Sweetgreen (SG) Q4 2025 Earnings Call Transcript

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DATE

Thursday, Feb. 26, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• Chief Executive Officer and Co-Founder — Jonathan Neman
• Chief Financial Officer — Jamie McConnell

TAKEAWAYS

• Full Year Revenue -- $679,500,000 was reported for 2025.
• Comparable Sales Decline -- Comparable sales decreased by 7.9% for the year.
• Unit Growth -- 35 net new restaurants opened, ending with 281 total locations.
• Restaurant-Level Margin (fiscal year ended Dec. 28, 2025) -- Margin was 15.2% for the year.
• Adjusted EBITDA (fiscal year ended Dec. 28, 2025) -- Loss of $11,000,000 reported for the year.
• Q4 Sales -- $155,200,000, down from $160,900,000 in Q4 the prior year.
• Q4 Comparable Sales -- Declined 11.5% compared to prior year.
• Q4 Restaurant-Level Margin -- 10.4%, down from 17.4% the prior year.
• Q4 Net Loss -- $49,700,000, compared to $29,000,000 prior year.
• Q4 Adjusted EBITDA -- Loss of $13,300,000 versus a loss of $600,000 the prior year.
• Q4 Food, Beverage, and Packaging Costs -- 29.2% of revenue, up 180 basis points year over year, primarily from increased protein portion and ingredient waste.
• Q4 Labor and Related Expenses -- 30.5% of revenue, up 200 basis points, reflecting wage inflation and sales deleverage.
• G&A Expense (Q4) -- $39,700,000, higher by $2,600,000 driven by one-time stock-based compensation changes.
• Cash Position -- Ended the quarter with $89,200,000 in cash; received $100,000,000 in cash proceeds at the start of 2026.
• 2026 Comparable Sales Guidance -- Management guided to negative 4% to negative 2% same-store sales for 2026.
• 2026 Restaurant-Level Margin Guidance -- 14.2%-14.7% anticipated in 2026.
• 2026 Adjusted EBITDA Guidance -- Guidance set between $1,000,000 and $6,000,000.
• 2026 Net New Restaurant Openings -- Targeting about 15 net new restaurants, with nearly half featuring Infinite Kitchen technology.
• Infinite Kitchen Labor Savings -- Established Infinite Kitchens delivered more than 700 basis points in labor savings over classic locations of similar age.
• Wraps Platform Testing -- Wraps began pilot in January, expanded to 68 restaurants, and could launch chainwide by mid-2026 if operational and retention metrics are met.
• Q1 2026 Same-Store Sales Trend -- January same-store sales declined 11.8%, citing severe weather impact.
• Menu Innovation Impact -- Improved salmon preparation led to “almost 20%” higher salmon sales velocity per Neman.
• Loyalty Member Frequency -- Members transacting both digitally and in-store visit Sweetgreen nearly two times as often as digital-only members.
• Scan to Pay Penetration -- Approaches 20% of in-store transactions, having doubled over two quarters.

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RISKS

• Q4 comparable sales declined 11.5%, and traffic and mix were down 13.3%, reflecting ongoing consumer pullback and operational headwinds.
• Management reported, "We continue to experience traffic pressure," and guidance anticipates further same-store sales declines of 2%-4% in 2026.
• Q4 net loss widened to $49,700,000 from $29,000,000 the prior year, driven by margin declines, deleverage, and increases in costs across labor, food, and operating expenses.
• Q1 2026 is expected to be the most challenging quarter, with “January same-store sales declined 11.8%, impacted by severe weather.”

SUMMARY

Sweetgreen(NYSE:SG) reported steeper traffic and comparable sales declines in both the fourth quarter and the full year, resulting in margin deterioration and higher net losses. Management is implementing a multi-pronged transformation plan that prioritizes operational consistency, streamlined menu innovation, targeted value initiatives, and continued Infinite Kitchen deployment. The company is testing new product categories such as wraps—piloting in 68 restaurants, with performance under scrutiny for a potential mid-year wider rollout. Guidance reflects management’s expectation for further same-store sales declines and a cautious outlook on price increases, signaling continued consumer and cost headwinds. Sweetgreen also emphasized new restaurant formats, loyalty engagement, and geography-focused improvements, but expects Q1 to remain a notably pressured period.

• The transition from Sweetpass+ to SG Rewards shifted revenue composition by eliminating subscription revenue and introducing a loyalty deferral.
• Wraps offer a sub-$15 entry among all channels; management describes early wrap platform results as “really, really encouraging,” especially regarding new customer acquisition and second-order rates.
• Operational focus includes reducing ingredient and ordering complexity, rolling out new labor management and predictive ordering tools, and realigning incentives around sales and margin accountability.
• Infinite Kitchen technology, including the new Sweetlane drive-thru format, is being rapidly expanded and is credited with both cost and throughput gains in comparative locations.
• The company received $100,000,000 in cash proceeds in early 2026, boosting liquidity and supporting a measured pace of new unit development weighted to the back half of the year.

INDUSTRY GLOSSARY

• Infinite Kitchen (IK): Proprietary automated food assembly technology used by Sweetgreen to drive labor savings, throughput, and accuracy.
• Stage Gate Process: A disciplined approach at Sweetgreen for new menu or operational innovations, structured to evaluate test performance and ensure operational feasibility prior to broader rollout.
• Sweetlane: Drive-thru restaurant format incorporating Infinite Kitchen technology, designed to target suburban and on-the-go customer segments.

Full Conference Call Transcript

Jonathan Neman: Thank you, Rebecca. Thank you to everyone joining us this afternoon. Our team members are our most important ingredient. They are the heart behind every meal we serve. From the people leading our restaurants and serving guests every day to the teams in our support center. Every team member plays a role in bringing our mission of connecting people to real food to life. I want to thank our teams for staying disciplined and focused on the fundamentals during what has been a challenging operating environment. In that spirit, I want to recognize my Co-Founder and longtime partner, Nathaniel Ru.

From our first day at Georgetown to building Sweetgreen, Inc. together, Nate has been a defining force behind our culture, our creativity, and our belief that the smallest details are what make a brand truly special. While Nate has stepped back from his day-to-day role, I am grateful he will continue to support us from the board as we build what is next for Sweetgreen, Inc. Nate, Nic, and I are all confident that the team we have in place today is set up to navigate Sweetgreen, Inc. through this moment and lead us into our next phase of growth.

Our full year results make it clear there is more work to do as we position the business for the future. For fiscal year 2025, revenue was $679,500,000. We continue to experience traffic pressure. Comparable sales for the year declined 7.9%. We opened 35 net new restaurants, ending the year with 281 locations. Restaurant-level margin was 15.2%, and adjusted EBITDA was a loss of $11,000,000. I will start with an update on our Sweet Growth transformation plan, and Jamie will walk through the financials in more detail.

We are executing with urgency across the business and are one quarter into our transformation plan, which is focused on five strategic priorities: one, operational excellence; two, food quality and menu innovation; three, personalized experience; four, brand relevance; and five, disciplined profitable investments. While the financial impact will take time to materialize, we are strengthening the foundation of the company. We are improving operations, elevating food quality, accelerating menu innovation, and strengthening our value proposition, all guided by clear return thresholds. We are staying relentlessly focused on our guests and acting on what matters most to them.

As I walk through our strategic priorities, I will share a few encouraging signs where the foundational work is beginning to show up in the business. Starting with operational excellence, it remains the foundation of our ability to win with guests. We are building the systems and discipline required to deliver consistent, high-quality execution across every restaurant every day. Let me share where we are. Over the summer, we implemented Project One Best Way, our system-wide effort to elevate operational excellence through clear standards, performance-based leadership, and measured execution. Today, approximately two-thirds of our restaurants are hitting our “Great” bar based on our internal operational audits.

What is most encouraging is the shift in the distribution this quarter, with more restaurants exceeding standard and fewer falling below, reflecting improved consistency across the fleet. Importantly, “Great” is not a static benchmark. As performance improves, we continue to raise the bar by increasing both the standard score and our expectations for what constitutes great. Throughput is where operational discipline translates into results. In any great kitchen, it means having everything in its place before the rush. That same principle drives our “Rush Ready Before Peak” initiative, ensuring the right team members are in position, prep is complete, and stations are set before peak volume hits.

We have just started to introduce real-time throughput visibility to our field teams, giving them the ability to see performance and adjust in the moment. We know that speed and accuracy during peak periods are what drive both guest satisfaction and team confidence, and we are building the muscle memory across the system to deliver consistently. We have also strengthened how we measure and drive performance. The restaurant scorecard we introduced last quarter gives teams clear visibility into a focused set of metrics—sales, throughput, customer satisfaction, labor, food quality, and people—so they know exactly where we are winning and where we need to improve.

During my restaurant visits, I review scorecards with our teams and walk the “Sweet Path,” a framework that breaks each restaurant into clear zones with simple, consistent standards for how we show up every day. We are encouraged by the progress we are seeing, but we know there is more work to do. We are still seeing inconsistencies in areas like ingredient availability and ordering, as well as team scheduling, and we are addressing them directly, improving our tools, retraining teams system-wide, and realigning quarterly bonus incentives around the financial and operational metrics that matter most.

Our goal is to equip restaurant leaders with clear data and streamlined systems so they can think and act like owners, accountable for sales, margins, and the guest experience. Food quality and menu innovation are at the heart of who we are. Our menu sets us apart—built on real culinary credibility, made from scratch with ingredients from farmers and partners we know and trust. Delivering delicious food, executed consistently, is nonnegotiable. It is how we compete, and it is how we win. A recent example is our internal “Miso My Salmon” campaign, launched in December to sharpen execution and elevate salmon quality across the system.

We extended marinade times to deepen flavor and refined cooking and presentation, serving the fat side up for better caramelization and a more vibrant appearance. We took the same disciplined approach with chicken, updating our recipe for a juicier result alongside upgrades to our golden quinoa, white rice, and napa cabbage slaw that you can try in our restaurants today. This is our culture of culinary technique and practice: constantly refining how we prep, cook, and present our food. Menu innovation, when supported by strong operational execution, can be a key driver of comp growth. Our stage gate process implemented in 2025 guides this innovation by ensuring we test and learn while maintaining operational excellence in our restaurants.

Today, we have the most robust innovation pipeline in Sweetgreen, Inc.’s history, designed to diversify menu occasions, fan categories, attract new customers, and drive frequency with existing ones. We kicked off 2026 with two limited-time-only menus. The first was a collaboration with Function Health and their Co-Founder and Chief Medical Officer, Dr. Mark Hyman. Built entirely from existing ingredients, the menu was operationally simple to execute while reinforcing the quality and integrity of our offerings, and demonstrated how we can deliver credible, wellness-forward innovation without adding complexity in our restaurants.

Our second limited-time menu launched February 3 with the Winter Harvest Bowl, a seasonal take on our best-selling bowl featuring maple-glazed squash and the vegetable of the year, charred balsamic cabbage. At the same time, we brought back feta cheese to our core lineup, a frequently requested ingredient by loyal customers and brand fans. Taken together with our innovation pipeline, our menu calendar reflects our focus on creating newness on the menu and bringing customers fresh seasonal ingredients with compelling sourcing stories throughout the year. Our biggest menu expansion planned for 2026 is the launch of wraps, which began innovation testing in eight restaurants in the Los Angeles market in January.

As part of our stage gate process, we are learning how to execute wraps at scale while protecting throughput. Operational details, like a Cartia Press placement, have been key focus areas in our eight-restaurant test, and we are actively iterating based on those insights. Building on those learnings, we expanded wraps to a broader market pilot last week across select locations in Manhattan, the Midwest, and Los Angeles. The lineup—Classic Chicken Caesar, Chicken Salad Bacon Club, and Chicken Jalapeño Ranch—starts at $10.95 at select locations in New York City, and the full lineup is priced below $15 across all markets for in-store and pickup orders.

The early feedback is encouraging, and if performance meets our stage gate criteria for customer acquisition and retention, we expect to expand the platform in mid-2026. Improving value perception remains one of our highest priorities. With guests increasingly focused on value and quality while pulling back on overall restaurant spending, we know Sweetgreen, Inc. must deliver on both dimensions without compromising the experience that defines our brand. In 2025, we took important steps forward, including increasing protein portions, reintroducing lower-price seasonal offerings, launching $12 Daily Greens, and leaning into the $10 ‘Tis the Season Harvest Bowl to meet guests where they are. While these actions strengthen our value positioning, we recognize there is more work to do.

Following a comprehensive review of our menu and pricing architecture, we have identified a focused set of initiatives to simplify and strengthen the overall experience. Testing is underway, beginning with wraps pricing and loyalty entry price drops. We will also test a rearchitected Create Your Own platform designed to deliver greater price clarity and a more intuitive ordering experience, alongside clearly defined entry-price entrées across our core menu categories later this year, as we pace and sequence these moves over the next several quarters. Together, these initiatives are designed to create a more transparent value ladder, giving guests confidence in what they are paying while supporting incremental traffic and transactions across a broader range of price points.

At Sweetgreen, Inc., value has never been just about price. It is rooted in the farmers we source from, the quality of their ingredients, scratch cooking, generous portions, and a consistent experience. Our 2026 initiatives are focused on making that value clearer and easier to access at every touchpoint. Our personalized digital experience strategy is built to increase customer frequency and spend through one-to-one messages and incentives. The $10 ‘Tis the Season Harvest Bowl promotion in December was a strong proof point for our loyalty-first approach to value and guest engagement. By making the offer exclusive to loyalty members via the Sweetgreen, Inc. app, we brought both new and reactivated guests directly into our ecosystem.

It was our highest-performing reactivation promotion to date. We are listening to customers and followed this up with a $10 Chicken Avocado Ranch offer on February 9. This continued to build momentum with the playbook we call “Craving of the Month,” a loyalty-exclusive limited-time offer featuring a craveable menu item available only through the Sweetgreen, Inc. app, designed to give members a compelling reason to engage with the brand every month. Scan to Pay now represents approximately 20% of frontline, bringing in-store guests into our loyalty ecosystem and giving us full visibility into their Sweetgreen, Inc. behavior and preferences. The impact is tangible. Loyalty members who transact both digitally and in-store visit nearly 2x more frequently than digital-only customers.

We believe this is a key lever to drive higher-frequency omnichannel behavior, and, ultimately, the flywheel that builds lasting lifetime value among our most valuable guests. At our best, our brand creates culture and makes the spaces we occupy more real, vibrant, and connected. In the fourth quarter, our protein-focused campaign resonated with guests seeking more filling, satisfying meals. Built on the insight that protein stopped being about food, we cut through the noise with the launch of the PowerMax Protein Plate, delivering over 100 grams of protein from real ingredients like quinoa and chicken, with no fillers, and generated strong social buzz and brand relevance.

In February, we launched our expanded catering platform, including the Build Your Own Sweetgreen, Inc. Bar, and are seeing strong early traction. Anchored by our “Here for the Bowl” campaign and a Big Game activation at San Francisco's Ferry Building Farmers Market, the platform extends Sweetgreen, Inc. into group occasions and serves as a meaningful new customer acquisition channel. Shifting to our last pillar is disciplined profitable investment. In the fourth quarter, we opened 15 net new restaurants, including eight Infinite Kitchens. We also entered three new markets during the fourth quarter: Cincinnati, Sacramento with two Infinite Kitchen restaurants, and Arkansas. We opened our Bentonville restaurant in Q4, and our Fayetteville restaurant in Q1 2026.

We also expanded our presence in Arizona with the second location during the fourth quarter. On the Infinite Kitchen front, the technology continues to deliver on its promise: faster throughput, improved order accuracy, and elevated food quality, all while creating a better experience for both guests and team members. In the quarter, established Infinite Kitchens delivered higher AUVs and labor savings of more than 700 basis points compared to their classic counterparts of similar age. In November, we opened our first Infinite Kitchen Sweetlane location in Costa Mesa, California, expanding the technology into a new format designed to serve suburban markets and capture drive-thru occasions. The location is performing well, and we are excited to grow this format further.

We ended the year with 30 Infinite Kitchen locations. With the Botrista team now part of Wonder, we remain confident in the continuity and trajectory of the platform. The partnership is working. Since the transition, we have successfully opened two new Infinite Kitchen locations in the first quarter—Long Beach and our first in the DMV market at Pike 7. We continue to roll out software improvements, including new capabilities around greens portioning precision, demonstrating that development and deployment momentum remains firmly intact. Over the past year, we have strengthened the foundation of Sweetgreen, Inc. by putting the guest at the center of every decision.

We have rebuilt discipline around the fundamentals that matter most: great food, speed, genuine hospitality, and clear restaurant-level ownership and accountability. Maintaining that standard consistently across the system remains a top priority, because delivering on these basics is what earns trust and keeps guests coming back. At the same time, we are leaning into what makes Sweetgreen, Inc. different. We are strengthening our core menu, delivering innovation in a disciplined way, building a more connected digital ecosystem, and investing in a brand rooted in the Sweetgreen, Inc. lifestyle our guests choose to live every day.

Looking ahead, the work we need to do is clear: execute with discipline to improve performance quarter by quarter and build a stronger, more durable business. While there is still work to do, we are seeing encouraging signs that our efforts are taking hold. I want to thank our team for navigating a challenging year and positioning Sweetgreen, Inc. for more consistent performance ahead. I will now turn the call over to Jamie to review our financial results in detail.

Jamie McConnell: Thank you, Jonathan, and good afternoon, everyone. As Jonathan outlined, the past year was challenging, but it brought clarity on our priorities and the path forward under the Sweet Growth Plan. While we are still early, the actions we have taken and continue to take give us confidence in the opportunity ahead. Our objective is to build a more resilient operating model that supports consistent long-term financial performance. In my experience, sustained results come from staying relentlessly focused on the guest, empowering and holding our teams accountable, strengthening operational execution, and managing costs with discipline. These principles underpin our strategic priorities. When those fundamentals are in place, growth, margin expansion, and cash flow follow.

Across the P&L, we are taking a comprehensive, end-to-end approach to improve efficiency and ensure every dollar is working harder. This includes reducing complexity and reinforcing clear ownership and accountability throughout the organization. As Jonathan mentioned, we have updated our field bonus plan to align incentives directly with restaurant-level performance, encouraging our leaders to think and act like owners with full accountability for sales and margin. Turning to our fourth quarter results, sales were $155,200,000 compared to $160,900,000 a year ago, with comparable sales down 11.5%. Restaurant-level margin was 10.4%, down from 17.4% last year. During the quarter, we opened 15 net new restaurants, including eight Infinite Kitchen, and ended the year with 281 restaurants.

The comparable sales decline was driven by a 13.3% decrease in traffic and mix, partially offset by a 1.8% benefit from menu price increases. The decline also reflects the transition from Sweetpass+ to our new SG Rewards program, which eliminated subscription revenue and introduced a loyalty deferral. We expect the first quarter to be the most challenging of the year. January same-store sales declined 11.8%, impacted by severe weather. In March, we will be lapping the launch of RippleFries. The first quarter includes 70 basis points of price; 2025 carryover price fully rolled off in February. Fourth quarter food, beverage, and packaging costs were 29.2% of revenue, an increase of 180 basis points year over year.

The increase was primarily driven by higher ingredient usage and waste, including increased protein portions. These impacts were partially offset by menu pricing and mix. Harris impacted the quarter by 20 basis points. Fourth quarter labor and related expenses were 30.5% of revenue, an increase of 200 basis points year over year. This was primarily driven by deleverage from lower sales volumes and wage inflation, partially offset by menu price increases and lower bonus expense. Other operating expenses were 19.1% of revenue, an increase of 170 basis points year over year, driven primarily by deleverage from lower sales volumes, higher marketing spend, and increased repairs and maintenance.

G&A expense was $39,700,000 in the quarter, an increase of $2,600,000 year over year, primarily related to one-time stock-based compensation modifications made during the quarter. For 2026, we expect underlying support center costs, excluding stock-based compensation and one-time expenses, to be approximately percent of revenue, down from 15.3% in 2025 as we streamline the organization and drive greater cost discipline. Fourth quarter net loss was $49,700,000 compared to a net loss of $29,000,000 last year, reflecting the decline in restaurant-level profit. Adjusted EBITDA was a loss of $13,300,000 compared to a loss of $600,000 last year, also driven primarily by lower restaurant-level profit. We ended the quarter with $89,200,000 in cash.

At the beginning of fiscal year 2026, we closed the sale by receiving $100,000,000 in cash proceeds. Now turning to fiscal year 2026 guidance. We expect same-store sales to be a decline in the range of negative 4% to 2%. As comparisons ease, we expect same-store sales trends to improve throughout the year. We expect restaurant-level margin to range from 14.2% to 14.7% and adjusted EBITDA to range between $1,000,000 and $6,000,000. On unit growth, we expect to open about 15 net new restaurants, with nearly half featuring Infinite Kitchen technology. We also plan to enter two new markets, Nashville and Salt Lake City. Our development pipeline is weighted toward the back half of the year.

This is inclusive of a handful of closures at the end of their lease term where we see the opportunity to strengthen a nearby location. To close, the opportunity in front of us remains significant. We are rebuilding the fundamentals, strengthening operations, elevating the guest experience, and improving restaurant-level economics. We are committed to building a stronger, more profitable Sweetgreen, Inc. over the long term. With that, I will turn the call over to the operator to begin Q&A. Operator?

Operator: We will now open for questions. Your first question comes from the line of Jon Tower with Citi. Please go ahead.

Jon Tower: Hey, great. Thanks for taking the question. I guess maybe thinking through the comp guidance that you offered, it sounds like you are not going to be taking much price on the year, if any at all. But can you help us think through the puts and takes with respect to comp growth? I know you provided the cadence, but what you are expecting for timing, say, of wraps if they make it through the stage gate process in terms of when they may come through the year? And any other drivers to the top line as you are thinking through the business for '26 and beyond?

Jamie McConnell: Yeah. Hi, Jon. This is Jamie. We expect, like we said, guidance between negative 4% and negative 2%. And so we have had a really choppy beginning of the year with the storms in January and February. However, we have seen a couple really good weeks. We are being conservative given the economic backdrop, but we are excited about all things that we have in place. And then we are also excited if wraps do well in tests, which is looking great, that they do launch in Q2.

Jon Tower: Okay. And in terms of pricing, do you plan on taking any more or taking any during the year?

Jamie McConnell: We are being cautious given the consumer backdrop. But we will reevaluate throughout the year. But that is not in our guide.

Jon Tower: Okay. And then just last one. In terms of thinking about the building blocks to returning store margins to kind of that high teens, low twenties rate, obviously, sales are going to be a key component in it, but can you speak to any specific cost levers that you have already pulled or plan to pull in 2026 to kind of, you know, work with you guys as the sales begin to improve?

Jamie McConnell: Yeah. So there is a lot of things that we are working on for margin. So sales leverage is obviously going to be the biggest piece. But there is also some operational inefficiencies that we are working on. And one example would be around optimizing our order system for our team members to make sure they are ordering the right items, and we are taking the guesswork out of it. So we are looking to streamline that tool and making sure we get rid of all those manual inputs, so we are ordering correctly. So we do see some opportunity there. We also see opportunity within our supply chain, streamlining and doing some supplier diversification.

Jonathan Neman: Yeah. And, Jon, the only thing I will add to that is we have continued to see encouraging signs around our head coach stability and reducing turnover. And we know when we get stable head coaches and reduce turnover, we have more productive teams, which also leads to higher margins. So, obviously, leverage will be the biggest component, but there is a number of operational moves that we are putting in place that, you know, even without any sales leverage, we do have some margin gains to go for.

Jon Tower: Great. Thanks for taking the questions.

Jonathan Neman: Thanks, Jon.

Operator: Your next question comes from the line of Rahul Krotthapalli with JPMorgan. Please go ahead.

Rahul Krotthapalli: Good afternoon, guys. Can you discuss how the rollout of the Project One Way—maybe the first titration, understanding this is an ongoing process—is progressing? And, specifically, can you share some metrics maybe on store performance for the cohort of stores where the rollout has been the earliest, either on margin side or anything else, to give us more confidence that we are closer to the inflection? And I have a follow-up.

Jonathan Neman: Absolutely. Hi, Rahul. So we are very encouraged by the work we are doing from an operational perspective, and a huge shout out to our operations team and our field. We have instituted Project One Best Way, and over two quarters, you have seen the restaurants that have been scored “Great” through our internal audits double just in two quarters. We do see better comps and better return rates of customers in those stores as they perform better on those operational metrics. Those operational metrics are everything from our standards and process, but a lot in terms of hospitality and food quality as well. So they are very in-depth studies.

We are going to continue pushing on that with a huge focus as we look forward, not only on throughput but on hospitality and continuing to elevate our food quality. One thing that I mentioned earlier in the prepared remarks was around a lot of the moves we made around the quality of many of our core items. So we talked about the salmon, where we have elevated the quality of the salmon through some of our culinary techniques, and we have seen salmon, as an example, increase its velocity by almost 20% as we have done that. Similarly, we have upgraded how we season the rice—it is much more delicious.

If you have not tried it, I highly recommend it. And we have upgraded our quinoa from a classic plain quinoa to a golden quinoa. We even changed how we cook our chicken in terms of the cycle time of how often we cook it and the way in which we cook it to be juicier. So a huge focus on the guest and the product and elevating that, and we know when we do that, customers become more loyal and stay with us longer.

Rahul Krotthapalli: Thank you. And then reducing complexity is something you mentioned again in the prepared remarks. Can you revisit this topic on what the top priority areas are here in the store for 2026, and what kind of changes or impact we should see?

Jonathan Neman: In terms of what we actually do in the restaurant? Yes. And that is from the complexity reduction. Yeah. We are constantly looking at tools and processes, as well as what we do in the restaurant and where we can leverage value-added partners to make the work easier in our restaurants. And, again, given our food ethos and focus on made from scratch, we are very, very careful on this. So one of the big rollouts last year was around destemmed kale, as an example. We should see continued efficiencies from that.

There is a number of other opportunities, whether it be how we cook our steak is one thing that we are looking at, chicken protein marination is another one we are looking at, and we are looking at which dressings and sauces could be upstreamed, as long as they can be upstreamed in line with our values. So we really built commercialization muscle over the past couple years, and we will continue to lean into that to make it easier for our team members to work in-store, lower those prep hours, and move more of the hours to focus on hospitality and the guest experience.

Operator: Your next question comes from the line of Brian Bittner with Oppenheimer. Please go ahead.

Brian Bittner: As it relates to the trends in the business, I realize the storms have had a huge impact obviously on the first quarter for the industry, and particularly you given where your store base is. But have you attempted to perhaps strip out that headwind and think about the underlying trends and what those look like? Or do you have an estimate perhaps of how big the impact from the storms could be for the first quarter, so we can try to better think about the trends in the business?

Jamie McConnell: Yeah. So January and February are choppy. The impact of the storms to date is about 320 basis points, but that does not include the latest storm, where we have a little over 100 restaurants. So it is really hard to read the first quarter given our Northeast densification. But what I can tell you is the weeks where we are not seeing any weather, we are seeing some momentum in the business. So that has been great to see.

Brian Bittner: Okay. That is helpful. And just my follow-up question is related to the restaurant guidance for 2026. Maybe you can help unpack how to think about maybe the COGS and labor line items. They have obviously been large sources of deleverage looking backwards, but I think in order to get to the guidance for '26, we need much more stable performance in those two line items, but you are not taking much price, and you anticipate comps to be down 2% to 4%. Can you maybe shape expectations for the building blocks of that restaurant margin guidance?

Jamie McConnell: Yeah. Absolutely. So about half of it is—a little over half of it is—sales deleverage, but then we do see, when it comes to making up that protein portion, that is through supplier diversification and some refinements that we are doing in the supply chain while making sure we keep the quality in our delicious ingredients. Also, a lot of it is related to these operational inefficiencies. Jason is doing an awesome job with the team, but what we are realizing as we go out into these restaurants is that we are making things complicated for our team. So it has really been a focus of getting into the restaurants and seeing how we can make their life easier.

And so one of them was that predictive ordering tool that we are implementing and optimizing. So I think that is probably going to be the other half, as more of the supply chain initiatives and the AUV.

Jonathan Neman: Yeah. If I could just add one thing. We did put in a new labor management tool last year—our new workforce management—and we are continuing to optimize that and make sure we have the right labor at the right time in order to capture sales, but also really just not wasting labor, reducing overtime. And so, a number of levers for us to pull around operational efficiencies.

Jamie McConnell: Yep.

Jonathan Neman: Thank you.

Operator: Next question comes from the line of Brian Mullan with Piper Sandler. Please go ahead.

Brian Mullan: Thank you. Question on the wraps. I think this is something you have been contemplating for a long time. Is there a way to maybe frame up how big of an opportunity this could be, even qualitatively, including as a customer acquisition tool if you get the product and the operations right? And then separately, are you viewing this as a digital-only offering, or is this something you could envision walking the line and being able to order as well?

Jonathan Neman: Absolutely. So we are very excited about wraps—something we have been working on for a very, very long time, probably two years of product development, getting everything perfected, both the flavors, getting the supply chain ready to have a really clean wrap and, of course, perfecting the operation. Instituting our new stage gate process, we went into our rapid ops test in January in eight stores in Los Angeles. The main question we had was, is it going to impact our restaurants operationally, specifically any impact to throughput? I am very confident that it will not be a drag on throughput, and that was the big question.

We have now moved onto a market test with about 68 restaurants featuring wraps, started about a week ago. Results have been really, really encouraging. We have seen incidence tick up almost every day since launch. The feedback we have gotten from guests is phenomenal. It is really hitting, in many ways, a new customer. If you look at the addressable market—wraps, handhelds—there is a huge segment of the population, with us being a bowl-only concept, that we were not capturing. This opens up the aperture a lot for the type of customers and occasions that we can see.

The last thing I will say is that we talked about it in the prepared remarks, but wraps will all be sub-$15, starting at $10.95. So I think really disruptive from a price perspective. And the other thing we see is when people are coming in at those lower prices, their second-order rates are significantly higher. We expect to see the lifetime value, or the annual spend, of guests increase as we do that. So overall, very encouraging. Still perfecting things, getting ready for a midyear launch as long as it passes stage gate, but we do expect wraps to be a really big moment for us.

We will put significant marketing around it, and I will say I think it is going to be a huge moment for the brand.

Brian Mullan: Okay. That is great to hear.

Jonathan Neman: I did not answer your question. Your last part of it was, will it be digital-only? No. It will be available on all channels. Today, even in test—I encourage everyone to go try them and please share your feedback—we have three wraps today. We may expand the lineup, but they are available across all owned channels. Eventually, they will be available on all channels, including third-party, but for right now, they are available both in-store, on pickup, and through our pickup channel.

Brian Mullan: Okay. That is exciting. Thank you. And then a follow-up. Just a question on development. Maybe you could just talk about what the team is focused on beyond this year. I know given the lead times, you would normally be focused on '27, '28. Maybe you do not want to sign as many leases as you normally would right now. So just talk about how you are managing striking the right balance of slowing down now but not having a gap later in the pipeline if you want to accelerate.

Jonathan Neman: Yeah. That is pretty—you kind of nailed the approach. It is making sure we have a healthy pipeline so we have the optionality to speed up as comps improve and we feel good about the unit economics. However, keeping it, you know, not necessarily committing to too much to make sure we are disciplined from a cash perspective. We have learned a lot about where Sweetgreen, Inc. really works. We do have a really, really solid pipeline we feel very confident about for this year, and we do have a really solid pipeline built for '27. But really taking a wait-and-see approach in terms of signing too many deals as we perfect the unit economics in the business.

Once we do see comps turn positive and the flywheel starts going, we do expect to begin to accelerate development back to our previous algorithm.

Operator: Your next question comes from the line of Dennis Geiger with UBS. Please go ahead.

Dennis Geiger: Great. Thanks, guys. I wanted to touch on loyalty a little more. If you could share a bit more on what you saw in the quarter, including the impact to the comp in the quarter first. Then just anything else on the customer observation, including those most frequent guests—how they are using the program, where they are right now versus the old program? If any updates on that front. Thank you.

Jonathan Neman: Yeah. Absolutely. So overall, the program is doing well. We are continuing to see weekly year-over-year growth with new members signing up for the program. We do see loyalty members on an annual spend at more than two times non-loyalty members. It is definitely working. However, we also see a lot of opportunities. So you will see kind of a re-envisioning or an optimization of the program later this year—things like improving perks, adding tiers, boosting benefits of the program. For example, we need more options at lower tiers.

And then we also are seeing a lot of opportunities in how we can leverage AI and personalization around offers and communications, which we think will improve our targeting and continue to drive frequency. So overall, feeling pretty good about the program, but more optimizations coming to really make it a best-in-class program. The best thing about this versus the Sweetpass is it is much more broadly appealing. Last thing I will say is, we introduced Scan to Pay in our restaurants last year, and I think we may be one of the only restaurants that allows you to scan and pay with a single transaction, and that percentage inside of our restaurants has doubled over the past two quarters.

So we are now seeing about 20% of in-store transactions being a Scan to Pay transaction, and, again, those are more customers that we can target with communications and offers.

Dennis Geiger: Great. And then just if I may, one more on IK. Just as it relates to the higher AUVs that you called out, any additional comments there, high-level quantification, or perhaps anything on throughput metrics, etc., on the IK side of things? Thank you.

Jonathan Neman: Yeah. IK continues to be encouraging. We are seeing similar results that we have talked about in the past—at least 700 basis points of leverage. We did introduce our newer formats with the IK—much better from a customer experience perspective and from an operations perspective. And so we are going to continue to have that as a huge part of our toolkit. We opened two more stores with Infinite Kitchen this year in Q1. So we are up to 32 stores featuring the Infinite Kitchen. We continue to see the benefits around throughput, accuracy, and wait times, and over time, we think that also gives us a lot of pricing power.

So very encouraged by the IK, and we will continue to use it, especially in our more high-volume locations.

Dennis Geiger: Thanks, Jonathan.

Operator: Your next question comes from the line of Sara Senatore with Bank of America. Please go ahead.

Sara Senatore: Thank you. I guess maybe just two follow-ups. One is on the wraps. What is the implication for maybe operational complexity? I think your point about bowls—even the protein plates—probably looked kind of similar in terms of the build or how they went down the make line. But is this going to add complexity? And I guess it sounds like probably not something that you can use the Infinite Kitchen for. So as you are stage gating, I assume you are looking at the operational implications. But just anything you can say on that.

Jonathan Neman: Absolutely. So that was the major focus of our test. Even before our rapid ops testing, we did a lot of testing in single restaurants where we brought team members together, worked together to co-create the operation—things like where does tortilla placement go, how does the food move down the line. One of the things that we heard from customers in a lot of our surveys and focus groups was the product is better when the ingredients are mixed before wrapped, and the product is better when the wrap is cut.

So those were things that we wanted to ensure we brought to market, and luckily, through a lot of hard work from our operations team, those are things that we were able to enable and are not seeing any slowdown on throughput. We do not expect any additional labor needs in order to do it. It really works beautifully within our current workflows, and it actually does work with the IK. The Infinite Kitchen does put together all of the ingredients, and our team members wrap things up on the finishing station. So it actually works beautifully in those locations as well.

Sara Senatore: Oh, okay. Well, that is good to hear. And I guess then the second question was about some of your comments about marketing value and value. And I guess you did invest in value in the fourth quarter, and I think you said you saw some initial good reactions. But then, obviously, I think the quarter did not end up where you had hoped. So is there an opportunity here to not just maybe improve the value proposition but improve how you communicate it?

I do not know if it is something beyond what you do with the loyalty program or the in-app marketing, or just anything you have in terms of thinking about whether the communication maybe could be more effective as well as just the more, like, introductory price points.

Jonathan Neman: Yeah. So we see a lot of opportunities there, and we ran a lot of tests and pilots over the past six months to better understand the price-value equation, how that resonates with customers. So one was our $10 Harvest Bowl, where we saw incredible reactivation rates, great customer acquisition, and, interestingly, the reorder rate—holding those customers—was really high. So very encouraging is that brought people into the brand, and then they stayed with us past that promo. We followed that up this year with what we are calling our “Craving of the Month,” which is a value offering only for loyalty members, so it really works in that loyalty flywheel of bringing people into the brand.

And, again, what we are seeing is not only are they coming—many people are reactivating, or lost customers are reactivating, or new customers are joining with it—but, again, they are not just ordering there; they are sticking with us. But there is a lot more work we are doing on value. Wraps is something we have talked about with the anchor pricing on wraps. But in the prepared remarks, I mentioned a lot of the overall price-value architecture work that we are doing. We are going to test a new pricing structure for our Make Your Own bowls, and we are also looking at our pricing ladders and where we have our opportunities for more entry-level pricing.

Of course, we want to be very careful not to dilute our margins as we do this. But what we have seen is having different options for different groups of consumers. Ultimately, with Sweetgreen, Inc.’s mission—connecting people to real food—we want to democratize real food and make it accessible to all. And so these pricing ladders give options for all different types of consumers, and you will see a lot more work on the price side. At the same time, you are going to see a lot more work on offering more value. Last year, we increased our protein portions. We have upgraded a number of our ingredients, and we are improving the experience in our restaurants.

So the combination of those together, I think, will really start to get that flywheel of growth going for us, and we have seen some really, really encouraging early signs.

Sara Senatore: Okay. And then just the marketing question was sort of more—it sounds like you have a lot of initiatives. Is there contemplation of maybe marketing outside of just the app more broadly, maybe to the more infrequent customers and people? I do not know if a point of purchase or how you do that. I know you are relatively small, but just, I guess, my question was more you have good value—Is there a way to communicate it more broadly?

Jonathan Neman: Yeah. I think you will see more of that from us across many of our channels. I think you will also see—we have reevaluated our market mix. We are spending a lot of our money lower funnel, and I think you will start to see more top-of-funnel brand awareness. As we do that, as we create more brand salience, it actually improves our return on ad spend lower in the funnel. And if you go back to kind of what made Sweetgreen, Inc., going back to our roots, it was really a lot of that brand marketing and storytelling.

So I think you will see a healthy balance of brand marketing, top-of-funnel brand awareness—things like collaborations and ways we play into culture—as well as getting really efficient, optimized bottom-funnel, whether that be our media spend or what we can do through our owned channels in our loyalty program. So kudos to our marketing team really reinventing how we go to market and speak to more guests, and I think you will only see that improve throughout the next couple quarters.

Sara Senatore: Okay. That makes a lot of sense. Thank you very much.

Operator: Your next question comes from the line of Brian Harbour with Morgan Stanley. Please go ahead.

Brian Harbour: Yes. Good afternoon, guys. Are you still doing IK retrofits at this point? I guess I am just curious because that is clearly something that kind of reduces complexity, or is that not a focus at this point?

Jonathan Neman: It is not a huge focus for us. We have done a handful of them. We will continue to look at them as leases come up—when we are doing full renovations or relocations. For example, in the past few months, we did relocate two stores, one being our Union Square restaurant. The lease was up. We moved to a better location on the avenue and opened with an IK. Similarly, our first New York store at the NoMad moved across the street and opened with an IK. So you will see it being done selectively, but the retrofit is not a huge focus for us right now.

Brian Harbour: Okay. Got it. And just the slight change to store openings this year, is it those are getting delayed, or you have not signed some of those leases anywhere? I guess the broader question is, do you sort of have different views about where it makes sense to open at this point?

Jonathan Neman: You know, I think we have seen a lot of success in our new and emerging markets, which proves the TAM question. In the past couple quarters, we opened new markets such as Arkansas and Phoenix, which is doing incredibly well, and even a place like Cincinnati. So you will continue to see us go where we know it works. We are really trying to open in places where we have a high degree of confidence—where we can both have the right real estate, have the people leadership there, support it from a supply chain perspective.

And so we have a high degree of confidence in the pipeline for this year, and we have gotten a lot smarter about where to put new locations and what format. I also had it in the prepared remarks, but we have seen a lot of success with our Sweetlane. We have our first one in Schaumburg. We opened another one in Costa Mesa. We have another one coming very soon. And, obviously, those are harder to find, but it is a really great format for us that we are continuing to lean into.

Operator: Your next question comes from the line of Andrew Charles with TD Cowen. Please go ahead.

Andrew Charles: Great. Thank you. Jonathan, with your greater focus on protein and fiber as part of the marketing efforts, is there any evidence that your efforts are resonating with GLP users via your loyalty program or any other data you can collect on this? Then I have a follow-up.

Jonathan Neman: You know, it is hard to say because our users do not tell us that they are on GLP-1s. So it is hard to say, but clearly, many people are. What I can tell you is I do think we would be—long term, as GLP-1 adoption increases—we will be a beneficiary. From all of our research, as people get on GLP-1s, they want more protein-dense. They want fresher food. And I think William Blair put out a study a couple years ago about actually studying which brands—what customers want to eat once on GLP-1s. I think we were the only one where actually frequency increased.

So overall, we do see it as a tailwind, but we have no real evidence of it in our current data.

Andrew Charles: Okay. And then, Jamie, I know in 2025 the brand closed three restaurants that were near the end of their lease. I am curious if you had enough time in your role to review the portfolio to identify stores where it might make sense to be closed permanently before their end of lease term as a way to improve same-store sales, margins, and free cash flow as a way to help accelerate the turnaround?

Jamie McConnell: Yeah. No. We definitely are looking at that, and there was one that was closed in Q4, and we have a handful that are closing this year. But those are all near the lease term. We are looking at the whole portfolio. The ones that are not cash flow positive, we are taking a hard look at.

Andrew Charles: Thank you.

Operator: Your next question comes from the line of Chris Carroll with KeyBanc Capital Markets. Please go ahead.

Chris Carroll: So can you maybe talk to the digital mix growth that you are seeing more recently, both across total and owned channels? Is that a function of increasing loyalty engagement or Scan to Pay? Or is it maybe driven by non-digital customers’ frequency? And if it is that latter guest, how do you plan to reengage those non-digital guests?

Jamie McConnell: Yeah. So I will say that we are seeing some healthy pickup in our native business—our first-party channel—and I think that is part of some of the loyalty promotions that we are doing. Last year in marketplace, it was a tough environment. There was a lot of value going on, but I think we intentionally put them through our own channels and, like I said, we are seeing the stickiness of those transactions and that second-order rate increase. However, we do see tremendous opportunity in the marketplace area and to grow our third party as well. So that is all work that is underway.

Jonathan Neman: Yeah. And on your question around the—in-store business—it is in some ways our most important channel. It is where we acquire so many of our guests. It is where a lot of the food quality—you are eating it fresh, you are getting that house experience, you are learning about the brand. And so really focus on that, really from a hospitality perspective and throughput perspective. And we have gotten very clear on how to measure the right metrics to show that we are on the right track. Really, there is so much around that second-order rate—how do we incentivize teams around giving such a great experience where those customers come back within 30 days?

When you have that customer come back within 30 days, their annual spend is significantly higher than when they do not. We know Sweetgreen, Inc. is a frequency and loyalty—it is a habitual play. And so that in-store experience is a really, really important channel that we are highly focused on this year.

Chris Carroll: Got it. Thank you. And then, I guess as my follow-up, can you maybe comment on any differences you are seeing in sales trends across geographic regions, if any? Curious specifically if you are seeing any material differences between your legacy markets versus newer markets.

Jamie McConnell: Yeah. So I would say Northeast is still under pressure. But I will tell you, when I started in September, that was the first market that we visited as a management team, and there was a lot of work that is being done by Jason and team. And they hired a new RGM, and so we went back just this month, and it was encouraging to see all the work that is getting done and how delicious our food is and how operations are turning around. So that has been promising—that kind of the hope and future ahead. But one thing that has been great to see is our California market. That market has been under pressure.

If you think about last year, we had the fires and different things, but we are seeing some nice momentum in our business in California.

Jonathan Neman: Great. Thank you.

Operator: Your next question comes from the line of Jeffrey Bernstein with Barclays. Please go ahead.

Jeffrey Bernstein: Great. Thank you very much. Jonathan, it seems like over the past couple of quarters, there was lots of talk of trends by income, age, ethnicity. But it does seem like at least in recent months, perhaps there is some talking about maybe less bifurcation between those buckets and maybe less of a concern. Just wondering if there is any update in terms of your trends in any of those cohorts and if there is an income concern when I see you talking more about value. How do you measure your value perception? Maybe where do you score? Are you willing to reset the margin target to be more aggressive pushing value? And then I had one follow-up.

Jamie McConnell: Yeah. So in terms of our—We are seeing similar data. For Q4, we did see a slight decline in all cohorts, but we are seeing a little bit of pickup in Q1, which is great to see. And then I will let you comment on the value piece.

Jonathan Neman: Yeah. You know, I think the goal here is obviously anything we do from a value perspective, we have to make up in transactions so we do not see the margin deleverage. And so that is why we are looking very carefully at the price architecture. It is not a wholesale price decrease. It is more of a value ladder to have more options in. And we know as we do that, we see more frequency. So we are trying to do both—protect the margin as we offer more price value.

Jamie McConnell: Yeah. And we are definitely going to test every price move that we do to make sure we are getting those incremental transactions.

Jeffrey Bernstein: Got you. And then my follow-up, Jamie, you talked about for 2026 G&A reduction. I know you never know when best to temper spend versus reinvest more. I think some were thinking maybe you would see an uptick in spend to reinforce the brand positioning and the store-level support. So just wondering how you guys think about it as a management team— which direction to go within G&A. And maybe can you share the largest buckets that are actually driving that reduction in spend in '26?

Jamie McConnell: Yeah. So we have done a lot of work around G&A, and we will continue to lever that. But what is most important is we are investing in things that are driving returns. So we are super focused on our Sweet Growth transformation plan. So when it comes to marketing and now having Zip on board, we are really focused on that return and driving that value. So I would say you are going to see us investing heavily when there is a return. But you are going to see us reduce vendor spend in areas that are not creating returns and are not focused on our growth plans.

So it is really just recutting the dollars that were not creating returns and then focusing on the dollars that are creating returns for us. But there is a lot of opportunity—a lot of opportunity ahead, I would say—to lever that further.

Jonathan Neman: Thank you.

Operator: Your next question comes from the line of Sharon Zackfia with William Blair. Please go ahead.

Sharon Zackfia: Hi, thanks for taking the question. I guess, Jonathan, I am intrigued by the idea of simplifying the pricing architecture, particularly for the Create Your Own. Can you remind us what percent of your sales are Create Your Own at this point? And how simple can you make it? It does feel like sometimes I need a quantum physics degree to figure out what my bowl might cost before I order it.

Jonathan Neman: Yes. We hear you on that. So it is about a quarter of our business in terms of the Make Your Own. There are obviously many more people ordering signatures and then modifying them, but in the true Make Your Own, it is about a quarter of our business. So it is a very important segment for us. It is a little early to say exactly what we are doing, but it will be simplified and, I think, better for the guest.

Today, to your point, it does maybe feel like you are getting nickel-and-dimed down the line, so we want to make it where you kind of know what you are getting for a very simple price and making sure that it is really competitive in the marketplace. So more to come on that. That will be thoroughly tested through our stage gate process. But I do think that will be a major lever for us as we simplify our pricing structure and offer better price value.

Sharon Zackfia: Is it fair to think that would be anchored around the proteins on the pricing? And then would you—It seems like you would give some margin up by doing that. Would that be kind of, I guess, derailing some of that clawback of the protein reinvestment or the increased portion sizes that you did last summer?

Jamie McConnell: Yeah. So I would say that we are looking at it in a couple pieces. So we will be looking at those value ladders, but then we will also be looking at the elasticity of other items to sort of offset that benefit, but all of these will be carefully tested.

Jonathan Neman: Thank you.

Sharon Zackfia: Thanks, Jonathan.

Operator: Your next question comes from the line of Logan Reich with RBC Capital Markets. Please go ahead.

Logan Reich: Hey, good evening. Thanks for taking the question. I was wondering if you could give an update on how new store productivity has been tracking for the year and for the Q4 openings.

Jamie McConnell: Yeah. So I would say for the Q4 openings, it is hard to tell. Right? There has been a deceleration in the business. So I would say it is something that we are continuing to monitor, and we are looking forward to make sure in 2026 we are only getting the best sites, and we are working on all the things under the growth plan. So I would say it is too early to comment on the 2025 productivity, but we are seeing some great things when you look at areas—some of the new markets like Arizona that have not been impacted by weather—very promising results there.

Logan Reich: Got it. Thank you.

Operator: There are no further questions at this time. Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

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