Casual salad chain Sweetgreen (NYSE: SG) reported revenue ahead of Wall Street’s expectations in Q1 CY2025, with sales up 5.4% year on year to $166.3 million. On the other hand, the company’s full-year revenue guidance of $750 million at the midpoint came in 1.8% below analysts’ estimates. Its GAAP loss of $0.21 per share was in line with analysts’ consensus estimates.
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Sweetgreen (SG) Q1 CY2025 Highlights:
- Revenue: $166.3 million vs analyst estimates of $164.8 million (5.4% year-on-year growth, 0.9% beat)
- EPS (GAAP): -$0.21 vs analyst estimates of -$0.22 (in line)
- Adjusted EBITDA: $285,000 vs analyst estimates of -$1.52 million (0.2% margin, significant beat)
- The company dropped its revenue guidance for the full year to $750 million at the midpoint from $770 million, a 2.6% decrease
- EBITDA guidance for the full year is $30 million at the midpoint, below analyst estimates of $33.62 million
- Operating Margin: -17.2%, in line with the same quarter last year
- Free Cash Flow was -$29.86 million compared to -$9.98 million in the same quarter last year
- Same-Store Sales fell 3.1% year on year (5% in the same quarter last year)
- Market Capitalization: $2.10 billion
Company Overview
Founded in 2007 by three Georgetown University alum, Sweetgreen (NYSE: SG) is a casual quick service chain known for its healthy salads and bowls.
Sales Growth
Examining a company’s long-term performance can provide clues about its quality. Any business can put up a good quarter or two, but many enduring ones grow for years.
With $685.3 million in revenue over the past 12 months, Sweetgreen is a small restaurant chain, which sometimes brings disadvantages compared to larger competitors benefiting from better brand awareness and economies of scale. On the bright side, it can grow faster because it has more white space to build new restaurants.
As you can see below, Sweetgreen’s 18.9% annualized revenue growth over the last five years (we compare to 2019 to normalize for COVID-19 impacts) was excellent as it opened new restaurants and increased sales at existing, established dining locations.
This quarter, Sweetgreen reported year-on-year revenue growth of 5.4%, and its $166.3 million of revenue exceeded Wall Street’s estimates by 0.9%.
Looking ahead, sell-side analysts expect revenue to grow 17% over the next 12 months, a slight deceleration versus the last five years. Still, this projection is noteworthy and indicates the market is baking in success for its menu offerings.
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Restaurant Performance
Number of Restaurants
The number of dining locations a restaurant chain operates is a critical driver of how quickly company-level sales can grow.
Over the last two years, Sweetgreen opened new restaurants at a rapid clip by averaging 16.4% annual growth, among the fastest in the restaurant sector. This gives it a chance to scale into a mid-sized business over time.
When a chain opens new restaurants, it usually means it’s investing for growth because there’s healthy demand for its meals and there are markets where its concepts have few or no locations.
Note that Sweetgreen reports its restaurant count intermittently, so some data points are missing in the chart below.
Same-Store Sales
A company's restaurant base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth at restaurants open for at least a year.
Sweetgreen’s demand has been spectacular for a restaurant chain over the last two years. On average, the company has increased its same-store sales by an impressive 4.2% per year. This performance along with its meaningful buildout of new restaurants suggest it’s playing some aggressive offense.
In the latest quarter, Sweetgreen’s same-store sales fell by 3.1% year on year. This decline was a reversal from its historical levels.
Key Takeaways from Sweetgreen’s Q1 Results
We were impressed by how significantly Sweetgreen blew past analysts’ EBITDA expectations this quarter. We were also happy its same-store sales and revenue narrowly outperformed Wall Street’s estimates. On the other hand, it lowered its full-year revenue and EBITDA guidance. Overall, this was a weaker quarter. The stock traded down 9.6% to $16.43 immediately following the results.
Big picture, is Sweetgreen a buy here and now? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free.
