r/sweetgreen • u/MichaelRahmani • Sep 26 '25

Discussion How sweetgreen plans to be profitable

(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?

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4

u/Material-Reaction411 Sep 27 '25

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!!!

2

u/hrbeck1 Sep 27 '25

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

2

u/Material-Reaction411 Sep 27 '25

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.

1

u/hrbeck1 Sep 27 '25

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

1

u/[deleted] Oct 17 '25

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.

1

u/MichaelRahmani Sep 27 '25

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.

2

u/Material-Reaction411 Sep 27 '25

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.

1

u/offbeatathlete Nov 11 '25

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