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What changed in Sweetgreen, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Sweetgreen, Inc.'s 2023 and 2024 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 2024 report.

+473 added−564 removedSource: 10-K (2025-02-27) vs 10-K (2024-02-29)

Top changes in Sweetgreen, Inc.'s 2024 10-K

473 paragraphs added · 564 removed · 400 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe 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.
Biggest changeAdditionally, in connection with our Infinite Kitchen technology, we have three issued patents and four 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 with respect to the Infinite Kitchen technology to the extent we believe it would be beneficial and cost-effective.
Not only are our owned digital users our most frequent customers, but the average order value (which is the dollar value of an order exclusive of taxes and any fees paid by the customer) for orders placed on our Owned Digital Channels is higher than Non-Digital orders placed through our In-Store Channel.
Not only are users of our Owned Digital Channels our most frequent customers, but the average order value (which is the dollar value of an order exclusive of taxes and any fees paid by the customer) for orders placed on our Owned Digital Channels is higher than non-digital orders placed through our In-Store Channel.
We also use our website as a tool to disclose important information about the company and comply with our disclosure obligations under Regulation Fair Disclosure. Our corporate governance guidelines, code of business conduct and ethics and Board committee charters are also posted on the Investor Relations section of Sweetgreen website.
We also use our website as a tool to disclose important information about the company and comply with our disclosure obligations under Regulation Fair Disclosure. Our corporate governance guidelines, code of business conduct and ethics and Board committee charters are also posted on the Investor Relations section of the Sweetgreen website.
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).
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.
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 Argentina, Australia, Canada, China, the European Union, Hong Kong, Japan, Mexico, South Korea, and the United Kingdom.
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.
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, patents, and trade secrets.
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.
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 in 2023, were included as part of our Owned Digital Channels. Marketplace.
Additionally, for every meal purchase on opening day, we donate a meal to a local nonprofit impact partner to distribute to someone in need.
For every meal purchase on opening day, we donate a meal to a local nonprofit impact partner to distribute to someone in need.
At Sweetgreen, we only serve Real Food, which for us means: • Plant-forward • Celebrates seasonality • Made fresh in our restaurants • Prioritizes organic, regenerative, and local sourcing • Meets strict and humane animal welfare and seafood standards • Free of highly-processed preservatives, artificial flavors, and refined or hidden sugars • Mindful of the carbon impact of each ingredient to protect future generations This commitment to our Food Ethos keeps our food delicious, nutrient dense and sustainable.
At Sweetgreen, we focus on Real Food, which for us means: • Plant-forward • Celebrates seasonality • Made fresh in our restaurants • Prioritizes organic, regenerative, and local sourcing • Meets strict and humane animal welfare and seafood standards • Free of highly-processed preservatives, artificial flavors, and refined or hidden sugars • Mindful of the carbon impact of each ingredient to protect future generations This commitment to our Food Ethos keeps our food delicious, nutrient dense, and sustainable.
We may also be subject to lawsuits or investigations from our current or former employees, the U.S. Equal Employment Opportunity Commission, the Department of Labor, or others alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar matters, and we have been a party to a number of such matters in the past.
We may also be subject to lawsuits or investigations from our current or former employees, the U.S. Equal Employment Opportunity Commission, the Department of Labor, or others alleging violations of federal and state laws regarding workplace and employment matters, discrimination and similar matters, and we are and have been a party to a number of such matters.
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.
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 8 Table of Contents customization features, access to our seasonal menu items and ingredients, and access to exclusive promotions via Sweetgreen Rewards and Challenges.
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.
We believe our seasonal menu rotation, which celebrates the strength of our regional supply 7 Table of 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.
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”).
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 12 Table of Contents Privacy Act of 2018, as amended by the California Privacy Rights Act of 2020 (“CPRA”), (collectively, “CCPA”), consumer health data privacy laws such as Washington state’s My Health My Data Act, 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”) and 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”) (collectively, “GDPR”), and the Payment Card Industry Data Security Standard (“PCI DSS”).
ITEM 1. BUSINESS Our Mission To Build Healthier Communities by Connecting People to Real Food Overview Sweetgreen, Inc., a Delaware corporation (together with its subsidiaries, “Sweetgreen”, “we”, “us” or the “Company”) is a mission-driven, next generation restaurant and lifestyle brand that serves healthy food at scale.
ITEM 1. BUSINESS Our Mission To Build Healthier Communities by Connecting People to Real Food Overview Sweetgreen, Inc., a Delaware corporation (together with its subsidiaries, “Sweetgreen,” “we,”, “us,” or the “Company”) is a mission-driven, next generation restaurant and lifestyle brand that serves healthy food at scale.
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.
In recent years, 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 although we have seen an increased and prolonged negative impact on our revenue around national holidays.
Proprietary Technology Powers our Operations at Scale In addition to our customer-facing digital platform, we have also invested in technology to support our back of house operations and simplify the work of our team members.
Proprietary Technology Powers our Operations at Scale In addition to our customer-facing digital platform, we have also invested in technology to support our back of house operations, simplify the work of our team members, and enhance how we hire, train, and schedule team members.
Our national supply chain is organized into regional distribution networks that align retail proximity with cultivation, while also making it easy to leverage existing relationships as we enter new markets in that region. Quality Control and Food Safety At Sweetgreen, we refer to food safety as our “license to operate.” For Sweetgreen, food safety starts with our food supply.
Our national supply chain is organized into regional distribution networks. We seek to align retail proximity with cultivation, and to leverage existing relationships as we enter new markets in that region. Quality Control and Food Safety At Sweetgreen, we refer to food safety as our “license to operate,” and that starts with our food supply.
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.
We pay competitive wages and believe we offer many 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, 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.
In 2024, our restaurant teams collectively volunteered over 6,500 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.
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.
At Sweetgreen, we believe the best leaders come from within, so we deve lop 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 2024, 58% of open restaurant leadership roles were filled with promotions of existing employees.
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.
Our Core Menu • Our core menu features 13 curated, signature items which are offered year-round in all of our locations, including our new steak plate. • 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 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.
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.
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.
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 bold vision is to be as ubiquitous as traditional fast food, but with the transparency and quality that consumers increasingly expect. As of December 29, 2024 , we owned and operated 246 restaurants in 22 states and Washington, D.C.
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 Real Estate We op ened 25 Net New Restaurants in fiscal year 2024. As we continue to expand, we are confident that our compelling restaurant-level economics will continue to work across geographies and market types.
In the past, we have settled various lawsuits related to our alleged ADA non-compliance, which resulted in accommodations to our website, smartphone applications and physical restaurant locations. Seasonality Our revenue fluctuates as a result of seasonal factors and weather conditions.
We are currently a party to lawsuits in which it is alleged that we were not ADA compliant, and in the past, we have settled various lawsuits related to our alleged ADA non-compliance, which resulted in accommodations to our website, smartphone applications, and physical restaurant locations. Seasonality Our revenue fluctuates as a result of seasonal factors and weather conditions.
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
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. 13 Table of Contents
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.
In addition, a core part of our menu, salads, has proven to be more popular among consumers in the warmer months.
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.
Our Marketing Strategy Our brand has been designed to inspire consumers to live healthier. 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.
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.
We have obtained a registration of the Sweetgreen.com domain name as well. 11 Table of Contents 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 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.
In addition, the CPRA 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 the California Privacy Protection Agency to implement and enforce the CCPA.
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.
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. Corporate Information We were founded in November 2006 and incorporated in October 2009 in Delaware.
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.
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. In 2021, we acquired a kitchen automation technology company, Spyce Food Co.
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.
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.
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.
For fiscal year 2024 , 30% of our revenue was from our Owned Digital Channels, as compared to 36% from our Owned Digital Channels in fiscal year 2023. When including orders placed on the Marketplace Channel, 56% of our fiscal year 2024 revenue was derived from digital channels, as compared to 59% of our revenue in fiscal year 2023.
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.
As of the end of fiscal year 2024, we had 823 live Outpost locations. In addition, our Outpost and Catering Channel includes our catering offerings, which refer to sales to event and group customers made through our catering website for pickup at one of our restaurants or delivery to a customer specified address.
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.
Outpost and Catering. Our Outpost and Catering Channel enables office workers or building residents to get their custom Sweetgreen order delive red directly to an outpost station at their location during a dedicated time window each day, typically with lower customer fees than our other delivery channels.
The development and operation of restaurants depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic, and other regulations and requirements.
The development and operation of restaurants depends to a significant extent on the selection and acquisition of suitable sites, which are subject to zoning, land use, environmental, traffic, and other regulations and requirements. Our restaurants are also subject to state and local licensing and regulation by health, sanitation, food and occupational safety, and other agencies.
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.
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.
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.
In each of 2023 and 2024, Built In included Sweetgreen in their “100 Best places to Work in Los Angeles,” and in 2024 Forbes recognized Sweetgreen as one of “America’s Best Employers for Women.” Our Restaurant Team Structure and the Pathway to Opportunity We believe we have designed a transparent and structured career learning path.
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.
We continue to learn from these deployments and are incorporating our findings into future deployments. In 2023, our Infinite Kitchen technology 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.
We build direct relationships with our farmers and growers and we are proud to showcase them on the walls of every restaurant and spotlight them on our digital platform.
Consistent with our Food Ethos, we seek to prioritize ingredients that are certified organic, regenerative, or locally sourced, and meet high animal welfare and seafood standards. We build direct relationships with farmers and growers and we are proud to showcase them on the walls of every restaurant and spotlight them on our digital platform.
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.
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.
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.
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”.
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.
Bulk orders of salads, warm bowls, sides, and drinks can be ordered for delivery together and are prepared at select locations. In-Store. 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.
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 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. 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.
Our Supply Chain We have built a differentiated, end-to-end supply chain that begins with more than 200 domestic food partners, such as farmers and bakers, and culminates in delicious, high-quality food for our customers. Consistent with our Food Ethos, we prioritize ingredients that are certified organic, regenerative, or locally sourced, and meet strict and humane animal welfare and seafood standards.
Our Supply Chain We have built a differentiated, end-to-end supply chain that culminates in delicious, high-quality food for our customers. We currently have more than 140 active domestic food partners, such as farmer, bakers, and distributors.
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.
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.
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.
In 2024, we donated over 68,000 meals through our new restaurant opening program. 10 Table of Contents • 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.
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.
We continue to test new restaurant design concepts to bring Sweetgreen into a wider variety of trade areas and markets, including but not limited to a mobile pickup lane for digital orders. We have thoughtfully designed our restaurants to both reflect the culture and feel of our local communities and to support our multiple digital channels.
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.
(“Spyce”), and have further developed and deployed Spyce’s kitchen automation technology, which we refer to as the Infinite Kitchen. We incorporate our Infinite Kitchen technology into new and existing restaurants based, in large part, upon our evaluation of the potential economic and other benefits for those restaurants.
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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.
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We deployed units of the Infinite Kitchen in two of our restaurants during fiscal year 2023 and ten of our restaurants during fiscal year 2024. Of the 10 restaurants that received the Infinite Kitchen technology in fiscal year 2024, three were retrofits and seven were new restaurant openings.
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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.
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In each of 2023 and 2024, we were named one of Fast Company’s 9 Table of Contents Brands That Matter, which recognized companies and nonprofits that have undeniably impacted business and culture.
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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.
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Employees As of December 29, 2024, we had a total of 6,407 employees, 334 of whom worked at our Sweetgreen Support Center and 6,073 of whom worked in our restaurants.
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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.
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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.
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To 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.
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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.
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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.
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Our restaurants are also subject to state and local licensing and regulation by health, sanitation, food and occupational safety, and other agencies, which regulation has increased since the COVID-19 pandemic.
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As one example, the EU GDPR applies to any company established in the EEA and to companies established outside the EEA that process personal information in connection with the offering of goods or services to data subjects in the EEA or the monitoring of the behavior of data subjects in the EEA.
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These obligations may include limiting personal information processing to only what is necessary for specified, explicit, and legitimate purposes; requiring a legal basis for personal information processing; requiring the appointment of a data protection officer in certain circumstances; increasing transparency obligations to data subjects; requiring data protection impact assessments in certain circumstances; limiting the collection and retention of personal information; increasing rights for data subjects; formalizing a heightened and codified standard of data subject consents; requiring the implementation and maintenance of technical and organizational safeguards for personal information; mandating notice of certain personal information breaches to the relevant supervisory authority or authorities and affected individuals; and mandating the appointment of representatives in the UK and/or the EU in certain circumstances.
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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

213 edited+43 added−59 removed361 unchanged
Biggest changeTo date, we have been unsuccessful in subleasing the vacated portion of the Sweetgreen Support Center, and it is unknown if we will be successful in doing so, and if so, on what commercial terms. 31 Tab le o f Contents In addition, as each of our leases expires, we may fail to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to pay increased occupancy costs or to close restaurants in desirable locations.
Biggest changeIn addition, as each of our leases expires, we may fail to negotiate renewals, either on commercially acceptable terms or at all, which could cause us to pay increased occupancy costs or to close restaurants in desirable locations. These potential increased occupancy costs and closed restaurants could have an adverse effect on our business, financial condition, and results of operations.
Delays or failures in opening new restaurants, or in launching new restaurant formats (including walk-up, drive-in, or drive-thru formats or store formats incorporating automation technology), could cost significant company resources (including lost sales and additional labor and marketing costs) and have an adverse effect on our growth strategy and our business, financial condition, and results of operations.
Delays or failures in opening new restaurants, or in launching new restaurant formats (including walk-up or drive-thru formats or store formats incorporating automation technology), could cost significant company resources (including lost sales and additional labor and marketing costs) and have an adverse effect on our growth strategy and our business, financial condition, and results of operations.
Any such increases may cause the manufacture and deployment of additional Infinite Kitchen units to become cost-prohibitive for our business.
Any such cost increases may cause the manufacture and deployment of additional Infinite Kitchen units to become cost-prohibitive for our business.
Any reduction in workforce or restructuring may yield unintended consequences and costs, such as attrition beyond the intended reduction in workforce, delay in development of critical technology or business optimization programs due to gaps in knowledge transfer and new employee ramp up time, the distraction of employees, and reduced employee morale, and could adversely affect our reputation as an employer, which could make it more difficult for us to hire new employees in the future and increase the risk that we may not achieve the anticipated benefits from the reduction in workforce.
Any reduction in our workforce or restructuring may yield unintended consequences and costs, such as attrition beyond the intended reduction, delay in development of critical technology or business optimization programs due to gaps in knowledge transfer and new employee ramp up time, the distraction of employees, and reduced employee morale, and could adversely affect our reputation as an employer, which could make it more difficult for us to hire new employees in the future and increase the risk that we may not achieve the anticipated benefits from the reduction in workforce.
If any of our distributors or suppliers performs inadequately or is unable to grow and scale with our business, or our distribution or supply relationships are disrupted for any reason, there could be an adverse effect on our business, financial condition, and results of operations.
If any of our distributors or suppliers performs inadequately or is unable to grow and scale with our business, or if our distribution or supply relationships are disrupted for any reason, there could be an adverse effect on our business, financial condition, and results of operations.
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.
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 Delivery Channel application, which is likely to lead to customer dissatisfaction and higher refunds or credits.
The profitability of our restaurants is also adversely affected by increases in the price of utilities, such as natural gas, electricity and water, whether as a result of inflation, shortages or interruptions in supply, or otherwise.
The profitability of our restaurants is also adversely affected by increases in the price of utilities, such as natural gas, electricity, and water, whether as a result of inflation, shortages, interruptions in supply, or otherwise.
There has been increasing public focus by investors, environmental activists, the media, and governmental and nongovernmental organizations on a variety of environmental, social, and other sustainability matters. With respect to the restaurant industry, concerns have been expressed regarding energy management, water management, food and packaging waste management, food safety, nutritional content, labor practices, and supply chain and management food sourcing.
There has been increasing public focus by investors, environmental activists, the media, and governmental and nongovernmental organizations on a variety of environmental, social, and other sustainability matters. With respect to the restaurant industry, concerns have been expressed regarding energy management, water management, food and packaging waste management, food safety, nutritional content, labor practices, and supply chain and food sourcing management.
We have been and will likely continue to be party to litigation that could distract management, increase our expenses, or subject us to monetary damages or other remedies.
We have been and will likely continue to be party to litigation that could distract management, increase our expenses, and subject us to monetary damages or other remedies.
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.
Additionally, there is no assurance that future 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.
We collect, use, receive, store, process, generate, transfer, make accessible, protect, secure, dispose of, transmit, share, and disclose personal information and other sensitive information about customers, personnel, business contacts, and others; proprietary and confidential business data; trade secrets; intellectual property; sensitive third-party data and financial information in the course of operating our business.
We collect, use, receive, store, process, generate, transfer, make accessible, protect, secure, dispose of, transmit, share, and disclose personal information and other sensitive information about customers, personnel, business contacts, and others; proprietary and confidential business data; trade secrets; intellectual property; and sensitive third-party data and financial information in the course of operating our business.
Certain states also impose stricter requirements for processing certain personal data, including sensitive information, such as conducting data privacy impact assessments. These state laws allow for statutory fines for noncompliance.
Certain states also impose stricter requirements for processing certain personal information, including sensitive information, such as conducting data privacy impact assessments. These state laws allow for statutory fines for noncompliance.
Negative trends in sales, including as a result of prolonged adverse changes in macroeconomic conditions, have in the past caused us and could cause us in the future to, among other things, further reduce our workforce, reduce the number and frequency, or location of new restaurant openings, close restaurants or delay remodeling our existing restaurants, or recognize further asset impairment charges.
Negative trends in sales, including as a result of prolonged adverse changes in macroeconomic conditions, have in the past caused us and could cause us in the future to, among other things, further reduce our workforce, reduce the number and frequency of new restaurant openings, close restaurants or delay remodeling our existing restaurants, or recognize further asset impairment charges.
In addition, several states and localities in which we operate and the federal government have, from time to time, enacted minimum wage increases, changes to eligibility for overtime pay, paid sick leave and mandatory vacation accruals, and similar requirements. These changes have increased our labor costs and may have a further negative impact on our labor costs in the future.
In addition, several states and localities in which we operate and the federal government have, from time to time, enacted minimum wage increases, changes to eligibility for overtime pay, paid leave, mandatory vacation accruals, and similar requirements. These changes have increased our labor costs and may have a further negative impact on our labor costs in the future.
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.
Many of our efforts to generate revenue, particularly our investment in our Native Delivery, Outpost and Catering, and Marketplace Channels are 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.
We may have to further modify our websites or other digital platforms (including any digital kiosks that we may implement in our restaurants) or our restaurants by adding access ramps or redesigning certain interior layouts or architectural fixtures to provide service to or make reasonable accommodations for disabled persons.
We may have to further modify our websites or other digital platforms (including any digital kiosks that we may implement in our restaurants) or our restaurants by adding access ramps or redesigning certain interior or exterior layouts or architectural fixtures to provide service to or make reasonable accommodations for disabled persons.
As applicable, such rights may include the right to access, correct, or delete certain personal data, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact our business and ability to provide our products and services.
As applicable, such rights may include the right to access, correct, or delete certain personal information, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making. The exercise of these rights may impact our business and ability to provide our products and services.
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.
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.
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal information privacy laws, consumer protection laws (e.g., Section 5 of the Federal Trade Commission Act), and other similar laws (e.g., wiretapping laws).
While our existing operations have been implemented in a manner we believe is in compliance with current prevailing laws, one or more taxing jurisdictions could seek to impose incremental or new taxes on us.
While our existing operations have been implemented in a manner we believe is in compliance with current prevailing tax laws, one or more taxing jurisdictions could seek to impose incremental or new taxes on us.
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 increased our pricing several times in the past few years (including in fiscal years 2024 and 2023) 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.
These changes have resulted in, and may continue to result in, laws and regulations requiring us to disclose the nutritional content of our food offerings, and they have resulted, and may continue to result in, laws and regulations affecting permissible ingredients and menu offerings.
These changes have resulted in, and may continue to result in, laws and regulations requiring us to disclose the nutritional and other content of our food offerings, and they have resulted, and may continue to result in, laws and regulations affecting permissible ingredients, food content, and menu offerings.
Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.
Some threat actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors, for geopolitical reasons and in conjunction with military conflicts and defense activities.
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, 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, disease outbreaks, 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).
We have a localized set of suppliers, and typically rely on a single regional distributor for each of our produce items and another single regional distributor for grocery products in each geographical market where we operate, which may make our supply chain inherently more difficult to manage than if we partnered with national distributors, which is the approach of many of our competitors.
We have a localized set of suppliers, and often rely on a single regional distributor for our produce items and another single regional distributor for grocery products in each geographical market where we operate, which may make our supply chain inherently more difficult to manage than if we partnered with national distributors, which is the approach of many of our competitors.
We cannot guarantee that our internal procedures and training will be fully effective in preventing all food safety issues at our restaurants, including any occurrences of foodborne illnesses such as salmonella, Cyclospora, E. coli, and hepatitis A. Moreover, our internal team may fail to report unsafe or unsanitary conditions in accordance with our internal procedures.
We cannot guarantee that our internal procedures and training will be fully effective in preventing all food safety issues at our restaurants, including any occurrences of foodborne illnesses as attributable to salmonella, Cyclospora, E. coli, and hepatitis A. Moreover, our internal team may fail to report unsafe or unsanitary conditions in accordance with our internal procedures.
Cybercrime and hacking techniques are constantly evolving, and we or third parties who we work with may be unable to anticipate attempted security incidents, react in a timely manner, or implement adequate preventative measures, particularly given increasing use of hacking techniques designed to circumvent controls, avoid detection, and remove or obfuscate forensic artifacts.
Cybercrime and hacking techniques are constantly evolving, and we or third parties with whom we work may be unable to anticipate attempted security incidents, react in a timely manner, or implement adequate preventative measures, particularly given increasing use of hacking techniques designed to circumvent controls, avoid detection, and remove or obfuscate forensic artifacts.
Our quarterly financial results may fluctuate significantly, including due to factors that are not in our control, and could fail to meet investors’ expectations for various reasons, including: • negative publicity about the safety of our food, employment-related issues, litigation, or other issues involving our restaurants; • the impact of macroeconomic or geopolitical conditions, including their impact on customer behavior and discretionary spending; • fluctuations in supply costs, including as a result of inflation, particularly for our most significant ingredients, and our inability to offset the higher cost with price increases without adversely impacting our sales; • labor availability and wages of our restaurant employees, including as a result of inflation and changes to minimum wage, and our inability to offset the higher cost of labor with price increases without adversely impacting our sales; • increases in marketing or promotional expenses; • the timing of new restaurant openings and existing restaurant renovations and related revenues and expenses (including any delays in openings or renovations caused by delays in the manufacture or deployment of Infinite Kitchen units), and the operating costs at newly opened restaurants; • the impact of inclement weather and natural disasters, such as winter storms, freezes, and droughts, which could decrease customer traffic and increase the costs of ingredients; • changes in the senior management team; • the announcement of any mergers & acquisitions or other strategic partnerships; • the amount and timing of stock-based compensation; 51 Tab le o f Contents • litigation, settlement costs and related legal expenses; • tax expenses, asset impairment charges, and non-operating costs; and • variations in general economic conditions, including the impact of declining interest rates on our interest income or the impact of inflation.
Our quarterly financial results may fluctuate significantly, including due to factors that are not in our control, and could fail to meet investors’ expectations for various reasons, including: • negative publicity about the safety of our food, employment-related issues, litigation, or other issues involving our restaurants; • the impact of macroeconomic or geopolitical conditions, including their impact on customer behavior and discretionary spending; • fluctuations in supply costs, including as a result of inflation, particularly for our most significant ingredients, and our inability to offset the higher cost with price increases without adversely impacting our sales; • labor availability and wages of our restaurant employees, including as a result of inflation and changes to minimum wage, and our inability to offset the higher cost of labor with price increases without adversely impacting our sales; • increases in marketing or promotional expenses; • the timing of new restaurant openings and existing restaurant renovations and related revenues and expenses (including any delays in openings or renovations caused by delays in the manufacture or deployment of Infinite Kitchen units), and the operating costs at newly opened restaurants; • the impact of inclement weather and natural disasters, such as winter storms, freezes, fires, and droughts, which could decrease customer traffic and increase the costs of ingredients; • changes in the senior management team; • the announcement of any mergers & acquisitions or other strategic partnerships; • the amount and timing of stock-based compensation; • litigation, settlement costs, and related legal expenses; • tax expenses, asset impairment charges, and non-operating costs; and • variations in general economic conditions, including the impact of declining interest rates on our interest income or the impact of inflation.
Because of the prominence of our brand, we believe that we are an attractive target for cyberattacks, which have increased recently in the industry.
Because of the prominence of our brand, we believe that we are an attractive target for cyberattacks, which have increased in the industry.
To the extent that we do not effectively address capacity constraints, respond adequately to service disruptions, upgrade our systems as needed or continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, financial condition, and results of operations would be harmed.
To the extent that we do not effectively address capacity constraints, respond adequately to service disruptions, upgrade our systems as needed, or continually develop our technology and network architecture to accommodate actual and anticipated changes in technology, our business, financial condition, and results of operations could be harmed.
Consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or “do not track” mechanisms as a result of industry regulatory or legal developments, the adoption by consumers of browser settings or “ad-blocking” software, and the development and deployment of new technologies could impact our ability to collect data or engage in marketing and advertising, which could have an adverse effect on our business, financial condition, or results of operations.
Consumer resistance to the collection and sharing of the data used to deliver targeted advertising, increased visibility of consent or “do not track” mechanisms as a result of industry regulatory or legal developments, the adoption by consumers of browser settings or “ad-blocking” software, and the development and deployment of new technologies could impact our ability to collect data or engage in 40 Table of Contents marketing and advertising, which could have an adverse effect on our business, financial condition, or results of operations.
If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar); litigation (including class claims); additional reporting requirements and/or oversight; bans on processing sensitive information (including personal information); orders to destroy or not use personal information; indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); and financial loss.
If we or the third parties with whom we work fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to: government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar actions); litigation (including class claims); additional reporting requirements and/or oversight; bans on processing sensitive information (including personal information); orders to destroy or not use personal information; indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); and financial loss.
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.
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.
We are also subject to the Americans with Disabilities Act (the “ADA”) and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations and other areas, including our restaurants, website, and smartphone applications.
We are also subject to the Americans with Disabilities Act (the “ADA”) and similar state laws that give civil rights protections to individuals with disabilities in the context of employment, public accommodations, and other areas, including our restaurants, websites, and smartphone applications.
Food service businesses such as ours can be materially and adversely affected by severe weather conditions or natural disasters, such as severe rain and snow storms, earthquakes, wildfires, tornadoes, hurricanes, flooding, prolonged drought, protracted heat or cold waves or other natural disasters.
Food service businesses such as ours can be materially and adversely affected by severe weather conditions or natural disasters, such as severe rain and snow storms, earthquakes, fires, tornadoes, hurricanes, flooding, prolonged drought, protracted heat or cold waves or other natural disasters.
Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute other stockholders. If is possible in the future that we may issue additional capital stock that will result in dilution to all other stockholders.
Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute other stockholders. It is possible in the future that we may issue additional capital stock that will result in dilution to all other stockholders.
Material increases in the prices of the ingredients most critical to our menu could adversely affect our business, financial condition, and results of operations or cause us to consider changes to our product delivery strategy and adjustments to our menu pricing.
Material increases in the prices or decreased availability of the ingredients most critical to our menu could adversely affect our business, financial condition, and results of operations or cause us to consider changes to our product delivery strategy or adjustments to our menu pricing.
If customer health regulations or customer eating habits change significantly, we may choose or be required to modify or delete certain menu items, which may adversely affect the attractiveness of our restaurants to new or returning customers.
If food-related health regulations or customer eating habits change significantly, we may choose or be required to modify or delete certain menu items, which may adversely affect the attractiveness of our restaurants to new or returning customers.
Our reliance on third parties could have an adverse effect on our business, financial condition, and results of operations. We use various third-party vendors to provide, support and maintain most of our management information systems and technology, including key elements of our applications, and we also outsource certain accounting, payroll and human resource functions to business process service providers.
Our reliance on third parties could have an adverse effect on our business, financial condition, and results of operations. 25 Table of Contents We use various third-party vendors to provide, support and maintain most of our management information systems and technology, including key elements of our applications, and we also outsource certain accounting, payroll and human resource functions to business process service providers.
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 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; • 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.
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.
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 53% of the voting power of our outstanding capital stock.
Additionally, while our employee turnover rate has recently decreased, we have historically had high turnover rates. We believe our high turnover rate is caused by a number of factors, including that our restaurants tend to be very busy during peak lunch and dinner hours, and that our restaurant employees perform a significant amount of prep work in our restaurants.
Additionally, while our employee turnover rate has recently decreased, historically we had high turnover rates. We believe our high turnover rate was caused by a number of factors, including that our restaurants tend to be very busy during peak lunch and dinner hours, and that our restaurant employees perform a significant amount of prep work in our restaurants.
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.
If we cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could 24 Table of Contents 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.
Additional federal, state, and local proposals related to paid sick leave or similar matters, could, if implemented, also have an adverse effect on our business, financial condition, and results of operations.
Additional federal, state, and local proposals related to leave or similar matters, could, if implemented, also have an adverse effect on our business, financial condition, and results of operations.
We may not be successful in either developing these modifications and enhancements or in timely bringing them to market. For example, our customers were unable to order our delivery on our native Android smartphone application until March 2021, despite this feature being available on our iOS smartphone application for some time.
We may not be successful in either developing these modifications and enhancements or in timely bringing them to market. For example, our customers were unable to order the delivery of our products on our native Android smartphone application until March 2021, despite this feature being available on our iOS smartphone application for some time.
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.
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.
The occurrence of a similar incident at one or more of our restaurants, or negative publicity or public speculation about an incident, even if such publicity or speculation were to prove unfounded, could have an adverse effect on our business, financial condition, and results of operations. We have incurred significant losses since inception.
The occurrence of a foodborne illness incident at one or more of our restaurants, or negative publicity or public speculation about such an incident, even if such publicity or speculation were to prove unfounded, could have an adverse effect on our business, financial condition, and results of operations. We have incurred significant losses since inception.
In addition, a labor dispute involving some or all of our employees may harm our reputation, disrupt our operations and reduce our revenue, and resolution of disputes may increase our costs. If we are unable to continue to recruit and retain sufficiently qualified individuals, our business and our growth could be adversely affected.
In addition, a labor dispute involving some or all of our employees may harm our reputation, disrupt our operations, and reduce our revenue, and the resolution of any such disputes may increase our costs. If we are unable to continue to recruit and retain sufficiently qualified individuals, our business and our growth could be adversely affected.
Additionally, the failure of our systems to operate effectively, maintenance problems, upgrading or transitioning to new platforms, network failures, natural disasters, terrorism, war, electrical failures, hackers, computer viruses, and other security issues could result in delays in customer service, reduce efficiency in our operations, and result in reputational harm.
Additionally, the failure of our systems to operate effectively, 42 Table of Contents maintenance problems, upgrading or transitioning to new platforms, network failures, natural disasters, terrorism, war, electrical failures, hackers, computer viruses, and other security issues could result in delays in customer service, reduce efficiency in our operations, and result in reputational harm.
Our success depends largely upon the continued services of our key executives, and, to date, we have not implemented a robust or defined succession plan in the event of any key executive departures.
Our success depends largely upon the continued services of our key executives, and, to date, we have not implemented a robust succession plan in the event of any key executive departures.
Due to the popularity of our brand, we have noticed a number of companies (particularly internationally) that have designed their restaurants, logos, and names to be similar to ours, and we may lack the necessary trademark rights to stop this behavior, or may not be successful in enforcing such rights against such companies.
Due to the popularity of our brand, we have noticed a number of companies (particularly internationally) that have designed their restaurants, logos, and names to be similar to ours, and we 41 Table of Contents may lack the necessary trademark rights to stop this behavior, or may not be successful in enforcing such rights against such companies.
The replacement of one or more of our executive officers or other key employees would involve significant time and expense and may significantly delay or prevent the achievement of our business objectives. To continue to execute our growth strategy, we also must identify, hire, and retain highly skilled personnel.
The replacement of one or more of our executive officers or other key employees would 27 Table of Contents involve significant time and expense and may significantly delay or prevent the achievement of our business objectives. To continue to execute our growth strategy, we also must identify, hire, and retain highly skilled personnel.
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.
The CCPA provides for civil penalties of up to $7,988 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
If our customers react negatively to these operational changes (in particular the use of automation in our restaurants equipped with Infinite Kitchens), our brand value may be diminished, which could have an adverse effect on our business, financial condition, and results of operations.
If our customers react negatively to these operational changes (in particular the use of automation in our restaurants equipped with Infinite Kitchen units), our brand value may be diminished, which could have an adverse effect on our business, financial condition, and results of operations.
In addition, there can be no assurance that legislative, judicial or regulatory (including tax) authorities will not introduce proposals or assert interpretations of existing law and regulations, that would mandate that SG Logistics’ change its classification of the drivers.
In addition, there can be no assurance that legislative, judicial, or regulatory (including 36 Table of Contents tax) authorities will not introduce proposals or assert interpretations of existing law and regulations, that would mandate that SG Logistics’ change its classification of the drivers.
Our ability to identify, secure, and open new restaurant sites also depends on other factors, including: • identifying and securing an appropriate site and selecting the best restaurant format for that given site and market (including determining whether to test new restaurant formats, including any formats incorporating automation technology), which requires consideration of the likely effectiveness of our multi-channel approach at the site, the size of the site, traffic patterns, local retail and business attractions and infrastructure that may drive high levels of customer traffic and sales, proximity of the site to existing restaurants, and anticipated commercial, residential and infrastructure development near the site, all of which has become more challenging with the uncertainty of companies’ return-to-office plans in various locations; • negotiating leases with acceptable terms; • receiving timely delivery of leased premises to us from our landlords and the punctual commencement of our build-out construction activities; • obtaining tenant improvement allowances from our landlords; • analyzing financial conditions affecting developers and potential landlords, such as ability of landlords and developers to receive development financing, the effects of macro-economic conditions, and the credit market, which could lead to these parties delaying or canceling development projects (or renovations of existing projects), in turn reducing the number of appropriate restaurant sites available; • managing construction and development costs of new restaurants, particularly in competitive markets; • obtaining construction materials and labor at acceptable costs, particularly with the increase in inflation; • maintaining qualified real estate and construction resources to source and manage construction of new sites; 17 Tab le o f Contents • securing required governmental approvals, permits and licenses (including construction, certificates of occupancy and other permits) in a timely manner and responding effectively to any changes in local, state or federal laws and regulations; • avoiding the impact of inclement weather, natural disasters and other calamities; and • identifying, hiring, and training qualified employees in each local market.
Our ability to identify, secure, and open new restaurant sites also depends on other factors, including: • identifying and securing an appropriate site and selecting the best restaurant format for that given site and market (including determining whether to test new restaurant formats, including any formats incorporating automation technology), which requires consideration of the likely effectiveness of our multi-channel approach at the site, the size of the site, traffic patterns, local retail and business attractions and infrastructure that may drive customer traffic and sales, proximity of the site to our existing restaurants, and anticipated commercial, residential and infrastructure development near the site, many of which have become more challenging to analyze due to the uncertainty of other companies’ return-to-office plans in various locations; • negotiating leases with acceptable terms; • receiving timely delivery of leased premises to us from our landlords and the punctual commencement of our build-out construction activities; • obtaining tenant improvement allowances from our landlords; • analyzing financial conditions affecting developers and potential landlords, such as the ability of landlords and developers to receive development financing, the effects of macro-economic conditions, and the credit market, which could lead to these parties delaying or canceling development projects (or renovations of existing projects), in turn reducing the number of appropriate restaurant sites available; • managing construction and development costs of new restaurants, particularly in competitive markets; • obtaining construction materials and labor at acceptable costs, particularly with the increase in inflation; • maintaining qualified real estate and construction resources to source and manage construction of new sites; • securing required governmental approvals, permits and licenses (including construction, certificates of occupancy, and other permits) in a timely manner and responding effectively to any changes in local, state, or federal laws or regulations; 16 Table of Contents • avoiding the impact of inclement weather, natural disasters and other calamities; and • identifying, hiring, and training qualified employees in each local market.
Additionally, our farmers may not maintain food safety certifications, which may increase our risk in the event of a food safety incident. We have developed a process to monitor food safety certifications and standards of our farmers and we do not generally source products from farmers that do not have a comprehensive a food safety plan.
Additionally, our farmers may not maintain food safety certifications, which may increase our risk in the event of a food safety incident. 23 Table of Contents We have developed a process to monitor food safety certifications and standards of our farmers and we do not generally source products from farmers that do not have a comprehensive a food safety plan.
Any failure to maintain such licenses could have an adverse effect on our business, brand and reputation, financial condition and results of operations. Failure to comply with immigration laws, or changes thereto, may increase the operating costs of our business.
Any failure to maintain such licenses could have an adverse effect on our business, brand and reputation, financial condition, and results of operations. 34 Table of Contents Failure to comply with immigration laws, or changes thereto, may increase the operating costs of our business.
Additionally, in the future, our insurance premiums and retentions may increase, we may not be able to obtain similar levels of insurance on reasonable terms, or at all, and we may choose insurance policies that result in more risk for us.
Additionally, in the future, our insurance premiums and retentions may increase, we may not be able to obtain similar levels of insurance on reasonable terms, or at all, 49 Table of Contents and we may choose insurance policies that result in more risk for us.
We have also invested in technology, including our Infinite Kitchens, to support our back of house operations and simplify the work of our team members.
We have also invested in technology, including our Infinite Kitchen technology, to support our back of house operations and simplify the work of our team members.
However, despite any measures that we have taken by us to increase our cybersecurity, we cannot assure you that the measures that we or the third parties we work with have implemented will always be followed and/or be effective against current or future security threats or detect, mitigate and remediate all vulnerabilities on a timely basis.
However, despite any measures that we have taken to increase our cybersecurity, we cannot guarantee you that the measures that we or the third parties we work with have implemented will always be followed and/or be effective against current or future security threats or detect, mitigate, and remediate all vulnerabilities on a timely basis.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information or our information technology systems, or those of the third parties upon whom we rely.
Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information or our information technology systems, or those of the third parties with whom we work.
Similarly a third party may allege that technology that we license infringes upon or misappropriates that third party’s intellectual property rights, and we may lack sufficient contractual rights from the licensor to fully indemnify us for any loses, costs, or expenses that we incur in relation to any such allegation.
Similarly a third party may allege that technology that we license infringes upon or misappropriates that third party’s 44 Table of Contents intellectual property rights, and we may lack sufficient contractual rights from the licensor to fully indemnify us for any loses, costs, or expenses that we incur in relation to any such allegation.
There is also a risk that due to regulatory changes, such as suspensions of the use of NOLs and tax credits by certain jurisdictions, including in order to raise additional revenue to help counter the fiscal impact from the COVID-19 pandemic, possibly with retroactive effect, or other unforeseen reasons, our existing NOLs and 38 Tab le o f Contents tax credits could expire or otherwise be unavailable to offset future income tax liabilities.
There is also a risk that due to regulatory changes, such as suspensions of the use of NOLs and tax credits by certain jurisdictions, including in order to raise additional revenue to help counter the fiscal impact from the COVID-19 pandemic, possibly with retroactive effect, or other unforeseen reasons, our existing NOLs and tax credits could expire or otherwise be unavailable to offset future income tax liabilities.
Risks Related to Our Intellectual Property and Information Technology If the confidentiality, integrity, or availability of our information technology, software, services, communications, or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
Risks Related to Our Intellectual Property and Information Technology If the confidentiality, integrity, or availability of our information technology, software, services, communications, or data, or those of third parties with whom we work, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory investigations or actions; litigation; fines and penalties; disruptions of our business operations; reputational harm; loss of revenue or profits; loss of customers or sales; and other adverse consequences.
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.
This could decrease the effectiveness of our marketing and 39 Table of Contents 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.
The conversion of shares of our Class B common stock into shares of our Class A common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term.
The conversion of shares of our Class B common stock into shares of our Class A 45 Table of Contents common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term.
Many of our existing equity holders have substantial unrecognized gains on the value of the equity they hold, and therefore they may take steps to sell their shares or otherwise secure the unrecognized gains on those shares.
Many of our existing equity holders have substantial unrecognized gains on the value of the equity they hold, and therefore they may take steps to sell 46 Table of Contents their shares or otherwise secure the unrecognized gains on those shares.
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.
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 2024 , we had 25 Net New Restaurant Openings, and in fiscal year 2023 we had 35 Net New Restaurant Openings.
We anticipate that our operating expenses and capital expenditures will increase substantially in the foreseeable future, in particular, as we continue to: open new restaurants within existing and new markets; launch new restaurant formats; offer promotions; invest in our multiple product channels, including our Owned Digital Channels, and our Marketplace Channel, and other corporate infrastructure at our Sweetgreen Support Center; expand marketing channels and operations; add new products and offerings; and develop, enhance or invest in technologies to help grow our business, including our Infinite Kitchen technology and our smartphone application.
We anticipate that our operating expenses and capital expenditures will increase substantially in the foreseeable future, in particular, as we continue to: open new restaurants within existing and new markets; launch new restaurant formats; offer promotions; invest in our multiple product channels, including our Owned Digital Channels and our Marketplace Channel; expand marketing channels and operations; add new products and offerings; and develop, enhance, or invest in technologies to help grow our business, including our Infinite Kitchen technology and our smartphone application.
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.
Developing and delivering these new or upgraded products, menu items, services, channels, technology or features may increase our expenses, as the process may be costly and we may experience difficulties in developing and delivering these new or upgraded offerings, which may prevent us from achieving or maintaining profitability.
Complying with these laws and regulations subjects us to substantial expense and non-compliance could expose us to significant liabilities. We incur legal costs to defend, and we could suffer losses from, these and similar cases, and the amount of such losses or costs could be significant.
Complying with these laws and regulations subjects us to substantial expense and non-compliance could expose us to significant liabilities. We incur legal costs to defend, and we could suffer losses from, litigation and disputes regarding these and similar laws and regulations, and the amount of such losses or costs could be significant.
This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act of 1933, as amended (the “Securities Act”) creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
This provision would not apply to suits brought to enforce a duty or liability created by the Exchange Act. Furthermore, Section 22 of the Securities Act creates concurrent jurisdiction for federal and state courts over all such Securities Act actions. Accordingly, both state and federal courts have jurisdiction to entertain such claims.
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.
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 32 Table of Contents costs of doing business and, therefore, have an adverse effect on our business, financial condition, and results of operations.
Moreover, the risk of circumvention of our security measures or those of our third parties on whom we rely has been heightened by advances in computer and software capabilities and the increasing sophistication of actors who employ complex techniques.
Moreover, the risk of circumvention of our security measures or those of our third parties with whom we work has been heightened by advances in computer and software capabilities and the increasing sophistication of actors who employ complex techniques.
Third parties may claim that we infringe their intellectual property rights, and this may create liability for us or otherwise have an adverse effect on our business, financial condition, and results of operations.
Third parties have claimed, and may in the future claim, that we infringe their intellectual property rights, and this may create liability for us or otherwise have an adverse effect on our business, financial condition, and results of operations.
Our failure to comply with any of these laws and regulations could lead to higher employee turnover and negative publicity, and subject us to penalties and other legal liabilities, which could adversely affect our business and results of operations and potentially cause us to close some restaurants in these jurisdictions. 35 Tab le o f Contents In addition, a significant number of our restaurant employees are paid at rates impacted by the applicable minimum wage.
Our failure to comply with any of these laws and regulations could lead to higher employee turnover and negative publicity, and subject us to penalties and other legal liabilities, which could adversely affect our business and results of operations and potentially cause us to close some restaurants in these jurisdictions. 33 Table of Contents In addition, a significant number of our restaurant employees are paid at rates impacted by the applicable minimum wage.
Conversely, maintaining focus on our environmental sustainability goals may also expose us to scrutiny from members of the investment community or enforcement authorities who may disagree with aspects of our approach to environmental, social, and other sustainability matters. We may require additional capital to support business growth, and this capital might not be available on reasonable terms or at all.
Conversely, maintaining focus on our environmental sustainability goals may also expose us to scrutiny from members of the investment community or enforcement authorities who may disagree with aspects of our approach to such matters. 29 Table of Contents We may require additional capital to support business growth, and this capital might not be available on reasonable terms or at all.
In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation. 50 Tab le o f Contents This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.
In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.
Should our competitors increase spending on marketing and advertising or our marketing funds decrease for any reason, if our marketing strategies or pricing methodologies change, or should our marketing strategies or pricing methodologies be less effective than those of our competitors, it could result in an adverse effect on our business, financial condition, and results of operations. 29 Tab le o f Contents New information or attitudes regarding diet and health could result in changes in regulations and customer consumption habits, which could have an adverse effect on our business, financial condition, and results of operations.
Should our competitors increase spending on marketing and advertising or our marketing funds decrease for any reason, if our marketing strategies or pricing methodologies change, or should our marketing strategies or pricing methodologies be less effective than those of our competitors, it could result in an adverse effect on our business, financial condition, and results of operations. 28 Table of Contents New information or attitudes regarding diet and health could result in changes in regulations and customer consumption habits, which could have an adverse effect on our business, financial condition, and results of operations.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeOur Chief Technology Officer (“CTO”), as well as the security operations, engineering, risk management and legal functions help identify, assess and manage the Company’s cybersecurity threats and risks. Our security 53 Tab le o f Contents operations team monitors and identifies potentially material cybersecurity threats and risks, implements and maintains the Company’s incident management policies and plans.
Biggest changeOur Chief Technology Officer (“CTO”), as well as the security operations, engineering, risk management and legal functions help identify, assess and manage the Company’s cybersecurity threats and risks. Our security operations team monitors and identifies potentially material cybersecurity threats and risks, and implements and maintains the Company’s incident management policies and plans.
The board of directors’ audit committee is responsible for overseeing Company’s cybersecurity risk management processes, including oversight, mitigation, and disclosure of risks from cybersecurity threats. Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our CTO and members of our legal and cybersecurity teams.
The board of directors’ audit committee is responsible for overseeing the Company’s cybersecurity risk management processes, including supervision, mitigation, and disclosure of risks from cybersecurity threats. Our cybersecurity risk assessment and management processes are implemented and maintained by certain Company management, including our CTO and members of our legal and cybersecurity teams.
For example, our information security function works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business, and our senior management evaluates material risks from cybersecurity threats against our overall business objectives and provides an annual cybersecurity update to each of the board of directors and the audit committee.
For example, our information security function works with management to prioritize our risk management processes and mitigate cybersecurity threats that are more likely to lead to a material impact to our business, and our senior management evaluates material risks from 51 Table of Contents cybersecurity threats against our overall business objectives and provides an annual cybersecurity update to each of the board of directors and the audit committee.
In addition, the Company’s incident response process includes reporting material incidents to the audit committee of the board of directors. 54 Tab le o f Contents The audit committee and the full board receive annual reports from senior management concerning the Company’s significant cybersecurity threats and risk and the processes the Company has implemented to address them.
In addition, the Company’s incident response process includes reporting material incidents to the audit committee of the board of directors. The audit committee and the full board receive annual reports from senior management concerning the Company’s significant cybersecurity threats and risk and the processes the Company has implemented to address them.

Item 2. Properties

Properties — owned and leased real estate

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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.
Biggest changeITEM 2. PROPERTIES As of December 29, 2024, we operated 246 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

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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.
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. 53 Table of Contents PART II
ITEM 3. LEGAL PROCEEDINGS We are subject to various claims, lawsuits, governmental investigations, and administrative proceedings that arise in the ordinary course of business. We do not believe that the ultimate resolution of any of these matters will have a material effect on our financial position, results of operations, liquidity, or capital resources.
ITEM 3. LEGAL PROCEEDINGS We are subject to various claims, lawsuits, governmental investigations, and administrative proceedings that arise in the ordinary course of business. We do not believe that the ultimate resolution of any of these matters 52 Table of Contents will have a material effect on our financial position, results of operations, liquidity, or capital resources.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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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.
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 29, 2024, of the cumulative total return for our Class A common stock, the NYSE Composite Index, and the S&P 600 Restaurants Index. 54 Table of Contents November 18, 2021 December 26, 2021 June 26, 2022 December 25, 2022 June 25, 2023 December 31, 2023 June 30, 2024 December 29, 2024 Sweetgreen $ 100.00 $ 112.00 $ 47.61 $ 31.54 $ 38.86 $ 40.36 $ 107.64 $ 115.61 NYSE $ 100.00 $ 99.10 $ 86.53 $ 88.73 $ 90.37 $ 98.45 $ 105.31 $ 111.45 S&P Restaurant 600 Index $ 100.00 $ 97.51 $ 68.95 $ 76.42 $ 89.44 $ 88.75 $ 80.96 $ 103.08 This graph assumes an initial investment of $100 on November 18, 2021.
Use of Proceeds On November 22, 2021, we closed our IPO, in which we sold 14,950,000 shares of our Class A common stock at a price of $28.00 per share. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC acted as joint book-running managers for the offering.
Use of Proceeds On November 22, 2021, we closed our initial public offering (“IPO”), in which we sold 14,950,000 shares of our Class A common stock at a price of $28.00 per share. Goldman Sachs & Co. LLC and J.P. Morgan Securities LLC acted as joint book-running managers for the offering.
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.
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 24, 2025, there were approximately 13 stockholders of record of our Class B common stock that are affiliated with our three founders.
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.
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. 55 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.
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.
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 24, 2025, there were approximately 525 stockholders of record of our Class A common stock.

Item 7. Management's Discussion & Analysis

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

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Biggest changeAs 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.
Biggest changeDepreciation and Amortization Fiscal Year Ended (dollar amounts in thousands) December 29, 2024 December 31, 2023 Percentage Change Depreciation and amortization $ 67,346 $ 59,491 13 % As a percentage of total revenue 10 % 10 % — % The increase in depreciation and amortization for fiscal year 2024 was primarily due to the 60 Net New Restaurant Openings during fiscal years 2023 and 2024, as well as the amortization of developed technology that was placed into service during the first half of fiscal year 2023. 68 Table of Contents As a percentage of revenue, depreciation and amortization for fiscal year 2024 was flat compared to fiscal year 2023, primarily due to comparatively higher revenue in fiscal year 2024, offset by the increases noted above.
There can be no assurance that future cost increases, including as a result of inflation, can be offset by increased menu prices or that our current or future menu prices will be fully absorbed by our customers without any resulting change to their demand for our products.
There can be no assurance that any future cost increases, including as a result of inflation, can be offset by increased menu prices or that our current or future menu prices will be fully absorbed by our customers without any resulting change to their demand for our products.
These potential differences may be caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or NOL), and the age and book depreciation of facilities and equipment (affecting relative depreciation expense); • are widely used by analysts, investors, and competitors to measure a company’s operating performance; are used by our management and board of directors for various purposes, including as measures of performance, as a basis for strategic planning and forecasting; and • are used internally for a number of benchmarks including to compare our performance to that of our competitors .
These potential differences may be caused by variations in capital structures (affecting interest expense), tax positions (such as the impact on periods or companies of changes in effective tax rates or NOL), and the age and book depreciation of facilities and equipment (affecting relative depreciation expense); • are widely used by analysts, investors, and competitors to measure a company’s operating performance; are used by our management and board of directors for various purposes, including as measures of performance and as a basis for strategic planning and forecasting; and • are used internally for a number of benchmarks, including to compare our performance to that of our competitors .
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.
Depreciation and Amortization Depreciation and amortization include the depreciation of fixed assets, including leasehold improvements and equipment, 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.
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.
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 regulatory environment or in the future.
These costs primarily include lease and related non-cash expenses associated with our vacated former Sweetgreen Support Center, including the impairment of the operating lease asset. See Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
These costs primarily include lease and related non-cash expenses associated with our vacated former Sweetgreen Support Center, including the impairment and amortization of the operating lease asset. See Note 1 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
We will continue to remeasure the liability associated with our contingent consideration liability until the underlying service conditions are met, or the performance period expires. Income Tax Expense Income tax expense consists of federal and state tax expense on our operating activity, and changes to our deferred tax asset and deferred tax liability.
We will continue to remeasure the liability associated with our contingent consideration liability until the underlying service conditions are met, or the performance period expires. Income Tax (Benefit) Expense Income tax (benefit) expense consists of federal and state tax expense on our operating activity, and changes to our deferred tax asset and deferred tax liability.
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.
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 2024, 2023, and 2022 results for AUV and Same-Store Sales Change have been adjusted.
See Note 17 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details. We have not required significant working capital because customers generally pay using cash or credit and debit cards and, as a result, our operations do not require significant receivables.
See Note 3 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K for further details. We have not required significant working capital because customers generally pay using cash or credit and debit cards and, as a result, our operations do not require significant receivables.
This w as primarily due to the 71 Net New Restaurant Openings during fiscal years 2023 and 2022 as well as the use of higher-cost proteins. In addition, during fiscal year 2023, we experienced supply chain disruptions for our bowls and plates, which resulted in the use of alternative packaging solutions with higher costs of materials.
This was primarily due to the 71 Net New Restaurant Openings during fiscal years 2023 and 2022 as well as the use of higher-cost proteins. In addition, during fiscal year 2023 , we experienced supply chain disruptions for our bowls and plates, which resulted in the use of alternative packaging solutions with higher costs of materials.
Impairment and Closure Costs Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Impairment and closure costs $ 624 $ 2,542 (75 %) As a percentage of total revenue — % 1 % (1 %) During fiscal year 2023 we recognized non-cash impairment charges of $0.6 million related to lease and related costs associated with previously closed stores, including the amortization of operating lease asset, and expenses associated with CAM and real estate taxes.
Impairment and Closure Costs Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Impairment of long-lived assets $ 624 $ 2,542 (75 %) As a percentage of total revenue — % 1 % (1 %) During fiscal year 2023, we recognized non-cash impairment charges of $0.6 million related to lease and related costs associated with previously closed stores, including the amortization of operating lease asset, and expenses associated with CAM and real estate taxes.
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.
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 were changed, our operating lease assets and liabilities could differ materially.
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.
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 %) 74 Table of Contents 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.
However, over time, we expect that our margins will improve on our Native Delivery, Outpost and Catering , and Marketplace Channels as we scale each of these channels. Key Performance Metrics and Non-GAAP Financial Measures We track the following key performance metrics and non-GAAP financial measures to evaluate our performance, identify trends, formulate financial projections, and make strategic decisions.
However, over time, we expect that our margins will improve on our Native Delivery, Outpost and Catering , and Marketplace Channels as we scale each of these channels. 58 Table of Contents Key Performance Metrics and Non-GAAP Financial Measures We track the following key performance metrics and non-GAAP financial measures to evaluate our performance, identify trends, formulate financial projections, and make strategic decisions.
Fiscal year 2023 was a 53-week year with the extra operating week (the “53rd week”) falling in our fourth fiscal quarter. Fiscal 2022 and 2021 each contained 52 weeks. (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.
Fiscal years 2024 and 2022 each contained 52 weeks. Fiscal year 2023 was a 53-week year with the extra operating week (the “53rd week”) falling in our fourth fiscal quarter. (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.
The increase was also due to an increase in staffing expenses across all of our locations, primarily due to an increase in prevailing wage rates in many of our markets as a result of continued wage rate inflation in the industry.
T he increase was also due to an increase in staffing expenses across all of our locations, primarily due to an increase in prevailing wage rates in many of our markets as a result of continued wage rate inflation in the industry.
Financing Activities For fiscal year 2023, cash (used in) provided by financing activities i ncreased $9.8 million compared to fiscal year 2022, primarily due to the $10.4 million Spyce milestone true-up payment, offset by an in crease in proceeds received from stock option exercises of $0.6 million.
For fiscal year 2023, cash (used in) provided by financing activities increased $9.8 million compared to fiscal year 2022, primarily due to the $10.4 million Spyce milestone true-up payment, offset by an in crease in proceeds received from stock option exercises of $0.6 million.
We anticipate occupancy and related expenses on an absolute dollar basis will increase for the foreseeable future to the extent we continue to open new restaurants and revenue grows. Occupancy and related expenses as a percentage of revenue are impacted by geographic location, type of restaurant build, and amount of revenue.
We anticipate occupancy and 63 Table of Contents related expenses on an absolute dollar basis will increase for the foreseeable future to the extent we continue to open new restaurants and revenue grows. Occupancy and related expenses as a percentage of revenue are impacted by geographic location, type of restaurant build, and amount of revenue.
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.
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.
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.
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, market rents for the operating lease and other relevant economic factors that may impact the store under evaluation.
Fiscal year 2023 was a 53-week year with the extra operating week (the “53rd week”) falling in our fourth fiscal quarter. Fiscal 2022 and 2021 each contained 52 weeks. (2) Includes non-cash, stock-based compensation.
Fiscal years 2024 and 2022 each contained 52 weeks. Fiscal year 2023 was a 53-week year with the extra operating week (the “53rd week”) falling in our fourth fiscal quarter. (2) Includes non-cash, stock-based compensation.
We anticipate food, beverage and packaging costs on an absolute dollar basis will increase for the foreseeable future to the extent we experience additional in-store orders, as we open additional restaurants, and as a result our revenue grows.
We anticipate food, beverage, and packaging costs on an absolute dollar basis will increase for the foreseeable future to the extent we experience additional customer orders, as we open additional restaurants, and as a result our revenue grows.
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.
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; 60 Table of Contents • 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; other (income) expense; Spyce acquisition costs; enterprise resource planning system (“ERP”) implementation and related costs; legal settlements; and, certain other expenses as described in more detail below; and • other companies, including those in our industry, may calculate Restaurant-Level Profit and Adjusted EBITDA differently, which reduces their usefulness as comparative measures.
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.
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 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.
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.
Any material changes in the sum of our undiscounted cash flow estimates resulting from different assumptions used as of December 29, 2024 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 2024.
Results of Operations Comparison of Fiscal Year 2023 and Fiscal Year 2022 The following table summarizes our results of operations for fiscal year 2023 and fiscal year 2022: Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Dollar Change Percentage Change Revenue $ 584,041 $ 470,105 $ 113,936 24 % Restaurant operating costs (exclusive of depreciation and amortization presented separately below): Food, beverage, and packaging 161,725 130,136 31,589 24 % Labor and related expenses 171,306 147,474 23,832 16 % Occupancy and related expenses 54,281 45,238 9,043 20 % Other restaurant operating costs 94,809 77,971 16,838 22 % Total cost of restaurant operations 482,121 400,819 81,302 20 % Operating expenses: General and administrative 146,762 187,367 (40,605) (22 %) Depreciation and amortization 59,491 46,471 13,020 28 % Pre-opening costs 9,263 11,523 (2,260) (20 %) Impairment and closure costs 624 2,542 (1,918) (75 %) Loss on disposal of property and equipment 687 278 409 147 % Restructuring charges 7,437 14,442 (7,005) (49 %) Total operating expenses 224,264 262,623 (38,359) (15 %) Loss from operations (122,344) (193,337) 70,993 (37 %) Interest income (12,942) (5,143) (7,799) 152 % Interest expense 128 83 45 54 % Other expense 3,475 819 2,656 324 % Loss from operations before income taxes (113,005) (189,096) 76,091 (40 %) Income tax expense 379 1,345 (966) (72 %) Net loss $ (113,384) $ (190,441) $ 77,057 (40 %) Revenue Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Revenue $ 584,041 $ 470,105 24 % Average Unit Volume $ 2,877 $ 2,905 (1 %) Same-Store Sales Change 4% 13% (9 %) 68 Tab le o f Contents The increase in revenue in fiscal year 2023 was primarily due to $92.2 million of incremental revenue associated with 71 Net New Restaurant Openings during fiscal years 2023 and 2022.
Income Tax (Benefit) Expense Fiscal Year Ended (dollar amounts in thousands) December 29, 2024 December 31, 2023 Percentage Change Income tax (benefit) expense $ (1,301) $ 379 (443 %) As a percentage of total revenue — % — % — % Our effective tax rate for the fiscal years ended 2024 and 2023 was 1.4% and (0.3%), re spectively, primarily due to the full valuation allowance on our net deferred tax assets. 70 Table of Contents Comparison of Fiscal Year 2023 and Fiscal Year 2022 The following table summarizes our results of operations for fiscal year 2023 and fiscal year 2022: Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Dollar Change Percentage Change Revenue $ 584,041 $ 470,105 $ 113,936 24 % Restaurant operating costs (exclusive of depreciation and amortization presented separately below): Food, beverage, and packaging 161,725 130,136 31,589 24 % Labor and related expenses 171,306 147,474 23,832 16 % Occupancy and related expenses 54,281 45,238 9,043 20 % Other restaurant operating costs 94,809 77,971 16,838 22 % Total cost of restaurant operations 482,121 400,819 81,302 20 % Operating expenses: General and administrative 146,762 187,367 (40,605) (22 %) Depreciation and amortization 59,491 46,471 13,020 28 % Pre-opening costs 9,263 11,523 (2,260) (20 %) Impairment and closure costs 624 2,542 (1,918) (75 %) Loss on disposal of property and equipment 687 278 409 147 % Restructuring charges 7,437 14,442 (7,005) (49 %) Total operating expenses 224,264 262,623 (38,359) (15 %) Loss from operations (122,344) (193,337) 70,993 (37 %) Interest income (12,942) (5,143) (7,799) 152 % Interest expense 128 83 45 54 % Other expense 3,475 819 2,656 324 % Loss from operations before income taxes (113,005) (189,096) 76,091 (40 %) Income tax provision 379 1,345 (966) (72 %) Net loss $ (113,384) $ (190,441) $ 77,057 (40 %) Revenue Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Revenue $ 584,041 $ 470,105 24 % Average Unit Volume $ 2,877 $ 2,905 (1 %) Same-Store Sales Change 4 % 13 % (9 %) The increase in revenue in fiscal year 2023 was primarily due to $92.2 million of incremental revenue associated with 71 Net New Restaurant Openings during fiscal years 2023 and 2022.
Loss on Disposal of Property and Equipment Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Loss on disposal of property and equipment $ 687 $ 278 147 % As a percentage of total revenue — % — % — % 71 Tab le o f Contents The increase in loss on disposal of property and equipment was due to the timing of furniture, equipment and fixture replacements at multiple restaurants, in addition to a fleet-wide replacement of kitchen equipment with more cost efficient items in fiscal year 2023 as compared to fiscal year 2022.
Loss on Disposal of Property and Equipment Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Loss on disposal of property and equipment $ 687 $ 278 147 % As a percentage of total revenue — % — % — % The increase in loss on disposal of property and equipment was due to the timing of furniture, equipment and fixture replacements at multiple restaurants, in addition to a fleet-wide replacement of kitchen equipment with more cost efficient items in fiscal year 2023 as compared to fiscal year 2022.
Depreciation and Amortization 70 Tab le o f Contents Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Depreciation and amortization $ 59,491 $ 46,471 28 % As a percentage of total revenue 10 % 10 % — % The increase in depreciation and amortization for fiscal year 2023 was primarily due to the 71 Net New Restaurant Openings during fiscal years 2022 and 2023.
Depreciation and Amortization Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Depreciation and amortization $ 59,491 $ 46,471 28 % As a percentage of total revenue 10 % 10 % — % The increase in depreciation and amortization for fiscal year 2023 was primarily due to the 71 Net New Restaurant Openings during fiscal years 2023 and 2022.
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.
Fiscal year 2024 was a 52-week period that ended December 29, 2024, fiscal year 2023 was a 53-week period that ended December 31, 2023, and fiscal year 2022 was a 52-week period that ended December 25, 2022. In a 52-week fiscal year, each fiscal quarter includes 13 weeks of operations.
Before we open new restaurants, we incur pre-opening costs, as further described below. During fiscal year 2024, we plan to integrate our Infinite Kitchen into an increased number of our new restaurants. Average Unit Volume AUV is defined as the average trailing revenue for the prior four fiscal quarters for all restaurants in the Comparable Restaurant Base.
Before we open new restaurants, we incur pre-opening costs, as further described below. During fiscal year 2025, we plan to integrate our Infinite Kitchen into approximately half of our new restaurants. Average Unit Volume AUV is defined as the average trailing revenue for the prior four fiscal quarters for all restaurants in the Comparable Restaurant Base.
Based on our current operating plan, we believe our existing cash and cash equivalents and access to available revolving loan(s), will be sufficient to fund our operating lease obligations, capital expenditures, and working capital needs for at least the next 12 months.
Based on our current operating plan, we believe our existing cash and cash equivalents, will be sufficient to fund our operating lease obligations, capital expenditures, and working capital needs for at least the next 12 months.
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.
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 57 Table of Contents fast-casual offerings.
Our primary liquidity and capital requirements are for new restaurant development, initiatives to improve the customer experience in our restaurants, research and development costs, marketing-related costs, working capital and general corporate needs.
Our primary liquidity and capital requirements are for new restaurant development, including related to deployment of our Infinite Kitchen, initiatives to improve the customer experience in our restaurants, research and development costs, marketing-related costs, working capital and general corporate needs.
During the fiscal year ended December 31, 2023, the entire $4.3 million balance was related to the operating lease asset for the Company’s former Sweetgreen Support Center previously vacated during fiscal year 2022, and was recorded under restructuring charges within the consolidated statement of operations.
We recorded non-cash impairment charges of $4.3 million during the fiscal year ended December 31, 2023, wherein the entire $4.3 million balance was related to the operating lease asset for our former Sweetgreen Support Center previously vacated during fiscal year 2022, and was recorded under restructuring charges within the consolidated statement of operations.
Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 (1) December 25, 2022 (1) December 26, 2021 (1) Net New Restaurant Openings 35 36 31 Average Unit Volume (as adjusted) (2)(3) $ 2,877 $ 2,905 $ 2,623 Same-Store Sales Change (as adjusted) (%) (3)(4) 4% 13% 25% Total Digital Revenue Percentage 59% 62% 67% Owned Digital Revenue Percentage 36% 41% 46% (1) We operate on a 52/53 week fiscal year end that ends on the last Sunday of the calendar year.
Fiscal Year Ended (dollar amounts in thousands) December 29, 2024 (1) December 31, 2023 (1) December 25, 2022 (1) Net New Restaurant Openings 25 35 36 Average Unit Volume (as adjusted) (2)(3) $ 2,924 $ 2,877 $ 2,905 Same-Store Sales Change (as adjusted) (%) (3)(4) 6% 4% 13% Total Digital Revenue Percentage 56% 59% 62% Owned Digital Revenue Percentage 30% 36% 41% (1) We operate on a 52/53 week fiscal year end that ends on the last Sunday of the calendar year.
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.
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.
(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.
(5) Other expense includes the change in fair value of the contingent consideration issued as part of the Spyce acquisition. For additional information, see Notes 1 and 3 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
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.
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 59 Table of Contents corresponding fiscal month for the prior or current fiscal year, as applicable, will be excluded when calculating Same-Store Sales Change for that restaurant.
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.
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.
We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities, available cash balances, and access to available revolving loan(s).
We believe we will meet longer-term expected future cash requirements and obligations through a combination of cash flows from operating activities and available cash balances.
Subsequent to the adoption of ASC 842, closure costs include lease and related costs associated with closed restaurants and the vacated Sweetgreen Support Center, including the amortization of the operating lease asset, and expenses associated with CAM and real estate taxes for previously impaired stores.
Closure costs include lease and related costs associated with closed restaurants and our vacated former Sweetgreen Support Center, including the amortization of the operating lease asset, and expenses associated with CAM and real estate taxes for previously impaired stores.
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.
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.
Investing activities in fiscal year 2023 consisted primarily of purchases of property and equipment of $89.7 million related to 38 gross new restaurant openings (excluding tenant improvement allowances), restaurants in process, renovations, and prepayments associated with the deployment of our Infinite Kitchen and other restaurants related equipment.
Investing activities in fiscal year 2024 consisted primarily of purchases of property and equipment of $84.5 million related to 25 gross new restaurant openings (excluding tenant improvement allowances), restaurants in process, renovations, and prepayments associated with the deployment of our Infinite Kitchen units and other restaurant-related equipment.
Income Tax Expense 78 Tab le o f Contents Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Income tax expense $ 1,345 $ 147 815 % As a percentage of total revenue — % — % — % Our effective tax rate for the fiscal years ended 2022 and 2021 was (1.2%) and (0.1%), respectively, primarily due to the full valuation allowance on our net deferred tax assets Liquidity and Capital Resources Sources and Material Cash Requirements To date, we have funded our operations through proceeds received from previous common stock and preferred stock issuances, our ability to obtain lending commitments and through cash flow from operations.
Income Tax Expense Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Income tax expense $ 379 $ 1,345 (72 %) As a percentage of total revenue — % — % — % Our effective tax rate for the fiscal years ended 2023 and 2022 was (0.3%) and (0.7%), respectively, primarily due to the full valuation allowance on our net deferred tax assets 75 Table of Contents Liquidity and Capital Resources Sources and Material Cash Requirements To date, we have funded our operations through proceeds received from previous common stock and preferred stock issuances, our ability to obtain lending commitments and through cash flow from operations.
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.
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 29, 2024 and December 31, 2023, we had $214.8 million and $257.2 million in cash and cash equivalents, respectively.
Additionally, subsequent to year end we made a cash payment of approximately $3.9 million related to the Spyce milestone payment, which is currently included within contingent consideration in our consolidated balance sheets for the fiscal year ended December 31, 2023 .
During the fiscal year ended December 29, 2024, we made a cash payment of approximately $3.9 million related to the Spyce milestone payment, which was included within contingent consideration in our consolidated balance sheets for the fiscal year ended December 31, 2023.
The contingent consideration as of December 31, 2023 and December 25, 2022 wa s $8.4 million a nd $21.3 million, respectively. Additionally, we recorded the current portion of the contingent consideration of $6.0 million within other current liabilities in the consolidated balance sheet within this Annual Report on Form 10-K.
The contingent consideration as of December 29, 2024 and December 31, 2023 wa s $15.0 million a nd $8.4 million, respectively. Additionally, for the fiscal year ended December 31, 2023, we recorded the current portion of the contingent consideration of $6.0 million within other current liabilities in the consolidated balance sheet within this Annual Report on Form 10-K.
Food, beverage, and packaging costs as a percentage of revenue may vary, as these costs are impacted by menu mix and fluctuations in commodity costs, inflation, and availability, as well as geographic scale and proximity. We will continue to innovate in key areas, including menu.
Food, beverage, and packaging costs as a percentage of revenue may vary, as these costs are impacted by menu mix and fluctuations in commodity costs, inflation, and availability, as well as geographic scale and proximity.
Investing activities in fiscal year 2022 consisted primarily of purchases of property and equipment of $96.9 million related to 39 gross new restaurant openings (excluding tenant improvement allowances), restaurants in process, renovations, and prepayments associated with restaurants related equipment. In addition, we had a cash outflow for fiscal year 2022 of $5.4 million related to the purchase of intangible assets.
Investing activities in fiscal year 2023 consisted primarily of purchases of property and equipment of $89.7 million related to 38 gross new restaurant openings (excluding tenant improvement allowances), restaurants in process, renovations, and prepayments associated with restaurant-related equipment. In addition, we had a cash outflow for fiscal year 2023 of $6.1 million related to the purchase of intangible assets.
Pre-Opening Costs Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Pre-opening costs $ 9,263 $ 11,523 (20 %) As a percentage of total revenue 2 % 2 % — % The decrease in pre-opening costs for fiscal year 2023 was primarily due to improved cost efficiencies across 38 new restaurant openings in 2023 compared to 39 new restaurant openings in 2022.
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. 73 Table of Contents Pre-Opening Costs Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Pre-opening costs $ 9,263 $ 11,523 (20 %) As a percentage of total revenue 2 % 2 % — % The decrease in pre-opening costs for fiscal year 2023 was primarily due to improved cost efficiencies across 38 new restaurant openings in 2023 compared to 39 new restaurant openings in 2022.
Interest Income and Interest Expense Interest income consists of interest earned on our cash and cash equivalents. Interest expense includes mainly amortization of deferred financing costs from our debt origination and commitment fees. 67 Tab le o f Contents Other Expense Other expense consists primarily of changes in the fair value of our contingent consideration liability.
Interest Income and Interest Expense Interest income consists of interest earned on our cash and cash equivalents. Interest expense includes mainly amortization of deferred financing costs from our debt origination and commitment fees. Other Expense Other expense consists primarily of changes in the fair value of our contingent consideration liability in connection with the Spyce acquisition.
Other Restaurant Operating Costs Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Other restaurant operating costs $ 94,809 $ 77,971 22 % As a percentage of total revenue 16 % 17 % (1 %) The increase in other restaurant operating costs for fiscal year 2023 was primarily due to the 71 Net New Restaurant Openings during fiscal years 2022 and 2023.
As a percentage of revenue, the decrease in occupancy and related expenses for fiscal year 2023 was primarily due to an increase in locations in areas with lower occupancy cost as well as higher revenue. 72 Table of Contents Other Restaurant Operating Costs Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Other restaurant operating costs $ 94,809 $ 77,971 22 % As a percentage of total revenue 16 % 17 % (1 %) The increase in other restaurant operating costs for fiscal year 2023 was primarily due to the 71 Net New Restaurant Openings during fiscal years 2023 and 2022.
For fiscal year 2021, cash used in investing activities was $97.5 million. Investing activities in fiscal year 2021 consisted primarily of purchases of property and equipment of $84.5 million related to 31 gross new restaurant openings (excluding tenant improvement allowances), restaurants in process, renovations, and prepayments associated with restaurants related equipment.
For fiscal year 2022, cash used in investing activities was $102.0 million. Investing activities in fiscal year 2022 consisted primarily of purchases of property and equipment of $96.9 million related to 39 gross new restaurant openings (excluding tenant improvement allowances), restaurants in process, renovations, and prepayments associated with restaurant-related equipment.
Fiscal Year Ended (dollar amounts in thousands) December 25, 2022 December 26, 2021 Percentage Change Occupancy and related expenses $ 45,238 $ 35,863 26 % As a percentage of total revenue 10 % 11 % (1 %) The increase in occupancy and related expenses for fiscal year 2022 was primarily due to the 67 Net New Restaurant Openings during fiscal years 2021 and 2022.
Occupancy and Related Expenses Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Occupancy and related expenses $ 54,281 $ 45,238 20 % As a percentage of total revenue 9 % 10 % (1 %) The increase in occupancy and related expenses for fiscal year 2023 was primarily due to the 71 Net New Restaurant Openings during fiscal years 2023 and 2022.
In recent years, we have experienced a reduction in our Owned Digital Revenue Percentage and our Total Digital Revenue percentage, which we believe is due to the continuing recovery of our In-Store Channel.
Our Owned Digital Revenue Percentage is the percentage of our revenue attributed to purchases made through our Owned Digital Channels. In recent years, we have experienced a reduction in our Owned Digital Revenue Percentage and our Total Digital Revenue percentage, which we believe is due to the continuing recovery of our In-Store Channel and growth in third party marketplace.
(8) Represents the amortization costs associated to the implementation from our cloud computing arrangements in relation to our new ERP. (9) Expenses incurred to establish accruals related to the settlements of legal matters.
(8) Represents the amortization costs associated with the implementation of our cloud computing arrangements in relation to our ERP system. (9) Expenses recorded for accruals related to the settlements of legal matters.
The following table sets forth a reconciliation of our loss from operations to Restaurant-Level Profit, as well as the calculation of loss from operations margin and Restaurant-Level Profit Margin for each of the periods indicated : 63 Tab le o f Contents Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 (1) December 25, 2022 (1) December 26, 2021 (1) Loss from operations $ (122,344) $ (193,337) $ (134,399) Add back: General and administrative 146,762 187,367 125,040 Depreciation and amortization 59,491 46,471 35,549 Pre-opening costs 9,263 11,523 9,193 Impairment and closure costs 624 2,542 4,915 Loss on disposal of property and equipment (2) 687 278 107 Restructuring charges (3) 7,437 14,442 — Restaurant-Level Profit $ 101,920 $ 69,286 $ 40,405 Loss from operations margin (21) % (41) % (40) % Restaurant-Level Profit Margin 17 % 15 % 12 % (1) We operate on a 52/53 week fiscal year end that ends on the last Sunday of the calendar year.
The following table sets forth a reconciliation of our loss from operations to Restaurant-Level Profit, as well as the calculation of loss from operations margin and Restaurant-Level Profit Margin for each of the periods indicated : Fiscal Year Ended (dollar amounts in thousands) December 29, 2024 (1) December 31, 2023 (1) December 25, 2022 (1) Loss from operations $ (95,704) $ (122,344) $ (193,337) Add back: General and administrative 149,942 146,762 187,367 Depreciation and amortization 67,346 59,491 46,471 Pre-opening costs 6,616 9,263 11,523 Impairment and closure costs 2,218 624 2,542 Loss on disposal of property and equipment (2) 255 687 278 Restructuring charges (3) 2,276 7,437 14,442 Restaurant-Level Profit $ 132,949 $ 101,920 $ 69,286 Loss from operations margin (14) % (21) % (41) % Restaurant-Level Profit Margin 20 % 17 % 15 % (1) We operate on a 52/53 week fiscal year end that ends on the last Sunday of the calendar year.
Other factors that influence labor costs include each jurisdiction’s minimum wage and payroll tax legislation, inflation, the strength of the labor market for hourly employees, benefit costs, health care costs, and the size and location of our restaurants.
As with other variable expense items, we expect labor costs to grow as our revenue grows. Other factors that influence labor costs include each jurisdiction’s minimum wage and payroll tax legislation, inflation, the strength of the labor market for hourly employees, benefit costs, health care costs, and the size and location of our restaurants.
Our revenue growth has been negatively impacted in recent periods, in part by current macroeconomics conditions. We continue to see variability in our customer traffic patterns, including as a result of fluctuations in return to office as a result of many workplaces adopting remote or hybrid models and we expect this variability to continue for the foreseeable future.
We continue to see variability in our customer traffic patterns, including as a result of fluctuations in return to office as a result of many workplaces adopting remote or hybrid models and we expect this variability to continue for the foreseeable future.
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.
We excluded one restaurant from the Comparable Restaurant Base as of the end of fiscal year 2024, no restaurants as of the end of fiscal year 2023, and two restaurants as of the end of fiscal year 2022. Such exclusions did not result in a material change to AUV.
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 .
We expect revenue to increase as we focus on opening additional restaurants, diversify and expand our menu, make investments in marketing to attract new customers and increase order frequency from our existing customers, as well as any increases in the price of our menu items. Gift Cards . We also sell gift cards that do not have an expiration date.
Cash 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.
Cash Flows The following table summarizes our cash flows for the periods indicated: Fiscal Year Ended (in thousands) December 29, 2024 December 31, 2023 December 25, 2022 Net cash provided by (used in) operating activities 43,390 26,480 (43,169) Net cash used in investing activities (92,211) (95,665) (102,023) Net cash (used in) provided by financing activities 8,895 (5,199) 4,632 Net increase (decrease) in cash and cash equivalents and restricted cash $ (39,926) $ (74,384) $ (140,560) 76 Table of Contents Operating Activities For fiscal year 2024, cash provided by (used in) operating activities increased $16.9 million compared to fiscal year 2023, primarily due to a $20.9 million reduction in net loss after excluding non-cash items and a $4.0 million favorable working capital fluctuation, which is primarily related to the timing of payroll and other payments in the ordinary course of business, offset by the $3.4 million receipt of ERC in fiscal year 2023.
Restaurant Operating Costs Food, Beverage, and Packaging Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Food, beverage, and packaging $ 161,725 $ 130,136 24 % As a percentage of total revenue 28% 28% — % The increase in food, beverage, and packaging costs for fiscal year 2023 was primarily due to a $26.6 million increase in food and beverage costs and a $5.0 million increase in packaging cost.
The increase in revenue was partially offset by the negative impact of restaurant closures in fiscal year 2023, as well as an increase in discounts associated with the launch of our Sweetpass+ loyalty program. 71 Table of Contents Restaurant Operating Costs Food, Beverage, and Packaging Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Food, beverage, and packaging $ 161,725 $ 130,136 24 % As a percentage of total revenue 28 % 28 % — % The increase in food, beverage, and packaging costs for fiscal year 2023 was primarily due to a $26.6 million increase in food and beverage costs and a $5.0 million increase in packaging cost.
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.
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: Fiscal Year Ended (dollar amounts in thousands) December 29, 2024 (1) December 31, 2023 (1) December 25, 2022 (1) Net loss $ (90,373) $ (113,384) $ (190,441) Non-GAAP adjustments: Income tax (benefit) expense (1,301) 379 1,345 Interest income (10,942) (12,942) (5,143) Interest expense 256 128 83 Depreciation and amortization 67,346 59,491 46,471 Stock-based compensation (2) 39,024 49,532 78,736 Loss on disposal of property and equipment (3) 255 687 278 Impairment and closure costs (4) 2,218 624 2,542 Other expense (5) 6,656 3,475 819 Spyce acquisition costs (6) — 472 646 Restructuring charges (7) 2,276 7,437 14,442 ERP implementation and related costs (8) 914 881 288 Legal settlements (9) 1,326 425 — Employer portion of the founder performance stock unit payroll taxes (10) 1,053 — — Adjusted EBITDA $ 18,708 $ (2,795) $ (49,934) Net loss margin (13)% (19)% (41)% Adjusted EBITDA Margin 3% —% (11)% (1) We operate on a 52/53 week fiscal year end that ends on the last Sunday of the calendar year.
In addition we had cash outflow for fiscal year 2023 of $6.1 million related to purchase of intangible assets. For fiscal year 2022, cash used in investing activities was $102.0 million, an increase of $4.5 million compared to fiscal year 2021.
In addition we had cash outflow for fiscal year 2024 of $7.7 million related to purchase of intangible assets. For fiscal year 2023, cash used in investing activities was $95.7 million, a decrease of $6.4 million compared to fiscal year 2022.
(3) For fiscal year 2023, Average Unit Volume and Same-Store Sales Change was adjusted to exclude the 53rd week of operations. (4) Our results for the fiscal year ended December 31, 2023 have been adjusted to reflect the temporary closures of two restaurants, which were excluded from the calculation of Same-Store Sales change.
Our results for the fiscal year ended December 31, 2023 have been adjusted to reflect the temporary closures of two restaurants, which were excluded from the calculation of Same-Store Sales change. Our results for the fiscal year ended December 25, 2022, have been adjusted to reflect the temporary closures of 6 restaurants.
The increase in revenue was also impacted by an increase in Comparable Restaurant Base revenue of $43.6 million, resulting in a positive Same-Store Sales Change of 13%, consisting of a 7% benefit from menu price increases and a 6% increase from transactions.
The increase in revenue was also impacted by an increase in Comparable Restaurant Base revenue of $34.8 million, resulting in a positive Same-Store Sales Change of 6%, consisting of a 4% benefit from menu price increases and a 2% increase due to traffic and favorable product mix.
Additionally, historically, orders on our Native Delivery, Outpost and Catering and Marketplace Channels have resulted in a higher rate of refunds and credits than our In-Store and Pick-Up Channels, which has a negative 60 Tab le o f Contents impact on revenue on these channels.
Additionally, historically, orders on our Native Delivery, Outpost and Catering and Marketplace Channels have resulted in a higher rate of refunds and credits than our In-Store and Pick-Up Channels, which has a negative impact on revenue from these channels. We have also historically prioritized promotions and discounts on our Owned Digital Channels, which also reduces revenue from these channels.
See the subsections titled “—Key Performance Metrics” and “—Quarterly Results of Operations” for more information, including a description of the adjustments made to, and the unadjusted values for, AUV and Same-Store Sales Change for the periods presented.
See the subsections titled “—Key Performance Metrics” and “—Quarterly Results of Operations” for more information, including a description of the adjustments made to, and the unadjusted values for, AUV and Same-Store Sales Change for the periods presented. Overview We are a mission-driven, next generation restaurant and lifestyle brand that serves healthy food at scale.
(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.
(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. (7) Restructuring charges are expenses that are paid in connection with the reorganization of our operations.
Other Expense Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Other expense $ 3,475 $ 819 324 % As a percentage of total revenue 1 % — % 1 % The change in other expense in fiscal year 2023 was primarily due to a change in the fair value of our contingent consideration compared to the prior year, which was issued as part of the Spyce acquisition in the third quarter of fiscal year 2021. 72 Tab le o f Contents Income Tax Expense Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Income tax expense $ 379 $ 1,345 (72 %) As a percentage of total revenue — % — % — % Our effective tax rate for the fiscal years ended 2023 and 2022 was (0.3%) and (0.7%), re spectively, primarily due to the full valuation allowance on our net deferred tax assets.
Other Expense Fiscal Year Ended (dollar amounts in thousands) December 31, 2023 December 25, 2022 Percentage Change Other expense $ 3,475 $ 819 324 % As a percentage of total revenue 1 % — % 1 % The change in other expense in fiscal year 2023 was primarily due to a change in the fair value of our contingent consideration compared to the prior year, which was issued as part of the Spyce acquisition in the third quarter of fiscal year 2021.
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, pre-opening costs decreased in fiscal year 2024 compared to fiscal year 2023 due to the variances noted above as well as comparatively higher revenue in the current year.
Fiscal year 2023 was a 53-week year with the extra operating week (the “53rd week”) falling in our fourth fiscal quarter. Fiscal 2022 and 2021 each contained 52 weeks. (2) No restaurants were excluded from the Comparable Restaurant Base as of the end of fiscal year 2023.
Fiscal years 2024 and 2022 each contained 52 weeks. Fiscal year 2023 was a 53-week year with the extra operating week (the “53rd week”) falling in our fourth fiscal quarter.
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.
Upon sale, gift cards are recorded as unearned revenue and included within gift card liability in the accompanying audited consolidated balance sheets. The revenue from gift cards is recognized when redeemed by customers.
Accordingly, these are the policies we believe are the most critical to aid in fully understanding and evaluating our financial condition and results of operations. For further information, see Note 1 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Leases We determine if a contract contains a lease at inception.
For further information, see Note 1 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K. Leases We determine if a contract contains a lease at inception. Our material operating leases consist of restaurant locations and office space.
We have also historically prioritized promotions and discounts on our Owned Digital Channels, which also reduces revenue on these channels. If we see a shift in sales through the Native Delivery, Outpost and Catering , and Marketplace channels, our margins may decrease.
If we see a shift in sales through the Native Delivery, Outpost and Catering , and Marketplace channels, our margins may decrease.
Components of Results of Operations Revenue We recognize food and beverage revenue, net of discounts and incentives, when payment is tendered at the point of sale as the performance obligation has been satisfied, through our three disaggregated revenue channels: Owned Digital Channels, In-Store-Channel (Non-Digital component), and Marketplace Channel.
(10) Includes the employer portion of payroll taxes related to the vesting of 600,000 performance stock units released to each founder during the fiscal year ended December 29, 2024. 62 Table of Contents Components of Results of Operations Revenue We recognize food and beverage revenue, net of discounts and incentives, when payment is tendered at the point of sale as the performance obligation has been satisfied, through our three disaggregated revenue channels: Owned Digital Channels, In-Store-Channel (Non-Digital component), and Marketplace Channel.
However, as revenue increases, we expect that other restaurant operating costs, such as repairs and maintenance and property insurance, as a percentage of revenue will decline. 66 Tab le o f Contents Operating Expenses General and Administrative General and administrative expenses consist primarily of operations, technology, finance, legal, human resources, administrative personnel, and other personnel costs that support restaurant development and operations, as well as stock-based compensation expense and brand-related marketing.
Operating Expenses General and Administrative General and administrative expenses consist primarily of operations, technology, finance, legal, human resources, administrative personnel, and other personnel costs that support restaurant development and operations, as well as stock-based compensation expense and brand-related marketing.
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.
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 29, 2024, we owned and operated 246 restaurants in 22 states and Washington, D.C.
The following table presents our material cash requirements for future periods: (in thousands) Total 2024 2025 2026 2027 2028 Thereafter Operating leases (1) $ 402,304 $ 55,956 $ 56,123 $ 55,048 $ 50,928 $ 45,132 $ 139,117 (1) See Note 9 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.
The following table presents our material cash requirements for future periods: (in thousands) Total 2025 2026 2027 2028 2029 Thereafter Operating leases (1) $ 427,655 61,431 $ 61,647 $ 58,124 $ 52,188 $ 50,261 $ 144,004 (1) See Note 8 to our audited consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeFor 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.
Biggest changeFor example, in the fourth quarter of fiscal year 2024, as a result of extreme weather conditions, we experienced supply chain disruptions for tomatoes and cucumbers, which resulted in higher prices for those products or resulted in temporarily discontinuing those products in certain geographic markets.
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.
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 2024 and 2023.
Generally, our pricing agreements with suppliers range from one to three years, depending on the outlook for prices of the particular ingredient. In some cases, we have minimum purchase obligations.
Generally, our pricing agreements with suppliers range from up to three years, depending on the outlook for prices of the particular ingredient. In some cases, we have minimum purchase obligations.
Due to the recent pace of inflation and other global supply chain risks, including extreme weather conditions, suppliers and distributors have, and could continue to, attempt to renegotiate our existing contracts to increase prices, as well as assess certain fuel surcharges. These changes could have a negative impact on our commodity prices.
Due to the recent pace of inflation and other global supply chain risks, including extreme weather conditions, suppliers and distributors have, and could continue to, attempt to renegotiate our existing contracts to increase prices, as well as assess certain fuel surcharges. These changes could have a negative impact on our 79 Table of Contents commodity prices.
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.
As of December 29, 2024 and December 31, 2023, we ha d $214.8 million and $257.2 million of cash and cash equivalents, respectively, consisting of bank accounts and money market funds, and $2.6 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.
Macroeconomic conditions also negatively impact consumer discretionary spending and could negatively impact our Restaurant Level Profit. 87 Tab le o f Contents
Macroeconomic conditions also negatively impact consumer discretionary spending and could negatively impact our Restaurant Level Profit. 80 Table of Contents

Other SG 10-K year-over-year comparisons