Breaking Down Sweetgreen, Inc. (SG) Financial Health: Key Insights for Investors

Are you an investor keeping a close watch on the fast-casual restaurant scene? Have you been eyeing Sweetgreen, Inc. (SG), wondering if it's a healthy addition to your portfolio? In 2024, Sweetgreen reported a 16% increase in total revenue, reaching $676.8 million, and achieved its first full year of positive adjusted EBITDA at $18.7 million. But with a net loss of $29 million for the fourth quarter and a stock that has seen significant volatility, is Sweetgreen a promising investment or a risky bet? Dive in to uncover the key financial insights that will help you make an informed decision.

Sweetgreen, Inc. (SG) Revenue Analysis

Understanding Sweetgreen's revenue streams involves analyzing its primary revenue sources, year-over-year growth, contributions from different business segments, and any significant changes in these streams.

Sweetgreen, Inc. focuses on serving healthy food at scale within the fast-casual dining sector, emphasizing sustainability and community engagement. The company operates 246 restaurants across 22 states and Washington, D.C. as of December 29, 2024.

Here’s a detailed breakdown:

• Primary Revenue Sources:
  • Products: The core revenue comes from the sale of salads, bowls, and other healthy food items.
  • The menu is customizable and features 13 curated signature items available year-round, emphasizing plant-forward, seasonal, and locally sourced ingredients.
  • In 2024, Sweetgreen introduced steak as a new protein option.

The company also generates revenue through digital channels. In fiscal year 2024, 56% of revenue came from digital channels.

• Year-over-Year Revenue Growth Rate:
  • Sweetgreen has demonstrated strong revenue growth over the past few years.
  • In 2024, Sweetgreen reported a revenue of $676.8 million, a 16% increase compared to 2023.
  • This growth marks the fourth consecutive year of double-digit revenue growth since its IPO in 2021.

Historical revenue growth rates:

• Contribution of Different Business Segments to Overall Revenue:
  • Sweetgreen operates primarily within the fast-casual dining sector.
  • The company focuses on broadening its brand beyond salads.
  • Same-store sales grew by 6% for the full year 2024. This comprised a 4% benefit from menu price increases and 2% from traffic and mix.

Digital revenue also forms a significant portion of the total revenue. In Q3 2024, total digital revenue accounted for 55% of the total revenue.

• Analysis of Significant Changes in Revenue Streams:
  • Menu Innovation: The introduction of new menu items, such as the grass-fed, pasture-raised steak, has helped drive customer traffic.
  • Strategic Initiatives: Investments in marketing and technology are expected to drive future revenue growth.
  • New Restaurant Openings: Sweetgreen opened 25 new restaurants in 2024 and plans to open at least 40 new restaurants in 2025.

In Q4 2024, total revenue was $160.9 million, up from $153 million in Q4 2023. However, the company anticipates a decline in same-store sales between 5% and 3% for Q1 2025.

Despite these challenges, Sweetgreen is implementing several strategies to enhance revenue, including menu innovation, a revamped loyalty program, and strategic media investments.

See Mission Statement, Vision, & Core Values of Sweetgreen, Inc. (SG).

Sweetgreen, Inc. (SG) Profitability Metrics

Assessing Sweetgreen, Inc. (SG)'s financial health requires a detailed examination of its profitability metrics, which provide insights into the company's ability to generate earnings relative to its revenue, operating costs, and assets. Key metrics include gross profit, operating profit, and net profit margins.

For the fiscal year 2024, Sweetgreen's financial performance can be evaluated based on available data. While specific 2024 figures for all metrics may not be available, we can analyze trends and data from the most recent reports to understand the company's profitability. Keep in mind that the full financial picture for 2024 will be clear once the company releases its annual report.

Here's a breakdown of what to consider:

• Gross Profit: This is the revenue remaining after deducting the cost of goods sold (COGS). Monitoring Sweetgreen's gross profit helps in understanding how efficiently the company manages its production costs.
• Operating Profit: This is calculated by subtracting operating expenses (such as administrative and marketing costs) from the gross profit. It indicates how well Sweetgreen manages its business operations and is a key indicator of core profitability.
• Net Profit: This is the profit remaining after all expenses, including interest and taxes, have been deducted from revenue. It represents the actual profit available to shareholders.

To provide a comprehensive analysis, we can look at the trends in these profitability metrics over time. For instance, comparing the gross margin, operating margin, and net margin from 2022, 2023, and the available data for 2024 (if any) can reveal whether Sweetgreen's profitability is improving, declining, or remaining stable. Here's an example of how this data might be structured in a table:

Additionally, it's crucial to compare Sweetgreen's profitability ratios with industry averages. This benchmark helps in determining whether the company is performing better or worse than its competitors. Industry-specific data can provide context on whether Sweetgreen's margins are healthy within the fast-casual restaurant sector.

Analysis of operational efficiency, such as cost management and gross margin trends, further enhances the understanding of Sweetgreen's profitability. Effective cost management directly impacts the bottom line, and consistent gross margin improvements can signal enhanced operational performance. For example, a reduction in food waste or better supply chain management can lead to higher gross margins.

For more in-depth information, you can explore this resource: Breaking Down Sweetgreen, Inc. (SG) Financial Health: Key Insights for Investors

Sweetgreen, Inc. (SG) Debt vs. Equity Structure

Understanding how Sweetgreen, Inc. (SG) finances its growth involves analyzing its debt and equity structure. This includes examining its debt levels, key ratios, and recent financing activities to determine the company's financial strategy and risk profile.

As of the fiscal year 2024, Sweetgreen, Inc. (SG) holds a mix of debt, including both long-term and short-term obligations. Evaluating these components provides insights into the company's ability to manage its liabilities and fund its operations. For instance, a significant portion of long-term debt might indicate substantial investments in future growth, while the level of short-term debt reflects its immediate operational needs.

The debt-to-equity ratio is a critical metric for assessing Sweetgreen, Inc.'s (SG) financial leverage. This ratio indicates the proportion of debt and equity the company uses to finance its assets. A high debt-to-equity ratio suggests a more aggressive financing strategy, potentially increasing financial risk. It's important to compare Sweetgreen, Inc.'s (SG) ratio to industry standards to gauge whether its leverage is typical for its sector. Here's what to consider:

• High Ratio: May indicate higher financial risk but can also reflect strategic use of debt to fund growth.
• Low Ratio: Suggests a more conservative approach, potentially limiting growth opportunities but providing greater financial stability.

Recent activities, such as debt issuances, credit ratings, or refinancing, can significantly impact Sweetgreen, Inc.'s (SG) financial health. New debt issuances might fund expansion or acquisitions, while improved credit ratings can lower borrowing costs. Refinancing activities could indicate efforts to optimize its debt structure and reduce interest payments.

Balancing debt and equity is crucial for sustainable growth. Sweetgreen, Inc. (SG) must strategically manage its debt levels to avoid excessive financial strain while also leveraging equity to maintain a healthy capital structure. The optimal mix allows the company to fund its initiatives without compromising its financial stability. Here are some factors influencing this balance:

• Growth Plans: Ambitious expansion may require more debt financing.
• Market Conditions: Favorable equity markets can encourage equity funding.
• Investor Sentiment: Positive sentiment can make equity offerings more attractive.

Here is a basic example of how a debt and equity structure might look. Actual numbers for Sweetgreen, Inc. (SG) for the fiscal year 2024 would be needed to complete the table accurately.

For additional insights into Sweetgreen, Inc. (SG) financial health, you can check this out: Breaking Down Sweetgreen, Inc. (SG) Financial Health: Key Insights for Investors

Sweetgreen, Inc. (SG) Liquidity and Solvency

Assessing the liquidity and solvency of Sweetgreen, Inc. (SG) provides key insights into its short-term financial health and long-term stability. A review of various financial metrics offers a comprehensive understanding of the company's ability to meet its obligations.

Liquidity Positions:

• Current Ratio: Sweetgreen's current ratio has decreased from 3.02 in March 2024 to 2.02 as of December 2024. While this indicates a decline, a current ratio of 2.02 suggests that the company still has a reasonable ability to cover its short-term liabilities with its current assets.
• Quick Ratio: The quick ratio, which excludes inventory from current assets, was reported at 2.01 in December 2024, slightly below the current ratio, highlighting the company's solid liquid asset position.

Working Capital Trends:

Sweetgreen's working capital has seen fluctuations throughout 2024:

• It decreased from $176.26 million on March 31, 2024, to $118.62 million on December 31, 2024.
• Working Capital Per Revenue in Q3 2024 sequentially fell to 0.26, a new company low.

A decrease in working capital could indicate potential challenges in managing short-term assets and liabilities efficiently. For more insights, you can read about Mission Statement, Vision, & Core Values of Sweetgreen, Inc. (SG).

Cash Flow Statements Overview:

Analyzing the cash flow statements provides a clearer picture of Sweetgreen's financial activities:

• Operating Cash Flow: Net operating cash flow has varied throughout the year, with values of $3.43 million (2024-03-31), $19.12 million (2024-06-30), $14.73 million (2024-09-30), and $6.12 million (2024-12-31).
• Investing Cash Flow: Capital expenditures for 2024 stood at $84.46 million.
• Financing Cash Flow: Reviewing financing activities would provide insights into how Sweetgreen is funding its operations and growth.

Potential Liquidity Concerns or Strengths:

Several factors point to both strengths and potential concerns regarding Sweetgreen's liquidity:

Strengths:

• Strong revenue growth, with total revenue increasing by 16% to $676.8 million in fiscal year 2024.
• The company anticipates that its existing cash and cash equivalents will be sufficient to fund its operating lease obligations, capital expenditures, and working capital needs for at least the next 12 months.

Concerns:

• Negative free cash flow and high capital expenditure relative to operating cash flow raise concerns about its ability to fund growth internally and may require external financing.
• Decreasing cash and short-term investments could impact future financial flexibility.

Additional Data Points:

The following table summarizes key ratios and metrics for Sweetgreen:

Sweetgreen's financial health presents a mixed picture. While revenue is growing and liquidity ratios remain above industry averages, negative cash flow and decreasing working capital indicate areas needing attention. Investors should monitor these trends closely to assess the company's long-term financial stability.

Sweetgreen, Inc. (SG) Valuation Analysis

Determining whether Sweetgreen, Inc. (SG) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. These elements, when assessed together, provide a comprehensive view of the company's valuation.

Analyzing valuation ratios is crucial for understanding Sweetgreen, Inc.'s (SG) market position. Here's how these ratios can be interpreted:

• Price-to-Earnings (P/E) Ratio: This ratio indicates how much investors are willing to pay for each dollar of Sweetgreen, Inc.'s (SG) earnings. A higher P/E ratio might suggest overvaluation, while a lower one could indicate undervaluation, relative to industry peers or historical averages.
• Price-to-Book (P/B) Ratio: The P/B ratio compares Sweetgreen, Inc.'s (SG) market capitalization to its book value of equity. It can help investors determine whether the stock price is reasonable compared to the company's net asset value.
• Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio is used to assess the overall value of Sweetgreen, Inc. (SG) relative to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It's particularly useful for comparing companies with different capital structures.

Recent stock performance provides context to Sweetgreen, Inc.'s (SG) valuation. Consider these points:

• Stock Price Trends: Examining the stock price movement over the past year, or longer, can reveal investor sentiment and market confidence in Sweetgreen, Inc. (SG). Upward trends may reflect positive expectations, while downward trends could signal concerns.
• Dividend Yield and Payout Ratios: As of now, Sweetgreen, Inc. (SG) does not offer dividends, so these metrics are not applicable in its valuation analysis.

Here is a table summarizing SG stock information as of April 18, 2025:

Analyst opinions can offer insights into market perceptions of Sweetgreen, Inc. (SG):

• Consensus Recommendations: Look for the general sentiment among analysts—whether it's a buy, hold, or sell recommendation. A consensus buy rating suggests analysts believe the stock is undervalued, while a sell rating indicates the opposite.
• Price Targets: Analyst price targets provide a range within which they expect the stock to trade. Comparing the current stock price to these targets can further inform your valuation assessment.

To gain more insight into Sweetgreen, Inc.'s (SG) core values and strategic objectives, review their Mission Statement, Vision, & Core Values of Sweetgreen, Inc. (SG).

Sweetgreen, Inc. (SG) Risk Factors

Several factors, both internal and external, can significantly impact Sweetgreen, Inc.'s (SG) financial health. These risks span industry competition, regulatory changes, market conditions, and specific operational and strategic challenges. Understanding these risks is crucial for investors assessing the company's long-term viability and potential.

Here's an overview of key risks:

• Industry Competition: The fast-casual restaurant sector is highly competitive. Sweetgreen faces competition from established national chains, regional players, and smaller, independent restaurants. The ability to differentiate its offerings, maintain competitive pricing, and attract and retain customers is vital for sustained growth.
• Regulatory Changes: Changes in food safety regulations, labor laws (including minimum wage increases), and healthcare mandates can increase operating costs and impact profitability. Compliance with these regulations requires ongoing investment and adaptation.
• Market Conditions: Economic downturns, changes in consumer spending habits, and fluctuations in commodity prices (especially for fresh produce) can affect Sweetgreen's revenue and profit margins. Consumer preferences for healthy and sustainable food options also play a role.

Operational, financial, and strategic risks are often highlighted in the company’s earnings reports and filings. These may include:

• Supply Chain Disruptions: As a restaurant chain that relies heavily on fresh produce, Sweetgreen is vulnerable to supply chain disruptions caused by weather events, disease outbreaks, or other unforeseen circumstances. These disruptions can lead to increased costs and potential menu changes.
• Labor Costs and Availability: Rising labor costs and a tight labor market can put pressure on Sweetgreen's profitability. The company needs to effectively manage labor costs while attracting and retaining qualified employees.
• Expansion and Real Estate Risks: Sweetgreen's growth strategy involves opening new locations. This exposes the company to real estate risks, including securing favorable lease terms, accurately predicting store performance, and managing construction costs.
• Technology and Cybersecurity Risks: Reliance on technology for online ordering, payment processing, and data management exposes Sweetgreen to cybersecurity risks. Data breaches or system failures can damage the company's reputation and result in financial losses.

Mitigation strategies and plans that Sweetgreen may employ to address these risks can include:

• Diversifying Supply Chains: Sourcing ingredients from multiple suppliers can reduce the impact of disruptions from any single source.
• Investing in Technology: Implementing technology solutions to improve operational efficiency, manage inventory, and enhance the customer experience.
• Employee Training and Retention Programs: Investing in employee training and offering competitive wages and benefits to attract and retain talent.
• Insurance and Risk Management Programs: Utilizing insurance policies and risk management programs to mitigate potential losses from various risks.

For more insights into Sweetgreen, Inc.'s (SG) financial health, you can read: Breaking Down Sweetgreen, Inc. (SG) Financial Health: Key Insights for Investors.

Sweetgreen, Inc. (SG) Growth Opportunities

Sweetgreen, Inc. (SG) is focusing on several key strategies to fuel its future growth. These strategies include menu innovation, market expansion, and leveraging technology to enhance customer experience and operational efficiency.

Key growth drivers for Sweetgreen, Inc. (SG) include:

• Menu Innovation: Sweetgreen is continuously innovating its menu to cater to changing consumer preferences and dietary trends. This includes introducing new seasonal ingredients, developing innovative salads and bowls, and expanding plant-based options.
• Market Expansion: Sweetgreen, Inc. (SG) is strategically expanding its footprint in existing markets and entering new geographic areas. This involves opening new restaurants in high-traffic locations, expanding delivery services, and exploring partnerships to reach new customers.
• Technology Integration: Sweetgreen is leveraging technology to enhance the customer experience and improve operational efficiency. This includes investing in online ordering platforms, mobile apps, and data analytics to personalize offerings and optimize restaurant operations.

While specific future revenue growth projections and earnings estimates are subject to market conditions and company performance, several strategic initiatives and partnerships could drive future growth for Sweetgreen, Inc. (SG):

• Partnerships: Collaborations with complementary brands or platforms can expand Sweetgreen's reach and introduce its offerings to new customer segments.

Sweetgreen, Inc. (SG) possesses several competitive advantages that position it for sustained growth:

• Brand Recognition: Sweetgreen has established a strong brand reputation for providing fresh, healthy, and sustainable food options, which resonates with health-conscious consumers.
• Supply Chain: Sweetgreen has developed a robust supply chain that ensures access to high-quality ingredients from local farmers and suppliers.
• Technology Platform: Sweetgreen's technology platform enhances the customer experience and improves operational efficiency, providing a competitive edge in the fast-casual dining sector.

For additional insights into Sweetgreen, Inc. (SG)'s financial health, you can explore: Breaking Down Sweetgreen, Inc. (SG) Financial Health: Key Insights for Investors