therefore impact our cash flows and results of operations.
Removed
These macroeconomic conditions also negatively impact consumer discretionary spend and coupled with slower than expected return to office during and following the COVID-19 pandemic, including as a result of many workplaces adopting remote or hybrid models, led to our revenue growth slowing in the latter half of fiscal year 2022 (and much of such revenue regrowth was driven by a price increase taken in the first quarter of fiscal year 2022).
Added
Macroeconomic conditions also negatively impact consumer discretionary spending and could negatively impact our Restaurant Level Profit. 87 Tab le o f Contents
Removed
Additionally, as a result of continued inflation, we have seen an increase in wage rates and costs of goods sold during fiscal year 2022, which has had a negative impact on our Restaurant Level Profit.
Removed
In order to mitigate these risks, we have implemented and may in the future have to implement additional cost cutting measures, as described in the section titled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting our Business”. 88 Table of Contents

Other SG 10-K year-over-year comparisons