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Sweetgreen says pandemic recovery is neither ‘linear nor consistent’

But the salad chain reported Thursday that its same-store sales climbed 35% during the first quarter and earnings rose 67% over the year before.
Sweetgreen Sweetlane
Photo courtesy Sweetgreen

Acknowledging that the path to recovery is “neither linear nor consistent,” Sweetgreen on Thursday said it is continuing its work to build a sustainable and profitable restaurant chain.

The Los Angeles-based salad chain, which went public in November and was hit hard by the pandemic, reported that its first quarter revenue grew 67%, to $102.6 million, and same-store sales increased 35% over the year before. That same-store sales jump consisted of a 25% increase in transactions plus a 10% increase in menu prices.

Average unit volumes at Sweetgreen are now $2.8 million, up from $2.1 million in 2021, the company said.

Sweetgreen, which has 164 locations, opened eight new restaurants during the quarter and said it’s on pace to open at least 35 units this year, largely in suburban and residential areas.

It’s experimenting with some new unit formats, trying to attract convenience-minded customers coming out of the pandemic.

In August, Sweetgreen plans to open its first pickup kitchen. The digital-only location in Washington, D.C., will serve app, website, and third-party platform orders. It has an outdoor patio, but no indoor seating or customer-facing front line.

And sometime next year, the chain plans to open its first order-ahead drive-thru, dubbed a Sweetlane, in suburban Chicago.

Sweetgreen also said it added 98 Outposts, for a total of 579 locations, to its office drop-off program.

For the first quarter, digital sales made up 66% of all sales, compared to 77% a year ago. But just 43% of those digital orders came through Sweetgreen’s own digital channels, versus 53% in 2021.

The chain said it is working hard to convince diners to order through its own channels, in part by increasing the delivery radius to nearly 10 miles, and improving delivery speed.

“We’re going to continue to make our own channel a better place to order Sweetgreen,” CEO Jonathan Neman told investors Thursday.

Sweetgreen, which scrapped an earlier, value-focused loyalty program, is testing a new rewards offering.

The chain’s Sweetpass subscription program, tested early this year, sold 16,600 passes in three weeks, Neman said. The $10 pass offered users a $3 credit on each purchase for 30 days.

“We were delighted with the response, particularly for new, lapsed and low-frequency users,” he said.

Pass holders placed an additional five orders, on average, per month and more than doubled their spend over a non-pass holder.

As an example of that inconsistent recovery, Sweetgreen noted a shift in its busy days of the week. Pre-pandemic, Mondays were the chain’s busiest days. Now, as office workers change their schedules, Tuesdays, Wednesdays and Thursdays see the highest traffic.

The chain’s restaurant-level margin was 13% for the quarter, compared to 3% during the prior year period. For 2022, Sweetgreen continues to forecast margins between 16% and 17%, along with same-store sales growth between 20% and 26%.

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