The move away from salads is paying off for Sweetgreen.
The Washington, D.C.-based chain on Thursday said the Caramelized Garlic Steak added to the menu in May, and the non-salad protein plate category launched last year helped drive positive traffic in the second quarter, attracting more men, and more guests of all kinds at dinner.
In fact, CEO Jonathan Neman said Sweetgreen will be doing more with its menu over the next year to broaden its position as a fresh-food concept that appeals to more diners, not just salad eaters.
“Many people still think about Sweetgreen as a salad company. We’ve never viewed it that way,” said Neman. “From the very beginning, the idea was to create a company that leveraged in a really unique fresh supply chain, craft around how we make our food, and then apply that to different types of food.
“Of course, we started with salads, and that’s what we’re very much known for,” he added. “But, as you’re seeing, we’re starting to branch out and leverage that license the brand has around the quality, craveable fresh food.”
The steak dish rolled out this year, and the protein plates have helped boost dinner sales to 40% during the quarter. And more is coming down the pike to further broaden the menu, including attachments and beverages,
Same-store sales increased 9% for the June 30-ended quarter, which was the highest in two years. The increase was driven in part by 5% in menu pricing, but also 4% in both traffic and menu mix—the latter likely boosted by the steak dish, which was a more premium offering that was a big hit, Neman said.
But even without that lift from steak sales, CFO Mitch Reback said traffic was positive for the quarter, and increased sequentially each month, though he did not give specific numbers.
Same-store sales were also strong in new markets, like Texas, Florida, Georgia and the upper Midwest, he said.
Restaurant-level margins for the quarter were boosted to 22.5%, compared with 20% the prior year.
Neman also reported more stellar results from the robotic makeline format it calls the Infinite Kitchen, reiterating his vision that the technology could be in place in all Sweetgreen restaurants someday—though there is still much to learn about the capital required and the return on investment, he said.
During the second quarter, the company completed its first retrofit of an existing restaurant as an Infinite Kitchen.
Sweetgreen at Penn Plaza in New York City has been retrofitted with the automated makeline. | Photo courtesy of Sweetgreen.
The automated system was added to a unit in Penn Plaza in New York City in July. It took only seven weeks to install the technology but the location was able to remain open and serving customers—though it closed for a week just for training.
It was also the first installation built by a contract manufacturer, which Neman said was delivered on time and at the expected cost (which was initially projected to be between $400,000 to $500,000. That range will go down over time at scale, Reback said.)
So far, the staff at the restaurant seemed to love the automated makeline, said Neman. “It’s just a lot more fun, and an easier place to work for them.”
At the first Infinite Kitchen in Naperville, Illinois, which passed its first anniversary in May, staff turnover was about 45% lower than at traditional units, said Neman.
The technology also is demonstrating impressive speed.
On its second day of operation as an Infinite Kitchen, for example, the Penn Plaza location produced 200 bowls in 30 minutes with 100% on-time reliability, and it has the potential to reach 500 bowls per hour. The average order was completed in 3.5 minutes.
And, in the context of Sweetgreen’s plan to be about more than salads, Neman said the Infinite Kitchen technology can be applied to more than just bowls.
“We see this as a huge tool, especially as labor becomes more challenging and more expensive,” he said.
This year, Sweetgreen expects to open seven new Infinite Kitchen locations, with another two to three as retrofits. On deck to become an Infinite Kitchen is a high-volume Sweetgreen in Chicago’s Willis Tower, for example.
Next year, as many as half of new openings will be Infinite Kitchens, Neman said, though the company has not yet projected growth plans for 2025.
Revenues for the quarter increased 21% to 184.6 million. And the company continued to narrow its net loss, ending the quarter with a net loss of $14.5 million, compared with a loss of $27.3 million a year ago.
Sweetgreen opened four new restaurants during the quarter for a total of 231.
The company also updated its guidance for the year (for a second time), saying it now expects same-store sales growth between 5% and 7%, compared with the 4% to 6% projected earlier.
Revenues for the year are expected to be between $670 million to $680 million, and profit margins between 19% and 20%.
Given all the reporting of consumer weakness, Reback said Sweetgreen will take a more cautious approach for the second half of the year, though the chain hasn’t seen guests pull back on spending. Menu pricing was at 4% in July, but traffic was positive, he said
Still, he noted, “We’re watching the outside world pretty closely."
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