Sweetgreen, Inc. Q4 FY2025 earnings call

• Operational excellence: Project OneWay has seen restaurants scored great through internal audits double in two quarters, with better comps and customer return rates. Elevated quality of core items like salmon, rice, quinoa, and chicken, with salmon velocity up ~20%. - Complexity reduction: Constantly looking at tools, processes, and in-restaurant activities to leverage value-added partners. Examples include de-stemmed kale, and looking at steak cooking, chicken protein marination, and upstreaming dressings/sauces. - Loyalty program: Weekly year-over-year growth in new members, loyalty members have higher annual spend. Scan-to-pay transactions doubled in past two quarters. - Infinite Kitchens (IK): 32 stores opened with IK, seeing benefits in throughput, accuracy, wait times, and pricing power. Used selectively, not a major retrofit focus. - Store openings: Focus on markets with high confidence, new and emerging markets like Arkansas, Phoenix, Cincinnati doing well. Suite lane format also being leaned into.

• Comp guidance: Between negative four and negative two. - Pricing: Being cautious given consumer backdrop, will reevaluate throughout the year but not in guide. - Restaurant margin: About half from sales deleverage, half from supply chain initiatives and operational efficiencies like predictive ordering tool and labor management tool optimization.

Q: Discuss how the rollout of Project OneWay is progressing and store performance metrics for earliest rolled-out stores.

A: Very encouraged by Project OneWay, restaurants scored great through internal audits doubled in two quarters, better comps and customer return rates in those stores.

Q: Revisit complexity reduction topic for 2026, top priority areas and impact.

A: Constantly looking at tools, processes, and in-restaurant activities to leverage value-added partners, examples like de-stemmed kale, steak cooking, chicken protein marination, upstreaming dressings/sauces.

Q: Strip out storm impact and trends, estimate first quarter storm impact.

A: January and February choppy, storm impact to date about 320 basis points, but latest storm not included, weeks without weather show momentum.

Q: Unpack restaurant margin guidance for 2026, COGS and labor line items.

A: About half sales deleverage, half from supply chain initiatives and operational efficiencies like predictive ordering tool and labor management tool optimization.

Q: Frame up RACs opportunity, whether digital only.

A: Very excited about wraps, 2 years of product development, rapid ops test in 8 stores, market test in 68 stores, results encouraging, wraps available on all channels.

Q: Talk about development beyond this year, managing lease signing.

A: Making sure of healthy pipeline, have solid pipeline for this year and 27, will accelerate development when comps improve.

Q: Share loyalty program quarter impact, customer observation.

A: Program doing well, weekly growth in new members, loyalty members have higher annual spend, optimizations coming, scan-to-pay transactions doubled.

Q: Comment on IK, higher AUVs, throughput metrics.

A: IK continues to be encouraging, 32 stores with IK, seeing benefits in throughput, accuracy, wait times, pricing power.

Q: Implication of wraps on operational complexity.

A: Testing focused on operational implications, no additional labor needs, works within current workflows and with IK.

Q: Marketing and value communication.

A: Lots of opportunities on value, testing new pricing structure for make your own bowls, reevaluating marketing mix for top of funnel brand awareness and bottom of funnel efficiency.

Q: IK retrofits, store openings change.

A: IK retrofits not a huge focus, focus on markets with high confidence, new and emerging markets doing well.

Q: Digital mix growth, sales trends by region.

A: Native business pickup due to loyalty promotions, Marketplace and third party growth underway, northeast under pressure but improving, California seeing momentum.

Q: Trends by cohorts, value perception, G&A reduction.

A: Q4 saw slight decline in all cohorts, pickup in Q1, value perspective focuses on price architecture and incremental transactions, G&A reduction by cutting non-returning spend and focusing on growth plan.

Q: Simplifying pricing architecture for create your own, percent of sales and impact.

A: About a quarter of sales is make your own, will be radically simplified and tested through stage gate process.

Q: Update on new store productivity tracking for Q4 openings.

A: Hard to tell for Q4 openings, monitoring and will focus on best sites in 2026, some new markets showing promising results.