Operations

Sweetgreen's robotic makelines show 10% sales lift

But the multi-tier Sweetpass subscription program is not showing results. CEO Jonathan Neman says it needs to be simpler.
sweetgreen
Sweetgreen opened 35 new restaurants in 2023. |Photo: Shutterstock.

Making progress toward profitability, Sweetgreen remains bullish on the potential for its automated Infinite Kitchen restaurants.

The first two units with the automated makeline that opened last year are showing average tickets more than 10% higher than other units in their markets, as well as faster throughput, improved order accuracy and the units have lower turnover, said Sweetgreen CEO Jonathan Neman, reporting results from the Dec. 31-ended fourth quarter and fiscal year on Thursday.

This year, Sweetgreen is planning to open seven more Infinite Kitchen units, among a projected 23 to 27 new restaurants overall. And three to four existing restaurants will be retrofitted with the automated makeline this year.

Neman said the Infinite Kitchen model will go next into higher-volume urban areas.

The automated makelines have the potential to do up to 500 bowls per hour, but they haven’t been able to demonstrate that capacity yet in the two existing locations, in a Chicago suburb and Huntington Beach, Calif., where demand hasn’t been quite that high.

Still, even where the technology can’t reach its full throughput potential, Neman said the benefits are real.

“Less labor, less turnover, better portioning and the food quality is better,” he said. “We think that there’s a ton of opportunity for this over time.”

Neman is counting on the potential of the technology, as well as culinary innovation and a planned increase in advertising spend, to push Sweetgreen over the line to profitability and 20% restaurant margins.

The 225-unit chain made progress in fiscal 2023.

In the fourth quarter, the net loss narrowed to $27.4 million, compared with $49.3 million a year ago. Revenues increased 29% to $153 million, with same-store sales up 6%, though 5% was the result of menu price increases. About 1% was driven by traffic and mix.

For the year, the company reported a net loss of $113.4 million, versus a net loss of $190.4 million the prior year. Revenues climbed 24% to $584 million, and same-store sales were up 4%. The average unit volume held at $2.9 million.

Neman was optimistic about momentum seen in newer markets, particularly in Texas and the Southeast. Sweetgreen recently opened its first unit in the Seattle area, and it is coming soon to the new markets of Charlotte, N.C. and Columbus, Ohio.

The three-tier Sweetpass loyalty/subscription program has yet to move any needles, however, though membership increased 25% in the second half of 2023—though the company declined to say how many members it has. Last month, Sweetpass+ was expanded to offer the option of an annual membership for $100 which unlocks perks and discounts that would cost $120 per year at the $10 monthly membership tier.

First launched in April 2023, Sweetpass hasn’t really shown any impact on sales, Neman said.

“So something we’re actively working on are optimizations and simplifications of the program that make it simpler, better for the customer and better for the company to drive more transactions,” Neman said. “The good news is there’s a lot of upside to be gained and the investments have largely been made.”

For fiscal 2024, Sweetgreen is projecting same-store sales increases between 3% to 5% and restaurant-level profit margin between 18% and 19.5%, with revenues ranging from $655 million to $670 million.

 

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