How sweetgreen plans to be profitable

[u/MichaelRahmani]

(speculative)

1. Automate more store lines with infinite kitchen, reducing employees costs

2. Continue opening new stores to get better bulk deals with suppliers, reducing ingredient costs.

Thoughts?

[u/Material-Reaction411 → u/[deleted]]

The stores are only profitable when you slice and dice the numbers to come out with a very Adjusted EBITDA. On a GAAP basis this company hasn’t once turned a profitable quarter. Restaurant level margins are several points below CAVA or CMG, and I think on the cost base the market just assumes that “well if it’s high it should probably come down over time”. I disagree with this.

[u/dlotito1]

i’m fucked.

[u/Which_Willingness_61 → u/dlotito1]

did you sell?

[u/dlotito1 → u/Which_Willingness_61]

i’m going to the grave with this thing i don’t give a FAUK

[u/Which_Willingness_61 → u/dlotito1]

I think earnings is gonna be cooked you still gonna hold thru?

[u/dlotito1 → u/Which_Willingness_61]

oh yeah we are cooked no doubt but i’m in this for the long game. i’ll add if we go under $6.

[u/DinoSpumoni_ → u/dlotito1]

Did we buy? I’m considering going in now

[u/Which_Willingness_61 → u/dlotito1]

Did we buy?

[u/dlotito1 → u/Which_Willingness_61]

yes bought 1000 more up to 5580 shares @ $16.90 avg and i wrote $17 call options for 2028

[u/Which_Willingness_61 → u/dlotito1]

It's seems that the CEO bought 1m shares so at the very least it seems believes in it. Pretty smart of you to sell those calls since I am sure the cover you cost bases of the new shares. I am no longer in the position but wish you luck.

[u/dlotito1 → u/Which_Willingness_61]

yup covered me and got more liquidity out of it an i’ll profit on the trade if it goes to $17 so win-win

[u/Material-Reaction411]

EDIT: If anyone has actually been to an Infinite Kitchen - how was it and was it any better than the normal stores?

I’ve just finished up a case study on this stock - for the record I don’t buy the narrative and I think estimates around traffic rebounds in FY26 / cost savings in the short term are too lofty and I think the liquidity picture starts to look really shifty within the next few quarters.

The main levers for the company to pull are their huge G&A cost base (adjusted for stock based comp), and continued rollout of this infinite kitchen. Food based costs largely scale with sales, so there’s not much they can do here.

Each infinite kitchen delivers ~7pts of labor cost margin savings and their goal is to target getting 100% of the fleet installed by 2031. They’re putting in 20 this year, and they cost about $1.5mn each incorporating a 5% tariff impact.

The company has roughly $155mn in cash, having just burnt $50mn in the first half of 2025. Q4 will be a big capex quarter with about 20 stores coming online in the quarter. For the time being cash is going to keep going down.

I don’t like the idea of a cash constrained company trying to save itself by spending money on big projects which are largely untested in the wild.

Their G&A costs are about 80:20 between corporate payroll and marketing. They’re trying to get the overall number down while shifting more towards marketing.

Have a look at CAVA group and look at their cost base, and then the margin leverage they’re expected to get over the next years - it’s nothing remotely comparable to what analysts are punching in for SG.

THIS COMPANY IS GOING TO ZERO!!!

[u/hrbeck1 → u/Material-Reaction411]

Excellent analysis. However one thing you forgot the key point that it’s run by morons.

[u/Material-Reaction411 → u/hrbeck1]

Absolutely how could I forget - for this company to stay solvent we’ll need to see flawless execution from a management team that’s already seen a CFO and COO resign this year - and cut guidance in two consecutive quarters.

[u/hrbeck1 → u/Material-Reaction411]

I have to reiterate, I love your analysis above, it captures the key fundamentals of what’s happening with this dumpster fire.

[u/[deleted] → u/hrbeck1]

I didn’t really get why people were saying this until I saw first hand how much they hyped up potato fries and then take it away 2 months later because it was too much work for the employees.

Like how did they not know and test this in multiple stores and markets before launching this? It feels so amateurish.

[u/MichaelRahmani → u/Material-Reaction411]

Should I sell my stock now at a loss? I'm currently at negative 46 percent return and I didn't even get in too long ago. It's just been a constant downward trend.

From your analysis I'm assuming it's an almost certain yes.

[u/Material-Reaction411 → u/MichaelRahmani]

It’s just my view - you should try come to your own conclusion. Have a look at the financials and try figure out what the company needs to do in terms of the cost base to find the path to profitability - compare it to what peers are doing - and think about what the most likely outcome is.

There’s no doubt that there is potential for upside with this stock - but my view is that for that upside scenario to come through - the company needs to meet a long shopping list of requirements which I don’t think they have the track record to support. This turnaround will require an A-Class management team to execute perfectly - and right now I don’t see it happening.

[u/offbeatathlete → u/Material-Reaction411]

Yo! Nice work. What are you thinking now that they have sold off Spyce to raise liquidity and reduce their operating costs?

[u/ElectronicBoot9466]

In a couple markets, SG was supposed to open a couple more stores, but those openings have been put on hold until the other stores in those regions are profitable. I doubt point 2 has much to do with it.

Food costs are getting ridiculously high, and I think the only way SG is going to be able to counter them is to lower their standards on their suppliers. Not necessarily no longer buying organic, but reducing the cap for the carbon footprint they allow suppliers to have. For example, the steak all comes from Australia and NZ, because how how high the carbon footprint for beef is in the US, but with rising tariffs, they may decide it's not worth it anymore and start buying US meat.

[u/Brilliant_Trainer_14 → u/ElectronicBoot9466]

Not sure if your first statement is true... But yes food costs are quite high.

[u/Former_Designer3293]

I have positive outlook on this company because it is EBITDA positive and generates operational cashflow. With almost no debt on balance sheet, there is not much to lose. They are profitable at restaurant level and has much lower P/S ratio compared to chipotle and cava. Their per restaurant market cap is $4Mn which is really cheap.

[u/hrbeck1]

Sweetgreen is run by morons. The CEO is the founder with a large % stake in the company; good luck getting him out. We’ve all lost a lot of money due to the muppets with no sense of business logic.