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Financing

Sweetgreen files its IPO

The 140-unit fast-casual salad chain, which has been hard hit by the pandemic, becomes the fifth restaurant brand to go public this year.
Sweetgreen
Photo: Shutterstock

Four months after saying it was going public, Sweetgreen on Monday officially filed for its initial public offering.

The 140-unit fast-casual salad chain, which becomes the fifth restaurant brand to go public so far this year, said it would be listed on the New York Stock Exchange and would trade under the ticker symbol SG.

In its securities filing, Sweetgreen did not disclose its price per share or how many shares it would offer.

It said it intends to use the proceeds from the IPO to fund “general corporate purposes, including working capital, operating expenses, and capital expenditures,” according to the filing. Sweetgreen said it would also use the money to further develop the robotic technology it acquired when it purchased Spyce, a robot-powered bowl concept with an electric delivery fleet, last month.

Sweetgreen joins a list of newly public restaurant chains this year that includes Portillo’s, Krispy Kreme, Dutch Bros and First Watch.

In the filing, Sweetgreen paints a picture of a fast casual hard hit by the pandemic that is working to regain its footing through rapid unit growth.

Sweetgreen, which was founded in 2007, currently generates $2.5 million average unit volumes for its restaurants. In 2019, that number was $3 million.

The chain, which operates in 13 states, saw its same-store sales decline 26% in 2020, with losses of $142 million that year. This year, same-store sales have turned positive 21%, with $87 million in losses.

Sweetgreen’s restaurant-level profit margin is 12%.

The salad chain is embarking on an aggressive unit growth strategy, adding about 21 locations in the past year. Sweetgreen said in its filing that it plans to double its current number of stores over the next three to five years.

That growth will come from expansion in new markets, “densification” in existing markets, digital growth and new restaurant formats.

“We plan to diversify our store formats by adding drive-thru and pick-up only locations to densify our markets, and to bring Sweetgreen into a wide variety of neighborhoods,” the brand said.

Among its risk factors, Sweetgreen said it had previously identified a “material weakness” in its internal controls over financial reporting.

“In recent periods, we have experienced rapid growth, and this growth has placed considerable strain on our IT and accounting systems, processes and personnel,” the chain said in its filing.

An audit for the period of Dec. 29, 2019 to Dec. 27, 2020 found issues with the chain’s financial reporting “because we did not have the proper business processes, systems, personnel and related internal controls in place,” Sweetgreen said.

The chain said it believes it has rectified those reporting issues as of June 27.

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