0001628280-25-050385
SEC filingRevenue declined 0.6% QoQ due to negative same-store sales of 9.5%, partially offset by new unit growth.
Revenue for Q3 2025 was $172.4M, down 0.6% from $173.4M in Q3 2024. The decline was driven by a 9.5% decrease in same-store sales, reflecting an 11.7% drop in traffic and product mix, partially offset by a 2.2% benefit from menu price increases. The traffic decline was attributed to a slowdown in consumer spending and the transition from the former Sweetpass+ loyalty program to the new SG Rewards program. New restaurant openings contributed $15.9M in incremental revenue from 35 net new units opened since Q3 2024.
Gross margin (food, beverage, and packaging as a percentage of revenue) increased to 30.7% from 27.5% due to menu price increases, partially offset by higher protein costs and tariff-related packaging costs. Operating loss widened to $36.3M from $21.2M, with operating margin declining to -21.0% from -12.2%. The deterioration was driven by higher impairment and closure costs ($4.6M vs $0.1M), increased pre-opening costs ($2.8M vs $1.8M), and deleverage on lower sales. Restaurant-Level Profit Margin fell to 13.1% from 20.1%, reflecting higher labor, occupancy, and other operating costs as a percentage of revenue.
Net loss was $36.1M compared to $20.8M in the prior year. Adjusted EBITDA turned negative at -$4.4M vs positive $6.8M, with Adjusted EBITDA Margin of -2.5% vs 3.9%.
Revenue is disaggregated into three channels: Owned Digital, In-Store (Non-Digital), and Marketplace. Owned Digital Revenue Percentage increased to 35.3% from 29.2%, driven by the new SG Rewards loyalty program. Total Digital Revenue Percentage rose to 61.8% from 55.1%. The shift toward digital channels, particularly delivery, negatively impacts margins due to third-party delivery fees and higher refund rates. In-Store channel revenue declined as traffic shifted to digital.
Management expects 37 net new restaurant openings in FY2025, including 18 Infinite Kitchen units, and 15-20 in FY2026 with about half featuring Infinite Kitchen. Tariffs are expected to continue impacting food and packaging costs by approximately 50 basis points. The Spyce sale, expected to close in late 2025 or early 2026, will provide $100M in cash and $86.4M in equity, strengthening the balance sheet and allowing more efficient Infinite Kitchen deployment. Management remains cautious on consumer spending trends and expects continued variability in traffic patterns.
As of September 28, 2025, Sweetgreen held $130.0 million in cash and cash equivalents, a significant decrease from $214.8 million at December 29, 2024. Restricted cash, primarily tied to workers' compensation insurance and lease-related letters of credit, stood at $4.1 million, bringing total cash, equivalents, and restricted cash to $134.1 million. The Company carries no debt; its previous $45.0 million Credit Facility with EagleBank expired on December 13, 2024, and was not renewed. Total stockholders' equity declined to $393.3 million from $446.1 million, driven by an accumulated deficit of $959.7 million. Inventory was minimal at $2.4 million, consistent with a fresh-food restaurant model. The balance sheet is heavily influenced by operating lease liabilities totaling $356.4 million, split between $41.7 million current and $314.7 million non-current. Goodwill remained unchanged at $36.0 million, and intangible assets, net, decreased to $21.6 million from $24.0 million due to amortization.
The Company's primary contractual obligations stem from operating leases for its 266 restaurant locations and corporate offices. Undiscounted future minimum lease payments total $464.6 million, with $9.8 million due in the remainder of 2025, $69.1 million in 2026, and $197.2 million thereafter. An additional $13.9 million in lease commitments exists for non-cancelable leases that have not yet commenced. Purchase obligations, primarily for restaurant supplies, are enforceable and due within twelve months, though no specific dollar amount was disclosed. The Company also carries a contingent consideration liability of $5.9 million related to the Spyce acquisition, classified within other current liabilities as the final milestone payment is expected within one year.
Capital expenditures for the thirty-nine weeks ended September 28, 2025, totaled $76.1 million, representing 14.5% of revenue, up from $57.7 million in the prior-year period. An additional $12.8 million in capex was accrued but unpaid. The Company had 23 facilities under construction as of period-end. No share repurchase program exists; shares acquired ($0.3 million) were solely for employee tax withholding on equity vesting. No dividends were declared or paid. Financing activities provided $2.8 million, entirely from stock option exercises, net of tax withholding payments. The Company paid $2.3 million in cash for the second Spyce milestone achievement, with $4.7 million issued in Class A common stock.
Sweetgreen operates as a single operating and reportable segment, deriving all revenue from company-owned U.S. restaurants. Revenue is disaggregated by channel: Owned Digital Channels ($175.8M), In-Store Non-Digital ($205.5M), and Marketplace ($143.0M) for the thirty-nine weeks ended September 28, 2025. No geographic segmentation is provided beyond the U.S. domestic market.
CFO turned negative at ($4.0M) versus $37.3M positive in the prior 39-week period, driven by larger net loss and unfavorable working-capital movements including ($32.2M) operating lease liability outflow. Capex intensity remained high at $76.1M (up from $57.7M), focused on new restaurant openings. No dividends or share repurchases were paid; only minor tax-withholding share activity occurred. FCF coverage of capital returns is not applicable given negative CFO and absence of returns. Notable items include $9.8M non-cash impairment and $24.0M stock-based compensation add-backs. Overall cash and restricted cash declined $83.3M to $134.1M.