A Sweetgreen banner on the NYSE, November 18, 2021.
Sweetgreen on Thursday reported widening losses but strong fourth-quarter sales growth and promising performance at its restaurants in its first quarterly report since its initial public offering.
The salad chain also issued a strong sales outlook for 2022, although it doesn’t expect to turn a profit yet.
Shares of the company soared 17% in extended trading. After a strong debut on the public markets in mid-November, the stock has struggled as investors question the company’s lack of profitability, a rarity for publicly traded restaurants.
Sweetgreen shares have shed more than 50% since debuting on the public market, dragging its market value down to roughly $2.2 billion. The stock closed Thursday down roughly 11% before spiking in extended trading on the back of its results.
The chain reported a fourth-quarter net loss of $66.2 million, or $1.14 per share, compared with a loss of $41.1 million, or $2.49 per share, a year earlier. The company recorded a $21.5 million increase in stock-based compensation. Sweetgreen also said that price hikes and killing off its loyalty program helped restaurant-level margins, although higher wages and employee bonuses weighed on its bottom line.
Net sales rose 63% to $96.4 million, topping expectations of $84.7 million, according to a survey of analysts by Refinitiv.
The chain reported same-store sales growth of 36% for the quarter. In the year-ago period, the company saw its same-store sales shrink by 28% as the pandemic took a toll on demand for its warm bowls and salads.
Most of the credit for the quarterly jump in same-store sales comes from an increase in orders, although the chain also reported a 4% benefit from price hikes.
Executives said the company has a lot of pricing power, but they’re wary of rising prices too high and scaring away new customers. Co-founder and CEO Jonathan Neman has previously said that the company’s aim is to become the McDonald’s of his generation.
Sweetgreen said 65% of its sales came from digital orders. While impressive when compared against the broader restaurant industry, that marks a decrease for the company, as more than three-quarters of its transactions came from online orders during the year-ago period.
“Once we take a front-line customer and they’re coming on digital, they’re coming back 1.5 times more,” Neman said on the company’s earnings call.
He added that if customers buy from two different channels, such as stores and online, they come back even more frequently.
Looking ahead to the first quarter, Sweetgreen said it anticipates revenue of between $100 million and $102 million and same-store sales growth of 30% to 33%. It’s also expecting adjusted losses before interest, taxes, depreciation and amortization of between $18 million and $20 million.
For the full year, Sweetgreen anticipates revenue of $515 million to $535 million and same-store sales growth of 20% to 26%. Wall Street is expecting the chain to see net sales of $513.1 million in 2022, though analyst coverage on the stock is light.
The company expects to see adjusted losses before interest, taxes, depreciation and amortization of $33 million to $40 million for 2022. Executives said they’re expecting food prices to rise 6% in 2022.
Sweetgreen is also planning to open at least 35 new locations during the year.