Q1 2025 Sweetgreen Inc Earnings Call

May 8, 2025

Earnings call all lines have been placed on mute to prevent any background noise.

Rebecca Nounou: I'd like to remind everyone that the information under the heading forward-looking statements included in our earnings release also applies to our comments made during the call. These forward-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward-looking statements.

After the Speakers' remarks, there will be a question and answer session. We respectfully ask that you keep your questions to one.

To withdraw your question Press Star one again.

Thank you I would now like to turn the call over to Rebecca Nunu. Please go ahead.

Rebecca Nounou: We also direct you to our earnings release for additional information regarding our use of non-GAAP financial measures, including reconciliations of non-GAAP financial measures mentioned on the call with the corresponding GAAP measures. Our earnings release can be found on our investor website.

Yeah.

Thank you and good afternoon, everyone.

Jonathan Neiman: Speaking on today's call will be Jonathan Neiman co founder and Chief Executive Officer imagery back Chief Financial Officer.

Jonathan Neman: And now I'll turn the call over to Jonathan to kick things off. Thank you, Rebecca, and good afternoon, everyone. Sweetgreen is redefining fast food, proving it's possible to operate with financial discipline without compromising on the quality of our menu or the seamless experience that defines our business. As we scale, we're building a more resilient business and leaning into what's working, a real estate playbook reflected by the strength of new markets and recent restaurant openings. Our Infinite Kitchens and Sweet Lane formats are unlocking operational efficiencies while enhancing the guest experience. We're also advancing menu innovation while refining our core, ensuring every ingredient is prepared, sauced, and seasoned to create meals that keep guests returning again and again.

Jonathan Neiman: Both will be available for questions during the Q&A session. Following the prepared remarks.

Jonathan Neiman: Today's call is being webcast live and recorded for replay.

Jonathan Neiman: The earnings release is available on the Investor Relations section of <unk> website at Investor Dot Sweet Green Dot com.

Jonathan Neiman: I'd like to remind everyone that the information under the heading forward looking statements included in our earnings release also applies to our comments made during the call.

Jonathan Neiman: These forward looking statements are based on information as of today, and we assume no obligation to publicly update or revise our forward looking statement.

Jonathan Neiman: We also direct you to our earnings release for additional information regarding our use of non-GAAP financial measures, including reconciliations of non-GAAP financial measures mentioned on the call with the corresponding GAAP measures. Our earnings release can be found on our investor website, and now I'll turn the call over to Jonathan to kick things off.

Jonathan Neman: Our first quarter results reflect the progress we've made, despite the quarter being significantly impacted by several external headwinds. These include the holiday timing shift, the L.A. wildfires, and their lingering impacts, as well as adverse weather impacts across several regions. For the first quarter, we reported sales of $166.3 million and a same-source sales decline of 3.1%. These results are toward the higher end of our guidance. By staying focused on what we can control, we delivered a restaurant-level profit margin of 17.9% and achieved slight adjusted EBITDA profitability.

Jonathan Neiman: Thank you Rebecca and good afternoon, everyone.

Jonathan Neiman: Sweet Green is redefining fast food prevent possible to operate with financial discipline without compromising on the quality of our menu for the seamless experience that defines our brand.

Jonathan Neiman: Now as we scale, we're building a more resilient business and leaning into whats working our real estate playbook reflected by the strength of new markets and recent restaurant openings are infinite kitchens, and sweetly formats are unlocking operational efficiencies, while enhancing the guest experience. We're also advancing menu innovation, while refining our core insuring.

Jonathan Neman: Both above are provided out. Looking ahead, the macro environment remains uncertain and volatile. April sales trends were soft, which we believe is reflective of a broader consumer slowdown. This has been particularly true in our largest markets such as New York, Austin, and Los However, we're confident in our ability to deliver long-term value for our guests, our team members, and our shareholders. I'm proud of the strides we've made, but no true operational excellence requires relentless attention to detail, especially now. That's why our team is committed to optimizing every process, no matter how small, to drive continuous improvement.

Jonathan Neiman: Every ingredient is prepared staff and Susan to create meals that keep guests returning again and again.

Jonathan Neiman: Our first quarter results reflect the progress we've made despite the quarter being significantly impacted by several external headwinds.

Jonathan Neiman: These include the holiday timing shift lay wildfires and the lingering impacts as well as adverse weather impacts across several regions.

Jonathan Neiman: For the first quarter, we reported sales of $166 3 million in the same store sales decline of three 1%.

Jonathan Neiman: These results are towards the higher end of our guidance range.

Jonathan Neman: We continue to see significant opportunities to optimize operations, broaden our customer base, grow guest frequency and expand our footprint.

Jonathan Neiman: <unk> focused on what we can control we delivered a restaurant level profit margin of 17, 9% and achieved slight adjusted EBITDA profitability, both above our provided outlook.

Tina: Thank you for standing by. My name is Keena and I will be your conference operator today.

Speaker Change: At this time I would like to welcome everyone to the Sweetgreen Incorporated First Quarter 2025 earnings call. All lines have been placed on mute to prevent any background noise.

Jonathan Neman: With these focus areas in mind, our three strategic pillars for 2025 are one, revolutionizing fast food through menu and technology innovation. Two, strengthening guest connection and operational excellence. And lastly, number three, strategically expanding and evolving our focus. These pillars are designed to increase traffic and expand restaurant level market.

Jonathan Neiman: Looking ahead, the macro environment remains uncertain and volatile.

Jonathan Neiman: April sales trends were soft, which we believe is reflective of a broader consumer slowdown.

Speaker Change: After the speaker's remarks, there will be a question and end session. We respectfully ask that you keep your questions to one. To withdraw your question, press star one again.

Jonathan Neiman: This has been particularly true in our largest markets such as New York, Boston and Los Angeles. However, we're confident in our ability to deliver long term value for our guests our team members and our shareholders.

Jonathan Neman: Let me share what we delivered in the first quarter. We opened five new restaurants. Fishtown in Philadelphia, Westfield and Campton in the New York metro area, Carytown in Richmond, and Hilldale in Milwaukee. As I shared on our last call, our 2024 class of new restaurants is tracking towards two-year metrics in year one and delivered a Q1 margin of 18.3%. Notably, 40% of this class is located in legacy markets and 60% in new markets, underscoring the broad-based strength of our profession. This reaffirms our confidence in the effectiveness of our real estate strategy and the significant long-term growth opportunity that lies ahead.

Jonathan Neiman: I am proud of the strides we've made but no true operational excellence requires relentless attention to detail, especially now.

Rebecca Nounou, Jonathan Neman

Speaker Change: Thank you and good afternoon everyone. Taking on today's call will be Jonathan Neman, co-founder and chief executive officer, and Mitch Reback, chief financial officer. Both will be available for questions during the Q&A session following the prepared remarks.

Jonathan Neiman: That's why our team is committed to optimizing every process no matter, how small to drive continuous improvement.

Jonathan Neiman: We continue to see significant opportunities to optimize operations broadened our customer base grow guest frequency and expand our footprint.

Today's call is theme webcasted live and recorded for replay.

Jonathan Neiman: With these focus areas in mind, our three strategic pillars for 2025, or one revolutionizing fast food through menu and technology innovation.

Speaker Change: The earnings release is available on the Investor Relations section of Sweet Green's website at investor.sweetgreen.com. I'd like to remind everyone that the information under the heading forward looking statements included in our earnings release also applies to our comments made during the call.

Jonathan Neiman: Strengthening guest connection in operational excellence, and lastly, number three strategically expanding and evolving our footprint.

Jonathan Neman: We continue to be pleased with the financial and operational performance of our Infinite Kitchen format, which is delivering strong results across key metrics. These locations are showing meaningful margin leverage compared to restaurants of similar age and volume, driven by improved efficiency and operational consistency. Additionally, our class of Infinite Kitchens continues to drive higher native digital sales due to their high throughput. which leads to a better guess. We believe the Infinite Kitchen, together with our revamped Loyalty Program, can accelerate our industry-leading digital presence. Not only do we see strong performance in our Infinite Kitchens, we are also seeing strong performance of our Suite Lane in Schaumburg, Illinois.

Speaker Change: These four-looking statements are based on information as of today, and we assume no obligation to publicly update or revise our four-looking statement.

Jonathan Neiman: These pillars are designed to increase traffic and expand restaurant level margin.

Jonathan Neiman: Let me share what we delivered in the first quarter.

Speaker Change: We also direct you to our earnings release for additional information regarding our use of non-GAAP financial measures, including reconciliation of non-GAAP financial measures mentioned on the call with the corresponding GAAP measures .

Jonathan Neiman: We opened five new restaurants this.

Jonathan Neiman: This accounting Philadelphia, Westfield and campaign, and the New York Metro area, Tarrytown, and Richmond, and Hildale in Milwaukee as I shared on our last call. Our 2024 class of new restaurants is tracking towards two year metrics in year, one and delivered a Q1 margin of 18, 3%.

Speaker Change: Thank you Rebecca and good afternoon, everyone.

Speaker Change: Sweet Green is redefining fast food prevent possible to operate with financial discipline without compromising on the quality of our menu for the seamless experience that defines our brand.

Jonathan Neiman: Notably 40% of this class is located in legacy markets and 60% in new markets underscoring the broad based strength of our performance.

Speaker Change: As we scale, we're building a more resilient business and leaning into whats working our real estate playbook reflected by the strength of new markets and recent restaurant openings are infinite kitchens, and sweetly formats are unlocking operational efficiencies, while enhancing the guest experience. We're also advancing menu innovation, while refining our core insuring.

Jonathan Neman: In the first quarter, comparable sales grew more than 20% year-over-year. Schaumburg's AUV and restaurant-level margin is above the fleet average and with minimal incremental costs. Schaumburg is a clear proof point of the strong cash-on-cash return potential of the Suite Lane format. This year's pipeline includes two new suite land locations, one classic and our first with an infinite kitchen, with more planned for 2020. We are reiterating our 2025 new unit guidance and continue to have high conviction in our long-term development roadmap of 15 to 20% annual unit growth. In 2025, we plan to enter three new markets, Sacramento, Phoenix, and Cincinnati, and open at least 40 new restaurants, including 20 with the Infinite Kitchen.

Jonathan Neiman: This reaffirms our confidence in the effectiveness of our real estate strategy and the significant long term growth opportunity that lies ahead.

Jonathan Neiman: We continue to be pleased with the financial and operational performance of our infinite kitchen formats, which is delivering strong results across key metrics. These locations are showing meaningful margin leverage compared to restaurants of similar agent volume driven by improved efficiency and operational consistency.

Speaker Change: Every ingredient is prepared sauce and Susan to create meals that keep guests returning again and again.

Jonathan Neiman: <unk> our class of infinite kitchen continues to drive higher native digital sales due to their high throughput and consistency, which leads to a better guest experience.

Speaker Change: Our first quarter results reflect the progress we've made despite the quarter being significantly impacted by several external headwinds.

Speaker Change: These include the holiday timing shift lay wildfires and the lingering impacts as well as adverse weather impacts across several regions.

Jonathan Neiman: We believe the infinite kitchen, together with our revamped loyalty program can accelerate our industry, leading digital presence.

Speaker Change: For the first quarter, we reported sales of $166 3 million in the same store sales decline of three 1%.

Jonathan Neiman: Not only do we see strong performance in our infinite kitchens. We're also seeing strong performance of our Sweet Lane in Schaumburg, Illinois.

Jonathan Neman: Additionally, we're planning two relocations that will be upgraded with the Infinite Kitchen and expect to complete one to three Infinite Kitchen retrofits of existing restrooms. As we scale, innovation across every touchpoint, physical and digital, becomes even more critical.

Jonathan Neiman: In the first quarter comparable sales grew more than 20% year over year, Schaumburg, AAV and restaurant level margin is above the fleet average and with minimal incremental costs Schaumburg is a clear proof point of the strong cash on cash return potential of the sweetly and formats.

Speaker Change: These results are towards the higher end of our guidance range.

Speaker Change: I think focused on what we can control we delivered a restaurant level profit margin of 17, 9% and achieved slight adjusted EBITDA profitability, both above our provided outlook.

Jonathan Neman: In today's environment, staying top of mind requires a steady cadence. Our 2025 calendar is designed to do just that, increase visit frequency, attract new customers and build deeper loyalty among our base.

Speaker Change: Looking ahead, the macro environment remains uncertain and volatile.

Jonathan Neiman: This year's pipeline includes two new sweetland locations, one classic and our first with an infinite kitchen with more planned for 2026.

Speaker Change: April sales trends were soft, which we believe is reflective of a broader consumer slowdown.

Jonathan Neman: Let me take a moment to share one of the most exciting things we've rolled out recently, Ripple Fry. After an initial test in our L.A. market, we launched Ripple Fries nationwide on March 4th. Ripple Fries are Sweetgreen's take on this classic item. Fresh cut daily in our restaurants, air fried in avocado oil, and served with a choice of our house-made pickled ketchup or garlic aioli. Made with just five simple ingredients, ripple fries are a category-defining side that's both craveable and aligned with our commitment to clean, elevated food. Ripple Fries drove same-store sales improvement in March.

Jonathan Neiman: We are reiterating our 2025, new unit guidance and continue to have high conviction in our long term development roadmap, a 15% to 20% annual unit growth.

Speaker Change: This has been particularly true in our largest markets such as New York, Boston and Los Angeles. However, we're confident in our ability to deliver long term value for our guests our team members and our shareholders.

Jonathan Neiman: In 2025, we plan to enter three new markets, Sacramento, Phoenix, and Cincinnati and open at least 40, new restaurants, including 20 with the infinite kitchen. Additionally.

Speaker Change: I'm proud of the strides we've made but no true operational excellence requires relentless attention to detail, especially now that's why our team is committed to optimizing every process no matter, how small drive continuous improvement.

Jonathan Neiman: Additionally, we're planning two relocations that will be upgraded with the infinite kitchen and expect to complete one to three infinite kitchen retrofits of existing restaurants.

Speaker Change: We continue to see significant opportunities to optimize operations broadened our customer base grow guest frequency and expand our footprint.

Jonathan Neiman: As we scale innovation across every touch point physical and digital becomes even more critical.

Jonathan Neman: They have become our most attached side item across channels, helping to lift overall ticket averages and broaden the meal experience. Notably, the strength has been consistent across all Our innovation pipeline continues to be a key driver of traffic.

Jonathan Neiman: In today's environment staying top of mind requires a steady cadence of newness or 2025 calendar is designed to do just that increased visit frequency attract new customers and build deeper loyalty among our base let.

Speaker Change: These focus areas in mind, our three strategic pillars for 2025, or one revolutionizing fast food through menu and technology innovation.

Speaker Change: Strengthening guest connection in operational excellence, and lastly, number three strategically expanding and evolving our footprint.

Jonathan Neman: For us, menu innovation goes beyond the food. It's about keeping the brand dynamic and culturally relevant.

Jonathan Neiman: Let me take a moment to share one of the most exciting things we've rolled out recently ripple fries.

Jonathan Neiman: After an initial test in our la market, we launched ripple fries nationwide on March 4th ruble Fries are <unk> take on this classic item fresh cut daily in our restaurants are fried and avocado oil and server the choice of our house made pickle catch up or garlic AOE.

Jonathan Neman: One of our most mouth-watering culinary launches planned for this year is our collaboration with Cote Korean Steakhouse. They are the first and only Michelin-starred Korean steakhouse in the U.S. Together, we are introducing Sweetgreen's first-ever Korean barbecue-inspired menu, featuring our new KBBQ glazed steak, cucumber kimchi, and an apple kimchi sauce, bringing an entirely new flavor profile to our guests.

Speaker Change: These pillars are designed to increase traffic and expand restaurant level margin let.

Speaker Change: Let me share what we delivered in the first quarter.

Speaker Change: We opened five new restaurants.

Speaker Change: As shown in Philadelphia, Westfield in Canton, and the New York Metro area, Tarrytown enrichment and Hillsdale in Milwaukee.

Jonathan Neiman: Made with just five simple ingredients verbal fries or a category defining side, that's both craveable and aligned with our commitment to clean elevated food.

Speaker Change: As I shared on our last call. Our 2024 class of new restaurants is tracking toward two year metrics in year, one and delivered a Q1 margin of 18, 3%.

Jonathan Neiman: <unk> drove same store sales improvement in March they have become our most attach side item across channels, helping to lift overall ticket averages and broaden the meal experience, notably the strength has been consistent across all markets.

Jonathan Neman: This limited-time menu launches nationwide next Tuesday on May 13th. Collaborations like this is one way Sweetgreen is redefining fast food, showcasing our culinary creativity, high-quality ingredients, and cultural relevance. When we deliver bold culinary led menu moments, we see clear signals, new customers show up, lapsed customers return and existing guests engage more That's why the work we're doing now, across both limited-time offers and strategic brand collaborations, is so important.

Speaker Change: Notably 40% of this class is located in legacy markets and 60% in new markets underscoring the broad based strength of our performance.

Speaker Change: This reaffirms our confidence in the effectiveness of our real estate strategy and the significant long term growth opportunity that lies ahead.

Jonathan Neiman: Our innovation pipeline continues to be a key driver of traffic for us menu innovation goes beyond the food, it's about keeping the brand dynamic and culturally relevant.

Speaker Change: We continue to be pleased with the financial and operational performance of our infinite kitchen format, which is delivering strong results across key metrics. These locations are showing meaningful margin leverage compared to restaurants of similar age and volume driven by improved efficiency and operational consistency.

Jonathan Neiman: One of our most mouthwatering culinary launches planned for this year is our collaboration with Coke Korean Steakhouse.

Jonathan Neiman: They are the first and only Michelin starred Korean steakhouse in the U S. Together, we are introducing <unk> first ever Korean barbecue inspired menu featuring our new <unk> steak cucumber, Kim Chi and an applicant cheese sauce, bringing an entirely new flavor profile to our guests.

Jonathan Neman: And there's more menu innovation to come. With seasonal menus planned for the summer and fall, we are poised to sustain momentum through high-traffic periods. We're also focused on elevating our core menu by perfecting how each ingredient is prepared, sauced, and seasoned, ensuring every ingredient and bowl is a craveable, repeatable winner. A lot of this starts with our proteins, how they are marinated, cooked, held, and portioned.

Speaker Change: Additionally, our class of infinite kitchen continues to drive higher native digital sales due to their high throughput and consistency, which leads to a better guest experience we.

Speaker Change: We believe the infinite kitchen, together with our revamped loyalty program can accelerate our industry, leading digital presence.

Jonathan Neiman: This limited time menu launches nationwide next Tuesday on May 13th collaborations like this is one way sweet Green is redefining fast food showcasing our culinary creativity high quality ingredients and cultural relevance.

Speaker Change: Not only do we see strong performance in our infinite kitchens. We are also seeing strong performance of our Sweet Lane in Schaumburg, Illinois.

Jonathan Neman: Our job now is to keep delivering on that promise, staying nimble, listening closely to our guests, and executing with the kind of discipline that builds lasting brand love.

Speaker Change: In the first quarter comparable sales grew more than 20% year over year, Schaumburg, SUV and restaurant level margin is above the fleet average and with minimal incremental costs Schaumburg is a clear proof point of the strong cash on cash return potential of the sweetly and format.

Jonathan Neiman: When we deliver bold culinary led menu mogens, we see clear signals, new customers show up lapsed customers return and existing guests engaged more deeply.

Jonathan Neman: Another important milestone for us has been the nationwide launch of our Reimagine Loyalty program, SG Rewards, at the beginning of April. SG Rewards is a points-based program where customers earn 10 points for every eligible dollar spent with the ability to redeem points for free menu items, unlock surprise offers, and gain access to member-exclusive experience. This updated program is designed to be more engaging and rewarding for a broader range of customers based directly on their feedback. In just the first few weeks of the launch of SU Rewards, we've already seen strong adoption and excitement from our community.

Jonathan Neiman: It's why the work we're doing now across both limited time offers and strategic brand collaborations is so important and theres more menu innovation to come with seasonal menu is planned for the summer and fall we are poised to sustain momentum through high traffic period.

Speaker Change: This year's pipeline includes two new sweetly and location, one classic and our first with an infinite kitchen with more planned for 2026.

Speaker Change: We are reiterating our 2025, new unit guidance and continue to have high conviction in our long term development roadmap of 15% to 20% annual unit growth.

Jonathan Neiman: We're also focused on elevating our core menu by perfecting how each ingredient is prepared source and seasoned ensuring every ingredient and bolt is a craveable repeatable winner.

Speaker Change: In 2025, we plan to enter three new market, Sacramento, Phoenix, and Cincinnati and open at least 40, new restaurants, including 20 with the infinite kitchen.

Jonathan Neiman: This starts with our protein how they're marinated cooked held in portion our job now is to keep delivering on that promise staying nimble listening closely to our guests and executing with the kind of discipline that builds lasting brand love.

Jonathan Neman: Since launch, we've added 20,000 new digital customers. As part of the perks SU Rewards members can expect, they will get an early first taste of our new KBBQ menu on May 12th, when ordering through the Sweetgreen app or website. I want to thank our team members who are doing an incredible job engaging with guests and helping them discover the benefit of our Reimagined Loyalty Program. In a challenging industry environment where consumers are making more intentional choices with every dollar, SG Rewards is designed to meet the moment by delivering meaningful value.

Speaker Change: Additionally, we're planning two relocations that will be upgraded with the infinite kitchen and expect to complete one to three infinite kitchen retrofits of existing restaurants.

Jonathan Neiman: Another important milestone for us has been the nationwide launch of our re imagine loyalty program <unk> rewards at the beginning of April.

Speaker Change: As we scale innovation across every touch point physical and digital becomes even more critical.

Speaker Change: In today's environment staying top of mind requires a steady cadence of newness or 2025 calendar is designed to do just that increased visit frequency attract new customers and build deeper loyalty among our base let.

Jonathan Neiman: <unk> rewards is a points based program where customers earn 10 points for every eligible dollar spend with the ability to redeem points for free menu items unlock surprise offers and gain access to member exclusive experiences. This updated program is designed to be more engaging and rewarding for a broader range of customers based directly on their feedback.

Jonathan Neman: As we look ahead, we've strategically shifted internal capital to focus more heavily on menu innovation and targeted media investment. Coupled with Enhanced Personalized CRM and our Reimagined Loyalty Program, we believe these efforts will work together to accelerate transaction growth and strengthen guest loyalty. burning to our team and operation.

Speaker Change: Let me take a moment to share one of the most exciting things we've rolled out recently ripple fries.

Speaker Change: After an initial test in our la market, we launched ripple fries nationwide on March 4th ruble Fries are <unk> take on the classic item fresh cut daily in our restaurants, airfreight and avocado oil and server the choice of our Housemade pickles catch up or garlic AOE.

Jonathan Neiman: And just the first few weeks of the launch of <unk> Awards, we've already seen strong adoption and excitement from our community since launch we've added 20000, new digital customers a week.

Jonathan Neiman: As part of the perks as fuel rewards members can expect they will get an early first taste of our new <unk> menu on May 12, when ordering through the <unk> app or website I want to thank our team members, who are doing an incredible job engaging with guests and helping them discover the benefit of our re imagine loyalty program.

Jonathan Neman: Our AI-powered workforce management system is now live in the majority of our restaurants. to just two markets remaining. We are on track for full implementation by the end of the second. This system gives team members an optional, user-friendly mobile platform to manage their schedules, aligning their availability with restaurant needs. Average weekly hours are up nearly 10% and absentee rates have declined by nearly 50%. For our head coaches, the platform enables smarter, more proactive workforce planning and frees up valuable time to focus on team development, the guest experience and restaurant We've continued to see progress on the turnover front for both coaches and the broader team, with turnover nearing 90%.

Speaker Change: Made with just five simple ingredients for both Pfizer a category defining side, that's both craveable and aligned with our commitment to clean elevated food.

Speaker Change: Peripheral price drove same store sales improvement in March they have become our most attach side item across channels, helping to lift overall ticket averages and broaden the meal experience, notably the strength has been consistent across all markets.

Jonathan Neiman: In a challenging industry environment, where consumers are making more intentional choices with every dollar <unk> rewards is designed to meet the moment by delivering meaningful value.

Speaker Change: Our innovation pipeline continues to be a key driver of traffic for us menu innovation goes beyond the food, it's about keeping the brand dynamic and culturally relevant one.

Jonathan Neiman: As we look ahead, we strategically shifted internal capital to focus more heavily on menu innovation and targeted media investments.

Speaker Change: One of our most mouthwatering culinary launches planned for this year is our collaboration with Coke Korean Steakhouse.

Jonathan Neiman: Coupled with enhanced personalized CRM and our re imagine loyalty program. We believe these efforts will work together to accelerate transaction growth and strengthen guest loyalty.

Speaker Change: They are the first and only Michelin starred Korean steakhouse in the U S. Together, we are introducing <unk> first ever Korean barbecue inspired menu featuring our new <unk> steak cucumber, Kim Chi and an applicant she sauce, bringing an entirely new flavor profile to our guests.

Jonathan Neman: More than half of our first quarter leadership roles were filled from within, a clear testament to our growing bench strength and sustained investment in our While we've made meaningful strides, we still have opportunities to raise the bar on operational execution across many of our locations. Inconsistencies in service, speed, and portioning highlight the need for sharper discipline, tighter systems integration, and a greater focus on the details that drive day-to-day excellence.

Jonathan Neiman: Turning to our team and operations.

Jonathan Neiman: Our AI powered workforce management system is now live in the majority of our restaurants with just two markets remaining we are on track for full implementation by the end of the second quarter.

Speaker Change: This limited time menu launches nationwide next Tuesday on May 13th collaborations like this is one way sweet Green is redefining fast food showcasing our culinary creativity high quality ingredients and cultural relevance.

This system give team members, an optional user friendly mobile platform to manage their schedules aligning their availability with restaurant needs average weekly hours are up nearly 10% an absentee rates have declined by nearly 50%.

Jonathan Neman: That's why I'm excited to welcome Jason Cochran as our new Chief Operating Officer. Jason is a seasoned operations leader with more than two decades of experience at some of the most iconic brands in our industry, including Pizza Hut and Chipola. At Pizza Hut, he served as CEO and board member of American West Restaurant Group, the third largest franchisee in the U.S., where he led transformational improvements in performance, instilling operational discipline, and elevating execution across hundreds of locations. At Chipotle, he played a key role in scaling operations during a period of rapid growth with a focus on driving consistency, improving throughput, and enhancing the guest experience.

Jonathan Neiman: For our head coaches the platform enables smarter more proactive workforce planning and frees up valuable time to focus on team development, the guest experience and restaurant performance.

Speaker Change: When we deliver bold culinary led menu mogens, we see clear signals new customers show up lapsed customers return and existing guests engaged more deeply that's why the work we're doing now across both limited time offers and strategic brand collaborations is so important and there is more menu innovation to come.

Jonathan Neiman: We've continued to see progress on the turnover front for both coaches and the broader team with turnover nearing 90%.

Jonathan Neiman: More than half of our first quarter leadership roles were filled from within a clear Testament to our growing bench strength and sustained investment in our people.

Speaker Change: With seasonal menu is planned for the summer and fall, we are poised to sustain momentum through high traffic period.

Speaker Change: We're also focused on elevating our core menu by perfecting how each ingredient is prepared sauce and season, ensuring every ingredient and bolt is a craveable repeatable winter.

Jonathan Neiman: While we've made meaningful strides we still have opportunities to raise the bar on operational execution across many of our locations.

Jonathan Neiman: Consistency is in service speed and portion of <unk> highlight the need for sharper discipline tighter systems integration and a greater focus on the details that drive day to day excellent.

Speaker Change: This starts with our proteins, how they're marinated cooked held in portion our job now is to keep delivering on that promise staying nimble listening closely to our guests and executing with the kind of discipline that builds lasting brand love.

Jonathan Neman: Jason is a highly methodical, hands-on leader who brings a sharp eye for detail, a deep commitment to standards, and a passion for unlocking operational excellence. I'm confident he'll help us drive greater consistency and accountability across the board.

Speaker Change: That's why I'm excited to welcome Jason Cochran, as our new Chief operating officer.

Speaker Change: Jason is a seasoned operations leader with more than two decades of experience at some of the most iconic brands in our industry, including Pizza hut and Chipotle.

Speaker Change: Another important milestone for us has been the nationwide launch of our re imagine loyalty program <unk> rewards at the beginning of April.

Jonathan Neman: I'm thrilled to welcome Jason to our leadership team and to partner with him closely on this next chapter.

Jonathan Neman: Before I turn the call over to Mitch, I want to take a moment to acknowledge the industry dynamic we're operating in and the decline in consumer sentiment. We believe we are uniquely positioned to succeed, even in a more challenging industry back. This confidence stems from the strength of our death loyalty, our disciplined financial approach, and our unwavering commitment to transparent, high-integrity solutions. As our menu has evolved to include more warming, heartier offerings, such as our protein plates and premium additions like steak, we've seen a positive shift in the brand's value perception at dinner.

Speaker Change: At Pizza Hut, he served as CEO and board member of American West Restaurant Group third largest franchisee in the U S where he led transformational improvements in performance instilling operational discipline and elevating execution across hundreds of locations.

Speaker Change: <unk> rewards is a points based program where customers earn 10 points for every eligible dollar spend with the ability to redeem points for free menu items unlock surprise offers and gain access to member exclusive experiences. This updated program is designed to be more engaging and rewarding for a broader range of customers based directly on their feedback.

Speaker Change: At Chipotle. He played a key role in scaling operations during a period of rapid growth with a focus on driving consistency improving throughput and enhancing the guest experience.

Speaker Change: And just the first few weeks since the launch of <unk> Awards, we've already seen strong adoption and excitement from our community since launch we've added 20000, new digital customers a week.

Speaker Change: Jason is a highly methodical hands on leader, who brings a sharp eye for detail a deep commitment to standards and a passion for unlocking operational excellence at scale.

Jonathan Neman: However, we also recognize the opportunity to introduce compelling mid- and lower-priced items that increase guest frequency, particularly in the current environment. Given our customization model, we're well positioned to act quickly through limited time and evergreen menu items. We're excited about what's ahead and confident in our ability to deliver value in a way that deepens connection with our guests. without compromising on the quality or integrity that come to expect. As we look ahead, we're confident that our culinary innovation pipeline focused on elevating the guest experience, recent loyalty program launch, and focused investments in marketing and media will drive sales and strengthen the brand.

Speaker Change: As part of the Perks Su rewards members can expect they will get an early first taste of our new <unk> menu on May 12, when ordering through the <unk> app or website.

Speaker Change: I'm confident he'll help us drive greater consistency and accountability across the fleet.

Speaker Change: Thrilled to welcome Jason to our leadership team and to partner with them closely on this next chapter.

Speaker Change: To thank our team members, who are doing an incredible job engaging with guests and helping them discover the benefit of our re imagine loyalty program.

Speaker Change: Before I turn the call over to Mitch I wanted to take a moment to acknowledge the industry dynamic we're operating in and the declining consumer sentiment.

Speaker Change: In a challenging industry environment, where consumers are making more intentional choices with every dollar <unk> rewards is designed to meet the moment by delivering meaningful value.

Speaker Change: We believe we are uniquely positioned to succeed even in a more challenging industry backdrop.

Speaker Change: This confidence stems from the strength of our guest loyalty, our disciplined financial approach and our unwavering commitment to transparent high integrity sourcing.

Speaker Change: As we look ahead, we strategically shifted internal capital to focus more heavily on menu innovation and targeted media investments.

Speaker Change: Coupled with enhanced personalized CRM and our re imagine loyalty program. We believe these efforts will work together to accelerate transaction growth and strengthen guest loyalty.

Speaker Change: As our menu has evolved to include more warming heartier offerings, such as our protein place and premium additions like steak, we've seen a positive shift in the brand's value perception at dinner hour.

Jonathan Neman: We remain focused on what we can control, delivering consistently great experiences, improving operational execution, and investing in our people and process.

Speaker Change: Turning to our team and operations.

Speaker Change: We also recognize the opportunity to introduce compelling mid and lower priced items that increased guest frequency, particularly in the current environment.

Speaker Change: Our AI powered workforce management system is now live in the majority of our restaurants with just two markets remaining we're on track for full implementation by the end of the second quarter.

Jonathan Neman: Sweetgreen has always been more than just a place to eat. We're a community, a movement, and a brand built on purpose, with farm-to-flavor at the heart of how we connect people to real food.

Speaker Change: Given our customization model, we are well positioned to act quickly through limited time, an evergreen menu items. We're excited about what's ahead and confident in our ability to deliver value in a way that deepens connections with our guests.

Mitch Reback: And now, I'll turn the call over to Mitch, who will take you through our financials in more detail. Thank you, Jonathan, and good afternoon, everyone. Total revenue for the quarter was $166.3 million, up from $157.9 million in the first quarter of 2024.

Speaker Change: This system gives team members and optional user friendly mobile platform to manage their schedules aligning their availability with restaurant needs average weekly hours are up nearly 10% an absentee rates have declined by nearly 50%.

Speaker Change: Without compromising on the quality or integrity did come to expect from Sweet Green.

Speaker Change: For our head coaches the platform enables smarter more proactive workforce planning and frees up valuable time to focus on team development. The guest experience in restaurant performance.

Speaker Change: As we look ahead, we're confident that our culinary innovation pipeline focused on elevating the guest experience recent loyalty program launch and focused investments in marketing and media will drive sales and strengthen the brand.

Mitch Reback: Same-store sales for the first quarter declined 3.1% compared to the prior year period. This reflects a 3.4% benefit from menu price increases and a negative 6.5% impact from traffic and mix. Same-store sales grew in more than half of our markets, led by the Upper Midwest, Texas, and Colorado, all of which comped double-digit. Our average unit volume in the first quarter was 2.9 million. We opened five restaurants, ending the first quarter with 251 restaurants. Restaurant level profit margin for the quarter was 17.9% compared to 18.1% a year ago. Restaurant-level profit for the first quarter was $29.7 million, up 4% year-over-year.

Speaker Change: We've continued to see progress on the turnover front for both coaches and the broader team with turnover nearing 90%.

Speaker Change: We remain focused on what we can control delivering consistently great experiences improving operational execution and investing in our people and processes.

Speaker Change: More than half of our first quarter leadership roles were filled from within a clear Testament to our growing bench strength and sustained investment in our people.

Speaker Change: <unk> has always been more than just a place to eat where our community of movement and a brand built on purpose with farm to flavor at the heart of how we connect people to real food and now I will turn the call over to Mitch who will take you through our financials in more detail.

Speaker Change: While we've made meaningful strides we still have opportunities to raise the bar on operational execution across many of our locations.

Speaker Change: Since these in service speed and portion and highlight the need for sharper discipline tighter systems integration and a greater focus on the details that drive day to day excellent.

Mitch: Thank you Jonathan and good afternoon, everyone.

Mitch: Total revenue for the quarter was $166 3 million up from $157 9 million in the first quarter of 2024.

Speaker Change: That's why I'm excited to welcome Jason Cochran, as our new Chief operating officer.

Speaker Change: Jason is a seasoned operations leader with more than two decades of experience at some of the most iconic brands in our industry, including Pizza hut and Chipotle.

Mitch Reback: For a reconciliation of restaurant-level profit and restaurant-level margin to comparable gap figures, please refer to the Earnings Relay. Food, beverage, and packaging costs were 26.5% of revenue for the quarter and more than 100 basis point improvement from the prior year period, primarily due to distribution savings from continued market densification and ingredient consolidation, as well as favorable contract pricing on key ingredients. Labor and related expenses were 28.9% of revenue for the first quarter in line with the prior year period. Occupancy and related expenses for 9.4% of revenue, slightly higher than the prior year period. Operating support center costs in the first quarter increased slightly versus the prior year period on a dollar basis.

Mitch: Same store sales for the first quarter declined three 1% compared to the prior year period. This reflects a three 4% benefit from menu price increases and a negative six 5% impact from traffic and mix.

Mitch: Same store sales grew and more than half of our markets led by the upper Midwest, Texas, and Colorado, all of which Comped double digits. However.

Mitch: Our average unit volume in the first quarter was $2 9 million reopened.

Speaker Change: Chipotle He played a key role in scaling operations during a period of rapid growth with a focus on driving consistency improving throughput and enhancing the guest experience.

Mitch: We opened five restaurants, ending the first quarter was 251 restaurants.

Mitch: Front level profit margin for the quarter was 17, 9% compared to 18, 1% a year ago.

Speaker Change: <unk> is a highly methodical hands on leader, who brings a sharp eye for detail a deep commitment to standards and a passion for unlocking operational excellence at scale.

Mitch: Restaurant level profit for the first quarter was $29 7 million up 4% year over year for a reconciliation of restaurant level profit and restaurant level margin to comparable GAAP figures. Please refer to the earnings release.

Speaker Change: I'm confident he'll help us drive greater consistency and accountability across the fleet.

Mitch Reback: As a percentage of revenue, year over year, operating support center costs for the first quarter decreased slightly to 16.7% from 17.1%.

Speaker Change: Thrilled to welcome Jason to our leadership team and to partner with them closely on this next chapter.

Speaker Change: Before I turn the call over to Mitch I wanted to take a moment to acknowledge the industry dynamic we're operating in and the declining consumer sentiment.

Mitch: Food beverage and packaging costs were 26, 5% of revenue for the quarter and more than 100 basis point improvement from the prior year period, primarily due to distribution savings from continued market densification and ingredient consolidation as real as favorable contract pricing on key ingredients.

Mitch Reback: Net loss for the quarter was $25 million as compared to a loss of $26.1 million in the prior year period. The decrease in net loss is primarily due to a $1.2 million increase in our restaurant level profit, partially offset by an increase in depreciation and amortization expense primarily associated with an increase in new restaurants.

Speaker Change: We believe we are uniquely positioned to succeed even in a more challenging industry backdrop.

Speaker Change: This confidence stems from the strength of our guest loyalty, our disciplined financial approach and our unwavering commitment to transparent high integrity sourcing.

Mitch: Labor and related expenses were 28, 9% of revenue for the first quarter in line with the prior year period.

Speaker Change: As our menu has evolved to include more warming heartier offerings, such as our protein place in premium editions like steak, we've seen a positive shift in the brand's value perception at dinner.

Mitch Reback: Adjusted EBITDA, which excludes stock-based compensation and certain other adjustments, was $300,000 for the first quarter. Our balance sheet remains strong with a cash balance of $184 million.

Mitch: Occupancy and related expenses were nine 4% of revenue slightly higher than the prior year period.

Speaker Change: However, we also recognize the opportunity to introduce compelling mid and lower priced items that increased guest frequency, particularly in the current environment.

Mitch: Operating support center costs in the first quarter increased slightly versus the prior year period on a dollar basis as they.

Mitch Reback: Now I'd like to provide an update for our shareholders on the potential impact of tariffs across three key areas of our business. First, supply chain. Second, the restaurant build-out costs. And third, the infinite kitchen. From a supply chain perspective, our exposure remains relatively contained. The vast majority of our core ingredients are domestically sourced. At this time, our exposure to tariffs is about 75 basis points for the second quarter of 2025. Most of this impact comes from just a few items, primarily our packaging, which is currently sourced from China. Six months ago, we began a project to move packaging out of China, and we anticipate this to be completed during the second half of 2025.

Mitch: Percentage of revenue year over year operating support center costs for the first quarter decreased slightly to 16, 7% from 17, 1%.

Mitch: Net loss for the quarter was 25 million as compared to a loss of $26 1 million into prior year period. The decrease in net loss was primarily due to a $1 2 million increase in our restaurant level profit, partially offset by an increase in depreciation and amortization expense primarily associated with an increase.

Speaker Change: Without compromising on the quality or integrity, they've come to expect from sweetly.

Mitch: And new restaurants.

Speaker Change: We remain focused on what we can control delivering consistently great experiences improving operational execution and investing in our people and processes.

Mitch: Adjusted EBITDA, which excludes stock based compensation and certain other adjustments was $300000 for the first quarter.

Mitch: Our balance sheet remains strong with a cash balance of 184 million.

Mitch Reback: We expect the tariff impact to be reduced in the second half of the year to approximately 40 basis points. This does not reflect the impact of any further mitigation initiatives.

Mitch: Now I'd like to provide an update for our shareholders on the potential impact of tariffs across three key areas of our business.

Mitch: First supply chain second restaurant build out costs and third the infinite kitchen.

Mitch Reback: As we plan for the build out of our 2025 real estate pipeline, we anticipate tariffs will have an approximate 10% impact on our 1.4 to 1.5 million per unit build out costs. Importantly, this impact is not expected until late in 2025, as we have pre purchased a number of key components. Our team continues to diversify our supply base, avoid cost pass-throughs, and is focused on securing multi-year pricing agreements with key partners to further mitigate the tariff impact.

Mitch Reback: Thank you Jonathan and good afternoon, everyone.

Mitch Reback: Total revenue for the quarter was $166 3 million up from $157 9 million in the first quarter of 2024.

Mitch: From a supply chain perspective, our exposure remains relatively contained.

Mitch: Vast majority of our core ingredients are domestically sourced.

Mitch Reback: Same store sales for the first quarter declined three 1% compared to the prior year period.

Mitch: At this time, our exposure to tariffs is about 75 basis points for the second quarter of 2025.

Mitch Reback: Flex a three 4% benefit from menu price increases and a negative six 5% impact from traffic and mix same store sales grew and more than half of our markets led by the upper Midwest, Texas, and Colorado, all of which Comped double digits.

Mitch: Most of this impact comes from just a few items, primarily our packaging, which is currently sourced from China.

Mitch: Six months ago, we began a project to move packaging out of China, and we anticipate this to be completed during the second half of 2025.

Mitch Reback: On the Infinite Kitchen, as Jonathan mentioned, we're extremely encouraged by their performance. These restaurants continue to outperform expectations in both efficiency and guest satisfaction. As we scale the Infinite Kitchen, which costs approximately $450,000 to $550,000 per unit, we are closely monitoring the impact of tariffs on our cost structure. Currently, roughly 15% of each unit's cost is tied to components sourced from China. We have 10 IKs on hand that were not impacted by tariffs. While the current tariff rate on Chinese goods will impact the Infinite Kitchen, it remains accretive to our return on capital due to the long term labor savings, consistency and improvements in throughput.

Mitch: The tariff impact to be reduced in the second half of the year to approximately 40 basis points. This does not reflect the impact of any further mitigation initiatives.

Mitch Reback: Average unit volume in the first quarter was $2 9 million.

Mitch Reback: We opened five restaurants, ending the first quarter was 251 restaurants.

Mitch Reback: Front level profit margin for the quarter was 17, 9% compared to 18, 1% a year ago.

As we plan for the build out of our 2025 real estate pipeline, we anticipate tariffs will have an approximate 10% impact on our one four to one 5 million per unit Buildout costs. Importantly, this impact is not expected until late in 2025 as we have pre purchased a number of key components.

Mitch Reback: Restaurant level profit for the first quarter was $29 7 million up 4% year over year for a reconciliation of restaurant level profit and restaurant level margin to comparable GAAP figures. Please refer to the earnings release.

Mitch: Our team continues to diversify our supply base avoid cost pass throughs and is focused on securing multiyear pricing agreements with key partners to further mitigate the tariff impact.

Mitch Reback: Food beverage and packaging costs were 26, 5% of revenue for the quarter and more than 100 basis point improvement from the prior year period, primarily due to distribution savings from continued market densification and ingredient consolidation as real estate verbal contract pricing on key ingredients.

Mitch Reback: We remain committed to the expansion of the Infinite Kitchen and reiterate our 2025 new unit and IK guidance.

Jonathan Neiman: The infinite friction as Jonathan mentioned, we're extremely encouraged by their performance. These restaurants continued to outperform expectations for both efficiency and guest satisfaction.

Mitch Reback: Now turning to fiscal year 2025. As we look out on the next three quarters, we are highly cognizant that this is a dynamic environment. As you have heard from others across our industry, and seen in recent data, consumer sentiment has fallen sharply. After returning to positive comp sales performance in March, we saw a mid single digit decline in the same store sales during April, coinciding with the tariff announcement. Historically, April has always shown a rampant performance as seasonal patterns kick in. This is the first time we haven't seen that list. We believe this is noteworthy and reflective of the volatile external environment and the softening consumer sentiment marked by more deliberate purchasing behavior and lower frequency across discretionary categories.

Mitch Reback: Labor and related expenses were 28, 9% of revenue for the first quarter in line with the prior year period.

Jonathan Neiman: As we scale, the infinite kitchen, which cost approximately $450 to 550000 per unit. We are closely monitoring the impact of tariffs on our cost structure currently roughly 15% of each unit's cost is tied to components sourced from China.

Mitch Reback: Occupancy and related expenses were nine 4% of revenue slightly higher than the prior year period.

Mitch Reback: Operating support center costs in the first quarter increased slightly versus the prior year period on a dollar basis.

Jonathan Neiman: 10-K's on hand that were not impacted by tariffs.

Mitch Reback: Percentage of revenue year over year operating support center costs for the first quarter decreased slightly to 16, 7% from 17, 1%.

Jonathan Neiman: While the current tariff rate on Chinese goods that will impact the infinite kitchen. It remains accretive to our return on capital due to the long term labor savings consistency and improvements in throughput we remain committed to the expansion of the infinite kitchen and reiterate our 2025 new unit in <unk> guidance.

Mitch Reback: Net loss for the quarter was 25 million as compared to a loss of $26 1 million into prior year period. The decrease in net loss was primarily due to a $1 2 million increase in our restaurant level profit, partially offset by an increase in depreciation and amortization expense primarily associated with an increase in new.

Jonathan Neiman: Now turning to fiscal year 2025.

Mitch Reback: Our outlook assumes that the current trends continue and layers in the positive impact of upcoming menu initiatives as well as continued ramp in our new loyalty program. As we considered our fiscal year guidance, we assume no further deterioration in macroeconomic conditions. As always, our forecast is based on the information available to us today, and we recognize that uncertainty in the macro environment remains elevated.

Jonathan Neiman: As we look out on the next three quarters, we are highly cognizant that this is a dynamic environment.

Mitch Reback: Restaurants.

Speaker Change: As you've heard from others across our industry and seen in recent data consumer sentiment has fallen sharply.

Mitch Reback: Adjusted EBITDA, which excludes stock based compensation and certain other adjustments was $300000 for the first quarter.

Speaker Change: After returning to positive comp sales performance in March we saw a mid single digit decline in the same store sales through the April coinciding with the tariff announcements.

Mitch Reback: Our balance sheet remains strong with a cash balance of 184 million.

Mitch Reback: Now I'd like to provide an update for our shareholders on the potential impact of tariffs across three key areas of our business.

Speaker Change: Historically April has always shown a ramp in performance has ceased no patterns kick in this is the first time, we haven't seen that lift. We believe this is noteworthy and reflective of the volatile external environment and the softening consumer sentiment arc by more deliberate purchasing behavior and lower frequency across <unk>.

Mitch Reback: For fiscal year 2025, we anticipate the following at least 40 net new restaurant openings. Revenue ranging from $740 million to $760 million. things to our sales growth approximately flat. Restaurant level margin of approximately 19.5%. Adjusted EBITDA of approximately $30 million. On the development front, 20 of our 40 restaurants will feature the Infinite Kitchen. In terms of pipeline timing, 30 of our 40 planned new restaurants will open in the second half of the year. We do not anticipate any price increases for the remainder of the year. While the external environment may create some short term volatility, particularly around traffic and frequency, we believe we have strong levers to navigate this moment.

Mitch Reback: First supply chain second to restaurant build out costs and third the infinite kitchen.

Mitch Reback: From a supply chain perspective, our exposure remains relatively contained the vast majority of our core ingredients here domestically sourced.

Speaker Change: Discretionary categories.

Mitch Reback: At this time, our exposure to tariffs is about 75 basis points for the second quarter of 2025.

Speaker Change: Our outlook assumes that the current trends continue and layers and the positive impact of upcoming menu initiatives as well as continued ramping our new loyalty program.

Mitch Reback: Most of this impact comes from just a few items, primarily our Pac country, which is currently sourced from China.

Speaker Change: And as we considered our fiscal year guidance, we assume no further deterioration in macroeconomic conditions.

Mitch Reback: Six months ago, we began a project to move packaging out of China, and we anticipate this to be completed during the second half of 2025.

Speaker Change: Always our forecast is based on the information available to us today, and we recognize that uncertainty in the macro environment remains elevated.

Mitch Reback: Look the tariff impact to be reduced in the second half of the year to approximately 40 basis points.

Mitch Reback: Reflect the impact of any further mitigation initiatives.

Speaker Change: For fiscal year 2025, we anticipate the following.

Mitch Reback: Specifically, we see meaningful opportunities to lean into our loyalty program and our seasonal offering. We have a number of traffic driving initiatives that have yet to launch, including our collaboration with Cote Steakhouse next week. As the year progresses and comps get easier in the second half of the year, we believe there is a clear path to accelerate momentum. We remain extremely confident in our strategies and the underlying health of our business. We have built a strong business, a differentiated brand, and a flexible omnichannel platform that allows us to adapt and drive sustainable growth. As we move through 2025, we remain disciplined in how we deploy capital and leverage our G&A.

Mitch Reback: As we plan for the build out of our 2025 real estate pipeline, we anticipate tariffs will have an approximate 10% impact on our one four to one 5 million per unit build out costs.

Speaker Change: At least 40 net new restaurant openings revenue ranging from $740 million to 760 million same store sales growth of approximately flat.

Speaker Change: Strong level margin of approximately 19, 5% adjusted EBITDA of approximately $30 million.

Mitch Reback: <unk> fleet. This impact is not expected until late in 2025 as we have pre purchased a number of key components. Our team continues to diversify our supply base avoid cost pass throughs and is focused on securing multiyear pricing agreements with key partners to further mitigate the tariff impact.

Speaker Change: On the development front plenty of our 40 restaurants will feature the infinite kitchen in terms of pipeline timing 30 of our 40 planned new restaurants will open in the second half of the year.

Speaker Change: We do not anticipate any price increases for the remainder of the year.

Speaker Change: The infinite friction as Jonathan mentioned, we're extremely encouraged by their performance. These restaurants continue to outperform expectations for both efficiency and guest satisfaction as.

Speaker Change: While the external environment may create some short term volatility, particularly around traffic and frequency. We believe we have strong levers to navigate to smoke.

Mitch Reback: We are focused on high return opportunities and committed to building a resilient, durable business.

Speaker Change: As we scale, the infinite kitchen, which cost approximately $450 to 550000 per unit. We are closely monitoring the impact of tariffs on our cost structure currently roughly 15% of each unit's cost is tied to components sourced from China.

Mitch Reback: one that can scale efficiently, serve with purpose, and create long term value for our shareholders, guests, and team members.

Speaker Change: Typically we see meaningful opportunities to lean into our loyalty program and our seasonal offerings. We have a number of traffic driving initiatives that have yet to launch, including our collaboration with coats take US next week as the.

Operator: And now I'll turn the call back to the operator to start q&a. At this time, I would like to remind everyone, in order to ask a question, press star, then the number one on your telephone keypad. We ask that you do please limit yourself to one question, and we'll pause for just a moment to compile the Q&A roster.

Speaker Change: The year progresses, and comps get easier in the second half of the year. We believe there is a clear path to accelerate momentum.

Speaker Change: Ken I Kase on hand that were not impacted by tariffs.

Speaker Change: While the current tariff rate on Chinese goods that will impact the infinite kitchen. It remains accretive to our return on capital due to the long term labor savings consistency and improvements in throughput we remain committed to the expansion of the infinite kitchen and reiterate our 2025 new unit in <unk> guidance.

Speaker Change: We remain extremely confident in our strategies and the underlying health of our business. We have built a strong business a differentiated brand and a flexible omnichannel platform that allows us to adapt and drive sustainable growth.

Jon Tower: Our first question comes from the line of Jon Tower with Citigroup. Please go ahead. Thanks.

Speaker Change: We move through 2025, we remain disciplined in how we deploy capital and leverage our G&A.

Mitch Reback: I guess maybe starting, I appreciate all the colors you you offered in tariffs and in terms of across the business and IK and I think that's certainly a point of a question that I'm getting a lot from investors. So I just want to clarify and make sure that I understand. It looks like all in, based on the range for build-out costs and including an infinite kitchen, it'll be roughly 32 to 37 percent higher than what you guys had originally targeted for stores previously for build-out costs with these tariffs in place. And that's the current situation that you know for tariffs coming in from China.

Speaker Change: Now turning to fiscal year 2025.

Speaker Change: As we look out on the next three quarters, we are highly cognizant that this is a dynamic environment.

Speaker Change: We are focused on high return opportunities and committed to building a resilient durable business.

Speaker Change: As you've heard from others across our industry and seen in recent data consumer sentiment has fallen sharply.

Speaker Change: One that can scale efficiently serve with purpose and create long term value for our shareholders guests and team members and now I will turn the call back to the operator to start Q&A.

Speaker Change: After returning to positive comp sales performance in March we saw a mid single digit decline in the same store sales during the April coinciding with the tariff announcements.

Speaker Change: At this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad. We ask that you do please limit yourself to one question and we'll pause for just a moment to compile the Q&A roster.

Speaker Change: Historically April has always shown a ramp in performance has seasonal patterns kick in this is the first time, we haven't seen that lift. We believe this is noteworthy and reflective of the volatile external environment and the softening consumer sentiment arc by more deliberate purchasing behavior and lower frequency across.

Mitch Reback: That's not assuming any changes at the moment for what's going to happen going forward.

John Power: Our first question comes from the line of John Power with Citigroup. Please go ahead.

Speaker Change: Thanks.

Mitch Reback: Hi Jon, it's Mitch. I think what I would say is the build-out cost for an NRO with no tariffs is approximately $1.5 million, and as of now we see that tariff running about a 10 percent of that type of number, so call it $150,000 per unit. And on the Infinite Kitchen, call an average cost of $500,000 per IK, the tariff is approximately $100,000. So you would see a total tariff impact of about $250,000 on a $2 million build out. So just a little bit over 10%. And I should point out in this dynamic world, that's as of the tariffs as of last night.

Speaker Change: Discretionary categories.

Speaker Change: I guess, maybe starting I appreciate all the color you offered in tariffs.

Speaker Change: Our outlook assumes that the current trends continue and layers and the positive impact of upcoming menu initiatives as well as continued ramp in our new loyalty program.

Speaker Change: And in terms of across the business and I again, I think that's certainly a point of.

Speaker Change: The question that I'm getting a lot from investors. So I just wanted to clarify and make sure that I understand it looks like all in based on the range for build out costs.

Speaker Change: And as we considered our fiscal year guidance, we assume no further deterioration in macroeconomic conditions.

Speaker Change: Always our forecast is based on the information available to us today, and we recognize that uncertainty in the macro environment remains elevated.

Speaker Change: Including an infinite kitchen, it'll be roughly 32% to 37% higher than what you guys had originally.

Speaker Change: Targeted for stores.

Speaker Change: For fiscal year 2025, we anticipate the following.

Speaker Change: Obviously for build out costs.

Speaker Change: With these tariffs in place and Thats kind of the current situation that you know for tariffs coming in from China, that's not assuming any changes at the moment for what's going to happen going forward.

Speaker Change: At least 40 net new restaurant openings revenue ranging from $740 million to 760 million same.

Speaker Change: Same store sales growth of approximately flat rest.

Speaker Change: Restaurant level margin of approximately 19, 5% adjusted EBITDA of approximately 30 million.

Speaker Change: Hi, John It's Mitch.

Speaker Change: I think what I would say is.

Mitch Reback: Okay, and just in terms of, go ahead, sorry. So, Jon, just one thing to add, we mentioned on the call that, you know, we've pre-bought materials for the majority of our pipeline this year. So a lot of that impact, including some infinite kitchens on hand. So, that is not impacting the entire pipeline this year. We really start to see the impact on the build out in Q4, and we do have a good number of IKs on hand and working to diversify the supply base there. The other thing I'd say is, you know, over the years, we've talked to you all about the work we're doing to optimize the overall build out cost.

Speaker Change: On the development front 20 of our 40 restaurants will feature the infinite kitchen in terms of pipeline timing 30 of our 40 planned new restaurants will open in the second half of the year.

Speaker Change: The build out costs for it and in a row with no tariffs was approximately $1 $5 million and as of now we see that tariff running about a 10% of that type of number so call it $150000 per unit.

Speaker Change: We do not anticipate any price increases for the remainder of the year.

Speaker Change: While the external environment may create some short term volatility, particularly around traffic and frequency. We believe we have strong levers to navigate to smoke.

The infinite kitchen, colon and average cost of $500000 per <unk>, a tariff is approximately $100000. So you would see a total tariff impact of about 252 hundred $50000 on a $2 million build out so just a little bit over 10%.

Speaker Change: Specifically, we see meaningful opportunities to lean into our loyalty program and our seasonal offerings. We have a number of traffic driving initiatives that have yet to launch, including our collaboration with coats take house next week.

Mitch Reback: So, this is all on a kind of apple to apples basis. We've obviously been working really hard on new formats and just general cost optimization. So, you know, our hope is to mitigate as much of this as possible, but this is just kind of if we took the impact as a, you know, as a straight apple to apple.

Speaker Change: And I should point out this dynamic world that sounds of the tariffs as of last night.

Speaker Change: As the year progresses and comps get easier in the second half of the year. We believe there is a clear path to accelerate momentum.

Speaker Change: Okay and just.

Speaker Change: Go ahead sorry.

Speaker Change: So John I'm, just wondering to add as we mentioned on the call that we pre bought materials for the majority of our pipeline. This year, so a lot of that impact, including some some infinite kitchens on hand, so that is not impacting the entire pipeline. This year, we really start to see the impact on the build out in Q4 and we.

Jon Tower: Got it.

Jonathan Neman: And maybe just one follow up, Jon, you mentioned in the prepared remarks, the idea of perhaps adding more mid to lower priced items to the menu, either evergreen or LTO options for value, like, one, where are you in that process? And then two, you know, how do you plan on communicating that to guests? You know, you're not necessarily a traditional marketer, nor would I expect you to be out there blasting the airwaves with a value pitch person. So is this something we should expect more through the rewards program or more through, you know, point of purchase?

Speaker Change: As we move through 2025, we remain disciplined in how we deploy capital and leverage our G&A.

Speaker Change: We are focused on high return opportunities and committed to building a resilient durable business one that can scale efficiently serve with purpose and create long term value for our shareholders guests and team members and now I will turn the call back to the operator to start Q&A.

Speaker Change: Have a good number of <unk> on hand, and working to working to diversify the supply base. There. The other thing I'd say is over the years, we've talked to you all about the work we're doing to optimize the overall build out cost. So this is all on a kind of apples to apples basis.

Speaker Change: Obviously <unk> been working working really hard on new formats.

Jonathan Neman: Like, how do you plan on getting that message out to folks who might not be aware that, you know, now there is something that's more approachable? So I think what I'd start with is, you know, if you look back over the past five years in the high inflationary environment, we've actually taken less price than most What we have done is, in an effort to broaden our TAM and broaden our consumer, we did introduce these heartier, warmer options, things like protein plates and steak. And the beautiful news about that is they really did work in unlocking a lot of those TAM markets.

Speaker Change: Just general cost optimization so.

Speaker Change: Our hope is to mitigate as much of this is possible. But this is just kind of if we took the impact of it.

Speaker Change: A straight apples to apples.

Speaker Change: Got it and maybe just one follow up John you mentioned in the prepared remarks, the idea of perhaps adding more mid to lower priced items to the menu either evergreen or MTO options for value.

Speaker Change: Our first question comes from the line of Jon Tower with Citigroup. Please go ahead.

Speaker Change: Thanks.

Speaker Change: I guess.

Speaker Change: Maybe starting I appreciate all the color you offered in tariffs.

Speaker Change: One where are you in that process and then too.

Speaker Change: And in terms of across the business and I again, I think that's certainly a point of.

Speaker Change: How do you plan on communicating that to guests.

Jonathan Neman: You can see that in the strength of those new markets and the comp in the emerging markets. But as we did that, some of the price value perception, if you look at our menu, you now have this higher category price things, great value for dinner. But we've noticed some price gaps on the menu, kind of in the middle or lower tier. So, we see a couple of ways that we can do that. One is through our seasonal menu. Our seasonal menu allows us to flex into different price points. We do see some opportunities to potentially introduce some things in the core.

Speaker Change: A question that I'm getting a lot from investors. So I just wanted to clarify and make sure that I understand it looks like all in based on the range for build out costs.

Speaker Change: Not necessarily a traditional market or nor would I expect you to be at their blasting the airwaves with a value pitch per se. So is that something we should expect more through the rewards program or more through point of purchase like how do you plan on getting that message out to folks who might not be aware of that.

Speaker Change: Including an imputed kitchen, it'll be roughly 32% to 37% higher than what you guys had originally.

Speaker Change: Targeted for stores previously for build out costs.

Speaker Change: Now, there's something that's more approachable.

Speaker Change: So so I think what I'd start with is if you look back over the past five years and the high inflationary environment, we've actually taken less price than most of the industry. What we have done is in an effort to broaden our Tam and broaden our consumer we did introduce these these hardy warmer options things like protein played since.

Jonathan Neman: We would not present them necessarily as a value menu, to your point. It would just be, you know, finding things, you know, kind of anchoring more of the menu in the mid to lower price tiers. And, of course, loyalty becomes a really big lever for us to be more surgical and personalized around how we can create the right customer journeys, the right promo, and, you know, the right next best action to drive the long-term value of our customers. So, we have a lot of levers at hand. And I think given, we mentioned on the call, given the way our menu is constructed, we have the ability to move pretty quickly in terms of coming up with new menu items and coming up with things that both the consumers love, we can execute seamlessly.

Mitch Reback: Hi, John It's Mitch.

Mitch Reback: I think what I would say is.

And the beauty.

Mitch Reback: The build out costs for it and in a row with no tariffs was approximately $1 $5 million and as of now we see that tariff running in about a 10% of that type of number so call. It a $150000 per unit.

Speaker Change: <unk> news about that is the really good work in unlocking a lot of those 10 markets you can see that in the strength of those new markets and the comp in the emerging markets, but as we did that some of the price value perception. If you look at our menu you now have this higher category pricing price things great value for dinner, but we've noticed some price gaps on the men.

Mitch Reback: The infinite kitchen call, an average cost of $500000 per K. The tariff is approximately $100000. So you would see a total tariff impact of about 252 hundred $50000 on a $2 million build out so just a little bit over 10%.

Speaker Change: You kind of in the middle or lower tier. So we see a couple of ways that we can do that one is through our seasonal menu our seasonal menu allows us to flex into different price points, we do see some opportunities to potentially introduce some things in the core we would not present present them isn't necessarily as a value menu to your point it would just be.

Jonathan Neman: And can kind of meet our margin profile. So, you know, the world changed pretty quickly here in April, but have a lot of tools at our disposal.

Jon Tower: Great, thanks for taking the question.

Mitch Reback: And I should point out this dynamic world that sounds as the tariffs as of last night.

Speaker Change: <unk> kind of finding things kind of anchoring more of the menu in the mid or mid to lower priced tiers and of course loyalty becomes a really big lever for us to be more surgical and personalized around how we can create the right customer journeys the right promo and the right next best action to drive the long term value of our customers.

Sarah Sinatore: Our next question comes from the line of Sarah Sinatore with Bank of America. Please go ahead. Thank you. Maybe, actually, a quick question about any differences you might be seeing in terms of geography. I'm just thinking about, you know, your exposure to D.C. because April has been quite mixed, I think, for different restaurants, and so trying to understand why some might be feeling the impact of, you know, lower consumer confidence, while others are actually seeing acceleration.

Mitch Reback: Okay.

Mitch Reback: Go ahead sorry.

Mitch Reback: So John just one thing to add as we mentioned on the call that we pre bought materials for the majority of our pipeline. This year, so a lot of that impact, including some some infinite kitchens on hand, so that is not impacting the entire pipeline. This year, we really start to see the impact on the build out in Q4 and we.

Speaker Change: So we have a lot of levers at hand, and I think given we mentioned on the call is given the way. Our menu is constructed we have the ability to move pretty quickly in terms of coming up with new menu items.

Sarah Sinatore: So I didn't know if there was a, maybe, just your geographic exposure. And then I do have a quick follow-up.

Mitch Reback: Have a good number of <unk> on hand, and working to working to diversify the <unk>.

Speaker Change: And coming up with things that both the consumers love, we can execute seamlessly and can kind of meet our margin profile.

Mitch Reback: Fly based there the other thing I'd say is over the years, we've talked to you all about the work we're doing to optimize the overall build out cost. So this is all on a kind of apples to apples basis. We've obviously been working working really hard on new formats.

Speaker Change: The world changed pretty quickly here in April but have had a lot of tools the tools at our disposal.

Jonathan Neman: Hi, Sarah. Thanks for the question. Yeah, I would point out two areas in our geography that are probably noteworthy. One that we mentioned on the last call, Los Angeles, which we said was about 15% of our volume, continues to be severely impacted in the aftermath of the LA fires. In our modeling, we see some lingering impacts of this continuing on for quite a while. And as you pointed out sometime around the beginning of April, we did see a change in our DC volume. So, you know, the company began in Washington, DC. It's kind of one of the markets that we're identified with.

Speaker Change: Great. Thanks for taking my questions.

Speaker Change: Our next question comes from the line of Sara Senatore with Bank of America. Please go ahead.

Mitch Reback: General cost optimization so.

Mitch Reback: Our hope is to mitigate as much of this is possible. But this is just kind of if we took the impact of it.

Sara Senatore: Thank you.

Quick question about any.

Mitch Reback: On a straight apples to apples.

Speaker Change: Differences you might be seeing in terms of geography I'm just.

Mitch Reback: Got it and maybe just one follow up John you mentioned in the prepared remarks, the idea of perhaps adding more mid to lower priced items to the menu either evergreen or <unk> options for value.

Speaker Change: Thinking about your exposure to D. C. Because April has been quite mixed I think for for different restaurants, and so trying to understand why some might be feeling the impact of lower consumer confidence, but others are actually seeing an acceleration. So I didn't know if there was a maybe just your geographic exposure.

Mitch Reback: One where are you in that process and then too.

Jonathan Neman: We have a number of stores there, but I should point out they're generally older, smaller stores in the DC market. But there clearly was a change in the DC performance around the beginning of April.

Mitch Reback: How do you plan on communicating that to guests.

Speaker Change: And then I give a quick follow up.

Mitch Reback: Not necessarily a traditional market or nor would I expect you to be out there blasting the airwaves with a value pitch per se. So is this something we should expect more through the rewards program or more through point of purchase like how do you plan on getting that message out to folks who might not be aware of that.

Speaker Change: Hi, Sarah Thanks for the question.

Speaker Change: I would point out two areas in our geographies that are probably noteworthy one that we mentioned on the last call Los Angeles, which we said was about 15% of our volume continues to be severely impacted in the aftermath of BLA fires.

Sarah Sinatore: Okay, thank you. Very helpful.

Sarah Sinatore: And then the follow up is about the breadth of your, your reach, you know, this, I'm super excited about the COTE collaboration, but that strikes me as a little bit of a New York institution. How do you think about that in terms of, you know, appealing, I think, as Jon mentioned, you know, broader, broadening TAM and kind of the, the. things that you do from a culinary perspective.

Mitch Reback: Now, there's something that's more approachable.

Mitch Reback: So I think what I'd start with is if you look back over the past five years and the high inflationary environment, we've actually taken less price than most of the industry. What we have done is in an effort to broaden our Tam and broadened our consumer we did introduce these hardy.

Speaker Change: In our modeling we see some lingering impacts of this continuing on for quite a while.

Speaker Change: And as you pointed out correctly sometime around.

Jonathan Neman: Thanks. Yeah, so we're very excited about this collaboration. I think, you know, it's beyond just the collaboration. It's really about the bold flavors that we're bringing to market. You know, we're excited for everyone to taste it. It's a totally different flavor profile. It really leans on both the sourcing and scratch cooking, but brings in these Korean flavors and leverages our new steak offering with a twist. So, you know, in terms of the actual collaborator, you know, the reason we do this is it gives us a lot of culinary credibility. And it actually, the partnership with the chef helps us build truly delicious items. So it's a part of our storytelling.

Speaker Change: At the beginning of April we did see a change in our DC volume.

Speaker Change: The company began in Washington D. C. It's kind of one of the markets that were identified with <unk>. We have a number of stores there, but I should point out they're generally older smaller stores into DC market, but there clearly was a change in the DC performance around the beginning of April.

Mitch Reback: Hardy warmer options things like protein plates and stake and the beautiful news about that is really good work in unlocking a lot of those 10 markets you can see that in the strength of those new markets and the comp in the emerging markets, but as we did that some of the price value perception. If you look at our menu you now have this higher category pricing pricing.

Speaker Change: Okay. Thank you very helpful. And then the follow up is about the breadth of your your reach.

Mitch Reback: <unk> great value for dinner, but we've noticed some price gaps on the menu kind of in the middle or lower tier. So we see a couple of ways that we can do that one is through our seasonal menu our seasonal menu allows us to flex into different price points, we do see some opportunities to potentially introduce some things in the core we would not present.

Speaker Change: I'm Super excited about the collaboration but it strikes me as a little bit of a New York institution. How do you think about that in terms of appealing I think as John mentioned broader broadening can and kind of the.

Jonathan Neman: There's a lot of huge experiential element as part of it. And we know it's a core part of how we built this brand. And I think something that consumers expect. So what we've learned is it's not just if you've heard of it, it's a lot of, for us, it's a huge way to drive discovery for these great chefs that you may or may not know.

Mitch Reback: Present them isn't necessarily as a value menu to your point it would just be kind of finding things kind of anchoring more of the menu in the mid or mid to lower priced tiers and of course loyalty becomes a really big lever for us to be more surgical and personalized around how we can create the right customer journeys the right promo.

Speaker Change: Things that you get from culinary perspective. Thanks.

Speaker Change: Yeah. So we're very excited about this collaboration I think beyond just the collaboration it's really about the bold flavors that we're bringing to market.

Jonathan Neman: So very excited about bringing this new flavor and excited to share more with you on the next call.

Speaker Change: We are.

Speaker Change: We're excited fragrance tasted it it's a totally different flavor profile that really leans on both the sourcing and scratch cooking, but brings in this these korean flavors and Leverages, our new steak offering with a with a twist. So in terms of the actual collaborator.

Sarah Sinatore: Thank you.

Mitch Reback: The right next best action to drive the long term value of our customers. So we have a lot of levers at hand, and I think given we mentioned on the call is given the way. Our menu is constructed we have the ability to move pretty quickly in terms of coming up with new menu items.

Sharon Zackfia: Our next question comes from the line of Sharon Zackfia with William Blair.

Andrew Charles: Please go ahead. I'm sorry, our next question comes from the line of Andrew Charles with TD Cohen. Please go ahead. Thank you. This is Zach Ogden on for Andrew.

Speaker Change: The reason we do this is it gives us a lot of culinary credibility and it actually the partnership with the shelf helps us build truly delicious items. So.

Mitch Reback: And coming up with things that both the consumers love, we can execute seamlessly and can kind of meet our margin profile.

Speaker Change: So it is a part of our storytelling theres a lot of huge experiential element as part of it and we know it's a core part of how we built this brand and I think something that consumers expect so what we've learned is it's not just if you've heard of it that's a lot of for us until the huge huge way to drive discovery for these these great chefs that you may or may not.

Mitch Reback: The world changed pretty quickly here in April but have a lot of tools the tools at our disposal.

Zach Ogden: Just given April's mid-sales decline in same-sales sales, could you just walk us through the cadence of sales you expect for the rest of 2035 to get the flat for the full year? Thank you. What I would say about April, you know, as other people have noticed, April has generally been a month where our business has accelerated. That's probably been the pattern that's been in the business since inception. As the weather warms up, our business picks up. This April, that did not materialize. There's actually a significant change in the history and in the historical patterns of the business.

Mitch Reback: Great. Thanks for taking my questions.

Sara Senatore: Our next question comes from the line of Sara Senatore with Bank of America. Please go ahead.

Speaker Change: So very excited about bringing this new flavor and excited to share more with you on the next call.

Sara Senatore: Thank you.

Speaker Change: Quick question about any differences.

Thank you.

Speaker Change: Differences you might be seeing in terms of geography I'm just.

Speaker Change: Thinking about your exposure to D. C. Because April has been quite mixed I think for for different restaurants, and so trying to understand why some might be feeling the impact of lower consumer confidence bothers are actually seeing an acceleration and say I didn't know if there was a maybe just.

Speaker Change: Our next question comes from the line of Sharon Zackfia with William Blair. Please go ahead.

Speaker Change: Yeah.

Speaker Change: I'm sorry.

Speaker Change: Geographic exposure.

Speaker Change: Our next question comes from the line of Andrew Charles with Keybanc Cowen. Please go ahead.

Mitch Reback: largely coincided with the tariff announcement and some of the external uncertainty. What we see is the second quarter being challenging, both from a comp perspective led by April, as well as the fact that the launch of our loyalty program, as we've disclosed, will create some headwinds around our revenue number as we launch that program. During the back half of the year, particularly Q3 and Q4, we see business picking up for a number of reasons. One, we have slightly easier comps during that period. Two, the return of our summer seasonals and fall seasonals, these have been crowd favorites for a number of years that were not on the menu in 2024, and we think they'll have a massive impact beginning around July 2025.

Speaker Change: And then I guess a quick follow up.

Speaker Change: Hi, Sarah Thanks for the question.

Speaker Change: Thank you. This is <unk> on for Andrew just given April is mid single digit decline in same store sales could you just walk us through the cadence of sales do you expect for the rest of the 20 to 25 to get to flat for the full year.

Speaker Change: I would point out two areas in our geographies out or probably noteworthy one that we mentioned on the last call Los Angeles, which we said was about 15% of our volume continues to be severely impacted in the aftermath of BLA fires.

Speaker Change: Thank you.

Speaker Change: But I would say about April it was other.

Speaker Change: In our modeling we see some lingering impacts of discontinuing on for quite a while.

Speaker Change: People have noticed April has generally been a month, where in our business has accelerated its probably been the pattern. That's been in the business since inception as the weather warms up our business picks up this April that did not materialize.

Speaker Change: And as you pointed out correctly sometime around.

Speaker Change: At the beginning of April we did see a change in our DC volume.

Speaker Change: The company began in Washington D. C. It's kind of one of the markets that were identified with <unk>. We have a number of stores there, but I should point out they're generally older smaller stores into DC market, but there are clearly wasn't changed into DC performance surround the beginning of April.

There is actually a significant change in the history of the historical pattern of the business are largely coincides with the tariff announcements and some of the external uncertainty.

Mitch Reback: In addition to which, we have our loyalty program, which, as I said, will be a headwind in Q2, but becoming a pretty big tailwind as we go through Q3 in the back half of the year. I should point out, as I was kind of alluded to at the beginning, there's a degree of synergy between the launch of seasonals and loyalty program, where they can feed each other to help drive frequency and attract new customers. So, we think we have a pretty solid lineup of activity, actually starting next week with the code collaboration, but really accelerating in July.

Speaker Change: What we see as the second quarter being challenging both from a comp perspective led by April as well as the fact that the launch of our loyalty program as we've disclosed who create some headwinds around our revenue number.

Speaker Change: Okay. Thank you very helpful. And then the follow up is about the breadth of your your reach.

Speaker Change: I'm Super excited about the collaboration but it strikes me as a little bit about New York institution.

Speaker Change: As we launched that program during the back half of the year, particularly Q3 and four we see business picking up for a number of reasons one we.

Speaker Change: You think about that in terms of appealing I think as John mentioned broader broadening can and kind of like that.

Speaker Change: We have slightly easier comps during that period to the return of our summer seasonal and full seasonal is it been crowd favorites for a number of years that were not on the menu in 2024, and we think they will have a massive impact beginning around July of 'twenty 'twenty four or five in addition to which we have.

Speaker Change: Things that you do from a culinary perspective thanks.

Zach Ogden: Got it. Thank you.

Mitch Reback: And then just on the Infinite Kitchens, if the tariffs do persist, would that change your aptitude at all to retrofit stores to IKs going forward? Now, I really would not at this point in time change our deployment strategy around the Infinite Kitchen. When you do the math on the Infinite Kitchen and you take a kind of typical AUV store at $3 million and eight points of savings, you get around $240,000 annually. If the cost moved up from $500,000 to $600,000, you find the return on capital remains wildly accretive, and that's at current labor rates. When you look out over the next 10 years, we see labor continuing to increase and those returns increasing.

Speaker Change: Yes. So we're very excited about this collaboration I think beyond just the collaboration it's really about the bold flavors that we're bringing to market.

Speaker Change: We are.

Speaker Change: We're excited fragrance tastes that it's a totally different flavor profile that really leans on both the sourcing and scratch cooking, but brings in this these korean flavors and Leverages, our new steak offering with a with a twist so in terms of the.

Speaker Change: Our loyalty program, which as I said will be a headwind in Q2, but becoming a pretty big tailwind as we go through Q3 in the back half of the year.

Speaker Change: I should point out is was kind of alluded to at the beginning there is a degree of synergy between the launch of seasonal and loyalty program, where they can feed each other to help drive frequency and attract new customers. So we think we have a pretty solid lineup of activity actually starting next week with the code collaboration but really <unk>.

Speaker Change: The actual collaborator.

Speaker Change: The reason we do this is it gives us a lot of culinary credibility and it actually the partnership with the shelf helps us build truly delicious items.

Speaker Change: So it's a part of our storytelling there is a lot of huge experiential element as part of it and we know it's a core part of how we built this brand and I think something that consumers expect so what we've learned is it's not just if you've heard of it that's a lot of for US. It's a huge huge way to drive discovery for these these great chefs that you may or may not.

Mitch Reback: So I would say the current tariff structure would not change the IK deployment strategy at all.

Speaker Change: <unk> already in July.

Speaker Change: Got it. Thank you and then just on the if any kitchens <unk>.

Speaker Change: Chris do persist would that change your attitude at all to retro retrofit stores to AK as going forward.

Zach Ogden: Great.

Zach Ogden: Thank you.

Sharon Zackfia: And again, our next question is from the line of Sharon Zackfia with William Blair. Please go ahead. Hi, can you hear me? Yeah. Okay, thanks. I don't know what happened before.

Speaker Change: No. So very excited about bringing this new flavor and excited to share more with you on the next call.

Speaker Change: No.

Speaker Change: No I really don't at this point in time change our deployment strategy around the infinite kitchen. When you do the math on the infinite kitchen, and you've taken kind of typical <unk> store and $3 million and eight points of savings you get around $240000 annually. If the cost moved up from 500 to 600.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Sharon Zackfia with William Blair. Please go ahead.

Sharon Zackfia: I guess I wanted to ask about the markets that you've called out, which were, you talked about LA, but you also mentioned New York and Boston. Is there anything in those markets where you think your perceived value has somehow kind of declined in the recent environment? Is there anything you could point out operationally that maybe is causing those markets to gap differently than some of the other markets that you're operating in? Thanks for the question, Sharon. So I think there's a few things here. First, I'd say, if you think about the Sweetgreen model over our history, the seasonal menu was a core part of the model.

Speaker Change: Yeah.

Speaker Change: Do.

Speaker Change: You can find the return on capital remains a wildly accretive and that's our current labor rates. When you look out over the next 10 years, we see labor continuing to increase Sandoz returns, increasing so I would say the current tariff structure would not change the Ik deployment strategy at all.

Speaker Change: I'm sorry.

Speaker Change: Our next question comes from the line of Andrew Charles with Keybanc Cowen. Please go ahead.

Speaker Change: Great. Thank you.

Speaker Change: Our next question is from the line of Sharon Zackfia with William Blair. Please go ahead.

Jonathan Neman: We would change our menu about five times a year. And it's part of what drove the habituation, the frequency, you know, it's what would limit the fatigue and just keep you hooked, you know, season after season. With the removal of that, we've seen some weakness in the frequency of it, specifically in those core markets where those seasonals did especially well. So we're encouraged about bringing them back, bringing them back in a really big way. And we think that will help us with the frequency challenges we have.

Speaker Change: Thank you.

Speaker Change: But I would say about April.

Sharon Zackfia: Hi can you hear me.

Speaker Change: People have noticed April has generally been in months, where in our business has accelerated its probably been the pattern. That's been in the business since inception as the weather warms up our business picks up this April that did not materialize.

Speaker Change: Yes.

Speaker Change: Okay. Thanks, I don't know what happened before.

Speaker Change: I guess I wanted to ask about the the markets that you called out, which where you talked about la but you also mentioned in New York and Boston is there anything in those markets, where you think your prestige value has somehow.

Speaker Change: Or is it actually a significant change in the history and the historical pattern of the business are largely coincides with the tariff announcement and some of the external uncertainty.

Speaker Change: Declined in the recent environment.

Jonathan Neman: The second is loyalty. We made a transition from our SweetPass Plus loyalty program, which really had a pretty small member base to a much broader base loyalty program. And we're acquiring about 20,000 new loyalty members a week. This is pretty much more than each week than the whole SweetPass Plus membership base. So there's a huge opportunity here to kind of lean into that to continue to drive frequency.

Speaker Change: Is there anything you could point out operationally that maybe is causing those markets to GAAP differently and then some of the other markets that you're operating in.

Speaker Change: What we see as the second quarter being challenging both from a comp perspective led by April as well as the fact that the launch of our loyalty program as we've disclosed will create some headwinds around our revenue number.

John Power: Thanks for the question Sharon So I think Theres a few things here.

John Power: First I'd say, if you think about the <unk> model over our history. The seasonal menu was a core part of the model we would change our menu about five times a year and it's part of what drove the habituation the frequency.

Speaker Change: As we launched that program during the back half of the year, particularly Q3 and four we see business picking up for a number of reasons one we.

Jonathan Neman: And then the last thing I'd say is that there's definitely some operational opportunities we have specifically in a lot of those core legacy markets, specifically in the urban environment on our off-premise channels. So really highly focused on getting portioning and accuracy and speed right on those digital make lines. As you know, digital is a huge, huge part of the business, and we see an opportunity to really elevate the standards across those lines. Okay, thank you.

John Power: It's what would limit the fatigue and just keep you posted.

John Power: Season after season with the removal of that we've seen some weakness in the frequency of its specifically in those core markets, where those seasonal did especially well. So we're encouraged by bringing them back bringing them back in a really big way and we think that will help us with the frequency challenges we have the second is loyalty.

Speaker Change: Our loyalty program, which as I said will be a headwind in Q2, but becoming a pretty big tailwind as we go through Q3 in the back half of the year and I should point out is was kind of alluded to at the beginning there is a degree of synergy between the launch of seasonal and loyalty program, where they can feed each other to help drive frequency.

John Power: We made a transition from our Sui pass plus loyalty program, which really had a pretty small member base to a much broader a much broader base loyalty program and we're acquiring about 20000, new loyalty members. A week. This is pretty much more more than each week then the whole suite pass plus membership base. So there's a huge opportunity.

Logan Reich: Our next question comes from the line of Logan Reich with RBC Capital Markets. Please go ahead. Hey, guys. Good evening. Thanks for taking my question. I want to ask about prize and how the launch went relative to expectations and maybe anything you're able to share on on mix in terms of number of transactions or contribution to come. Any color there would be much appreciated.

Speaker Change: And attract new customers. So we think we have a pretty solid lineup of activity actually starting next week with the code collaboration but really accelerating in July.

Speaker Change: <unk> here.

Speaker Change: Lean into that to continue to drive frequency and then the last thing I'd say there is definitely some operational opportunities we have specifically in a lot of those core legacy market specifically in our in the urban environment on our off premise channels. So really highly focused on getting cautioning and accuracy and speed right on those.

Speaker Change: Got it. Thank you and then just on the if any kitchens, if the tariffs do persist would that change your attitude at all to Roger retrofit stores to Ikea is going forward.

Jonathan Neman: Sure, so very early, but very encouraged by Fry's. You know, we've had great customer feedback, great social awareness, a lot of fantastic trial, and it's by far our most attached side. So very encouraged, continuing to work to perfect them and get the word out, but overall, I think it's something that we're really proud of and customers love and should continue to help drive comp and take advantage of.

Speaker Change: Digital make lines you know digital is a huge huge part of the business and we see an opportunity to really elevate the standards across those lines.

Speaker Change: No.

Speaker Change: No I really don't at this point in time change our deployment strategy around the infinite kitchen. When you do the math on the infinite kitchen, and you've taken kind of a typical <unk> store of $3 million and eight points of savings you get around $240000 annually. If the costs moved up from 500 to 600.

Speaker Change: Okay. Thank you.

Speaker Change: Our next question comes from the line of Logan rates with RBC capital markets. Please go ahead.

Speaker Change: If.

Logan Rates: Hey, guys.

Speaker Change: You find the return on capital remains a wildly accretive and that's our current labor rates. When you look out over the next 10 years, we see labor continuing to increase Sandoz returns, increasing so I would say the current tariff structure would not change the Ik deployment strategy at all.

Hey, Thanks for taking my question I wanted to ask about fries and how the launch went relative to expectations and maybe anything you're able to share on on mix in terms of number of transactions or.

Brian Mullan: Our next question comes from the line of Brian Mullan with Piper Sandler. Please go ahead. Thank you.

Jonathan Neman: I just want to ask about the marketplace sales channel, you know, that's been growing faster than the in-store and the on digital, really for several quarters now. Can you just speak to what's behind that, particularly throughout last year and start this year? Just any color you could add would be great. Yeah, so we continue to see strength on Marketplace. I think there's a there's a few things. One, I think our product travels well. And people people love the fact that you know, it It just works in an off-premise environment. Two, we continue to optimize our relationships with the marketplaces and how we market and how we're presented on those marketplaces.

Logan Rates: Contribution to come.

Logan Rates: Any color there would be let's appreciate it.

Logan Rates: Sure so very early but very encouraged by fries.

Speaker Change: Great. Thank you.

Logan Rates: We've had great customer feedback great social awareness.

Sharon Zackfia: Our next question is from the line of Sharon Zackfia with William Blair. Please go ahead.

A lot of fantastic trial, and it's our it's by far most of the cash side.

Sharon Zackfia: Hi can you hear me.

Sharon Zackfia: Yes.

Logan Rates: So very encouraged continuing to work to perfect them and get the word out but overall I think it's something that we're really proud of and customers love and should continue to help drive comp in ticket.

Sharon Zackfia: Okay. Thanks, I don't know what happened before.

Sharon Zackfia: I guess I wanted to ask about the markets that you called out, which where you talked about la but you also mentioned in New York and Boston is there anything in those markets, where you think your prestige value has somehow.

Jonathan Neman: And I think a lot of our consumers are there. Lastly, I think not having a loyalty program gave a lot less reason to transact natively and with the loyalty program that should help us there. But overall, you know, good partners with them, happy to see continued growth, higher average checks, and we'll continue to, you know, leverage them as a partner.

Sharon Zackfia: Declined in the recent environment.

Logan Rates: Our next question comes from the line of Brian <unk> with Piper Sandler. Please go ahead.

Sharon Zackfia: Is there anything you could point out operationally that maybe is causing those markets to GAAP differently and then some of the other markets that you're operating in.

Speaker Change: Thank you I just wanted to ask about the marketplace sales channel that's been growing faster than the in store in the owned digital really for several quarters. Now can you just speak to whats behind that particularly throughout last year and to start this year.

Sharon Zackfia: Thanks for the question Sharon So I think Theres a few things here.

Sharon Zackfia: First I'd say, if you think about the <unk> model over our history. The seasonal menu was a core part of the model we would change our menu about five times a year and it's part of what drove the habituation the frequency.

Logan Rates: Any color you could add would be great.

Brian Bittner: Our next question comes from the line of Brian Bittner with Oppenheimer. Please go ahead. Hey, thank you. Just with all this talk, a lot of focus here on April sales trends on this call, just another question there. You said down mid-singles and a change in how April has behaved historically. And so I understand your caution, but is there any of this that is explained by your own toughening comparisons that happened into 2Q from 1Q?

Speaker Change: Yes, so we continue to see strength in the marketplace I think theres a theres a few things one I think our product travels well and people people love. The fact that you know it just works in an off premise environment.

Sharon Zackfia: It's what would limit the fatigue and just keep you posted.

Sharon Zackfia: Season after season with the removal of that we've seen some weakness in the frequency of its specifically in those core markets, where those seasonal did especially well incur.

Speaker Change: Two we continue to optimize our relationships with the marketplaces and how we market and how were presented on those marketplaces and I think a lot of our consumers are there lastly.

Sharon Zackfia: Encouraged by bringing them back bringing them back in a really big way and we think that will help us with the frequency challenges we have the second is loyalty.

Speaker Change: Not having a loyalty program gave a lot less reason to transact natively and with the loyalty program that should help us there.

Sharon Zackfia: We made a transition from our street pass plus loyalty program, which really had a pretty small member base to a much broad a much broader base loyalty program and we're acquiring about 20000, new loyalty members. A week. This is pretty much more more than each week, then the whole suite plus membership base. So it's a huge opt.

Mitch Reback: Is any of April just mathematically driven, or are you seeing underlying weakness that's making you more cautious on the near term and on 2Q? Now, Brian, I think that the more challenging comp period for the business will come actually in the next week as we launch a successful launch of steak gets lapped. So Cote will lap over the launch of steak a year ago. I think the April caution and results in the caution on the second quarter largely come from what we saw in April, where we had a period of limited menu and marketing activity.

Speaker Change: But overall good partners with them happy to see continued growth higher average checks and we'll continue to leverage them as a partner.

Speaker Change: Thank you.

Sharon Zackfia: <unk> here.

Sharon Zackfia: Kind of lean into that to continue to drive frequency and then the last thing I'd say is theres definitely some operational opportunities we have specifically in a lot of those core legacy market specifically in our in the urban environment on our off premise channels. So really highly focused on getting cautioning and accuracy and speed right on those.

Speaker Change: Our next question comes from the line of Brian Bittner with Oppenheimer. Please go ahead.

Brian Bittner: Hey, Thank you just.

Brian Bittner: Just with all this talk a lot of focus here on April sales trends on this call. Just another question. There you said down mid singles and a change in how April has behaved historically, so I understand your caution but is there any of this that is explained by your own toughening comparison.

Sharon Zackfia: Digital make lines as you know digital is a huge huge part of the business and we see an opportunity to really elevate the standards across those lines.

Mitch Reback: But that kind of left the same type of situation last April.

Mitch Reback: It really reflects much more of an external environment and kind of our take on consumer sentiment. Okay. And then just real quick on your guidance for the year for adjusted EBITDA, now approximately $30 million. I'm just trying to bridge to that guidance in my own model when I use the midpoint of your revenue and your restaurant margin guidance. The bridge from there is about flat G&A year-over-year versus last year on an adjusted basis. Is that the right math there? Is that how you're thinking about G&A as it relates to that $30 million of adjusted EBITDA?

Brian Bittner: That happened into <unk> from <unk> is any of April just mathematically driven or are you seeing underlying weakness.

Sharon Zackfia: Okay. Thank you.

Our next question comes from the line of Logan <unk> with RBC capital markets. Please go ahead.

Brian Bittner: Making you more cautious on the near term and on <unk>.

Speaker Change: Hey, guys. Good evening. Thanks for taking my question I wanted to ask about fries and how the launch went relative to expectations and maybe anything you're able to share on on mix in terms of number of transactions or.

Brian Bittner: Yes, Brian I think that the more challenging comp period for the business will come actually in the next week as we launch is successful launches stake gets lapped so cold.

Brian Bittner: We'll lap over the launch of stake a year ago, I think the April caution and.

Sharon Zackfia: Contribution to comp.

Sharon Zackfia: Any color there would be what I appreciate it.

Brian Bittner: Results in the caution on the second quarter largely come from what we saw in April where we were.

Sharon Zackfia: Sure so very early but very encouraged by fries had.

Mitch Reback: Yeah, I would point out and say that, you know, really, since the time we went public, the company continues to focus on gaining leverage in our DNA. And we continue to focus on that and accelerate that in this environment, and to make changes where we can adjust the DNA down without impacting our strategies or our development. And we will continue to really relentlessly pursue that in this environment.

Sharon Zackfia: Had great customer feedback great social awareness.

Brian Bittner: You had a period of limited menu and marketing activity, but that kind of lap. The same type of situation last April it really reflects much more of an external environment and kind of our take on consumer sentiment.

Sharon Zackfia: A lot of fantastic trial, and it's our it's by far most of the cash side.

Sharon Zackfia: So very encouraged continuing to work to perfect them and get the word out but overall I think it's something that we're really proud of and customers love and should continue to help drive comp in ticket.

Brian Bittner: Okay.

Brian Bittner: And then just real quick on your guidance for the year for adjusted EBIT to now approximately $30 million I'm, just trying to bridge to that guidance in my own model when I use the midpoint of your revenue and your restaurant margin guidance.

Mitch Reback: Okay, thank you, Mitch.

Christine Cho: Our next question comes from the line of Christine Cho with Goldman Sachs. Please go ahead. Thank you for taking the question.

Brian <unk>: Our next question comes from the line of Brian <unk> with Piper Sandler. Please go ahead.

Brian Bittner: The bridge from there is about flat G&A year over year versus last year on an adjusted basis is that the right math there is that how youre thinking about G&A.

Jonathan Neman: So I was wondering if there were any updates to how you're thinking about capital allocation and investment priorities, kind of in light of the tougher macro environment and other external factors. I think, Jon, you mentioned a 15 to 20% unit growth. Is that still a good anchor for the next few years? And what are some of the factors and triggers that could potentially shift that trajectory? Thank you.

Brian <unk>: Thank you I just wanted to ask about the marketplace sales channel that's been growing faster than the in store in the owned digital really for several quarters. Now can you just speak to whats behind that particularly throughout last year and to start this year just any color you could add would be great.

Brian Bittner: It relates to that $30 million of adjusted EBITDA.

Brian Bittner: Yeah, I would point out and say that.

Brian Bittner: Really since the time, we went public the company continues to focus on gaining leverage in our G&A and we continued to focus on that and accelerate that in this environment and to make changes, where we can adjust the G&A down without impacting our strategies or our development and we will continue to really relentlessly pursue that.

Brian <unk>: Yes, so we continue to see strength on marketplace, I think theres a theres a few things one I think our product travels well and people people love. The fact that you know it just works in an off premise environment.

Jonathan Neman: Hey, Christine, thanks for the question. I think what we said is that we were going to anticipate having a 15% algorithm and accelerating it up to 20% over time. That is still the correct algorithm. And while you're correct that the external environment right now is certainly more challenging, and changed somewhat abruptly around the beginning of April, we continue to have very strong return on capital on our new stores, and especially strong return on capitals with our Infinite Kitchen. As long as our return on capital remains at these levels, we don't see any change in our development.

Brian <unk>: Two we continue to optimize our relationships with the marketplaces and how we market and how were presented on those marketplaces and I think a lot of our consumers are there lastly, I think not having a loyalty program gave a lot less reason to transact natively and with the loyalty program that should help us there.

Brian Bittner: In this environment.

Speaker Change: Okay. Thank you Mitch.

Speaker Change: Our next question comes from the line of Christine Cho with Goldman Sachs. Please go ahead.

Christine Cho: Thank you for taking the question. So I was wondering if there are any update to how you're thinking about capital allocation and investment priorities Canadian light at the tougher macro environment and other external factors.

Brian <unk>: But overall good partners with them happy to see continued growth higher average checks and we'll continue to leverage them as a partner.

Christine Cho: I think John you mentioned, 15% to 20% unit growth is that a good anchor.

Speaker Change: Thank you.

Christine Cho: Thank you.

Christine Cho: Just one other question.

Christine Cho: For the next few years and what are some of the factors that could potentially gotcha.

Jonathan Neman: Any metrics that you can share on kind of the launch of the SG Rewards to date and how you plan to leverage the data you obtain from from that program to inform kind of your meta innovation, marketing and other parts of the business? Thank you.

Speaker Change: Our next question comes from the line of Brian Bittner with Oppenheimer. Please go ahead.

Christine Cho: Thank you.

Speaker Change: Hey, Thank you just.

Christine Cho: Hey, Christine Thanks for the question.

Speaker Change: Just with all this talk a lot of focus here on April sales trends on this call. Just another question. There you said down mid singles and a change in how April has behaved historically, so I understand your caution but is there any of this that is explained by your own toughening comparison.

Speaker Change: I think what we said is that we were going to anticipate having a 15% algorithm and accelerated it and up to 20% over time that is still the correct algorithm and while you are correct that the external environment right now is certainly more challenging and strange somewhat abruptly around the beginning.

Speaker Change: That happened into <unk> from <unk> is any of April just mathematically driven or are you seeing underlying weakness.

Speaker Change: And of April However, we continue to have very strong return on capital on our new stores and especially strong return on capital is with our infinite kitchen. So long as our return on capital remains at these levels, we don't see any change in our development.

Speaker Change: Making you more cautious on the near term and on <unk>.

Jonathan Neman: opportunities around the customer journeys and how we can drive the incremental visit. You know, we have a very, very good team that's able to segment customers and do all kinds of different challenges and promos and see what works and lean on those ones. And especially in this environment, I see a huge opportunity. It also gives us, you know, really rich data in terms of menu development.

Brian: Yes, Brian I think that the.

Speaker Change: The more challenging comp period for the business will come actually in the next week as we launch <unk>.

Speaker Change: Thank you just one other question.

Speaker Change: Metrics that you can share on kind of the launch of the as Chile, where it is today and how you plan to leverage the data you obtain from from that program to inform kind of your M&A innovation marketing and other parts of the business. Thank you.

Speaker Change: Excess the launches stake gets lapped so coke will lap over the launch of state a year ago, I think the April caution and <unk>.

Speaker Change: Results in the caution on the second quarter largely come from what we saw in April where we were.

Jonathan Neman: And we have a few exciting things planned on how we can leverage the digital environment to create more of a community. And we'll be sharing more on that in future calls. Thank you.

Speaker Change: Yes, overall very encouraged like I said, we're acquiring about 20000.

Speaker Change: You had a period of limited menu and marketing activity, but that kind of lap. The same type of situation last April it really reflects much more of an external environment and kind of our take on consumer sentiment.

Speaker Change: 90000, new digital customers on those as fuel rewards program per week on much of that conversion is happening in stores. So where we are now getting access to customer data on our analog in store channel as well as our digital channels.

Mitch Reback: Our next question comes from the line of Brian Harbour with Morgan Stanley. Please go ahead. Yeah, thanks. I guess, you know, you're going through another COO transition here, right? Could you just comment? If you think any of the priorities there will change. Thank You. behind timing or needs to be shifted, what will, what could evolve?

Speaker Change: Okay.

Speaker Change: And then just real quick on your guidance for the year for adjusted EBIT to now approximately $30 million I'm, just trying to bridge to that guidance in my own model when I use the midpoint of your revenue and your restaurant margin guidance.

Speaker Change: And we're starting to see some promising I'd say some promising.

Opportunities around the customer journeys and how we can drive the incremental visit we have I.

Speaker Change: Very very good team, that's able to segment customers and do all kinds of different challenges and promos and see what works and lean on those ones and especially in this environment I see a huge opportunity. It also gives us really rich data in terms of menu development.

Speaker Change: The bridge from there is about flat G&A year over year versus last year on an adjusted basis is that.

Speaker Change: The right math, there is that how youre thinking about G&A as it relates to that $30 million of adjusted EBITDA.

Speaker Change: Yes, I would point out and say that.

Speaker Change: And we have a few exciting things planned on how we can leverage the digital environment to create more of a community and we'll be sharing more on that in future calls.

Jonathan Neman: Absolutely. So we're really excited for Jason to join us and he brings a wealth of experience specifically in restaurants. The focus areas for us really are in terms of tightening up our standards to deliver consistently the quality food that customers expect. We also see a big opportunity I mentioned earlier on our digital make lines and making sure we're delivering accurately and with the right portion size. We see a big opportunity there. And then the last thing I'll say is with the growth plans we have ahead, we want to make sure our people flywheel is unlocked.

Speaker Change: It really since the time, we went public the company continues to focus on gaining leverage in our G&A and we continue to focus on that and accelerate that in this environment and to make changes, where we can adjust the G&A down without impacting our strategies of our development and we will continue to really relentlessly pursue that in.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Brian Harper with Morgan Stanley. Please go ahead.

Yes, thanks, good afternoon.

Speaker Change: This environment.

Speaker Change:

Mitch Reback: Okay. Thank you Mitch.

Speaker Change: I guess.

Speaker Change: Youre going through another transition year rate could you just comment on.

Speaker Change: Our next question comes from the line of Christine Cho with Goldman Sachs. Please go ahead.

Speaker Change: If you think any of the priorities there.

Speaker Change: Change or if it's more of a continuation of what Youre doing is there anything.

Jonathan Neman: Today we're seeing about 50% of head coaches being promoted internally. We would like to take that number up over time. We see our internal promotes being more successful. So the other thing is how we can build better leadership capability and have a pipeline of future leaders. So operations, it's all the little details to deliver, whether it's the right tools, the right systems, and most importantly the right culture and leadership in each and every store. And we're very confident in the wealth of leadership and experience that Jason will bring as well as the rest of our Ops leadership team to continue to deliver on the Sweetgreen promise.

Speaker Change: That you thought was sort of.

Speaker Change: Behind timing or it needs to be shifted what will.

Speaker Change: What could evolve sort of operations priorities.

Speaker Change: John You mentioned, 15% to 20% unit growth is that a good anchor for the next few years.

Speaker Change: Absolutely. So we're really excited for Jason to join Us and he brings a wealth of experience specifically in restaurants.

Speaker Change: And what are some of the factors that could potentially shift that's your question.

Speaker Change: Focus areas for us really are in terms of tightening up our standards.

Speaker Change: Thank you.

Christine Cho: Hey, Christine Thanks for the question.

Speaker Change: Deliver consistently the quality food that customers expect.

Christine Cho: I think what we've said is that we were going to anticipate having a 15% algorithm and accelerated and is up to 20% over time that is still the correct algorithm and while you are correct that the external environment right now is certainly more challenging and strange somewhat abruptly around the beginning.

Speaker Change: We also see a big opportunity I mentioned earlier on our on our digital make lines and making sure we're delivering accurately and with the right portion size, we see a big opportunity. There and then the last thing I'll say is with the growth plans. We have had we wanted to make sure. Our people flywheel has unlocked today, we're seeing about 50%.

Rahul Krotthapalli: And our final question comes from the line of Rahul Krotthapalli.

Jonathan Neman: Would JP Morgan please go ahead? Hi, guys. Jonathan, a lot has been discussed in terms of how advertising costs could get very low on a per transaction basis, I think, especially as agencies given to AI models, and like large brands and the consumer and internet industry are catching up on this. You have been leading the space in business transformation in multiple areas of your operations, whatnot. Curious how you think about this area on advertising and marketing spend, as this is going to be a big focus going forward for your sales and traffic driver. Rahul, thanks for the question.

Christine Cho: April we continue to have very strong return on capital on our new stores and especially strong return on capitals are infinite kitchen, so long as our return on capital remains at these levels, we don't see any change in our development.

Speaker Change: Of head coaches being promoted internally, we would like to take that number up over time, we see our internal promotes being more successful. So the other thing is how we can build better leadership capability and have a pipeline of future leaders. So it's operations. It's really a it's all the little details to deliver whether it's the right tools the right.

Speaker Change: Thank you just one other question.

Speaker Change: Metrics that you can share on kind of the launch of the CME, where it is today and how you plan to leverage the data you obtain from from that program to inform kind of the M&A innovation marketing and other parts of the business. Thank you.

Speaker Change: Systems, and most importantly, the right culture and leadership in each and every store and we're very confident in the wealth of leadership and experience that Jason will bring as well as the rest of our ops leadership team to continue to deliver on the speaker and promise.

Speaker Change: Yes, overall very encouraged like I said, we're acquiring about 20000 <unk>.

Jonathan Neman: I do think it's a huge opportunity. We've been leveraging AI across the business in a number of use cases, whether it be workforce management, talent selection, and, you know, customer service, etc. And I think there's a lot of opportunities to leverage AI in terms of our, in terms of loyalty and customer acquisition as well. So we're exploring and testing a bunch of things today. We're hopeful that it can help us in terms of our cost per position of customers and our retention, but I'd say it's still early days. But a number of tests and pilots that the team is all over right now.

Speaker Change: Okay. Thanks, guys.

Speaker Change: <unk> thousand new digital customers on those at your rewards program per week on much of that conversion is happening in store. So we're now getting access to customer data on our analog in store channel as well as our digital channels and we're starting to see some promising I would say some promising.

Speaker Change: And our final question comes from the line of Rahul Paul.

Speaker Change: Holly.

Speaker Change: J P. Morgan. Please go ahead.

Speaker Change: Hey, guys.

Jonathan Neiman: Jonathan a lot has been discussed in terms of how advertising costs could get very low on a per transaction basis, I think that especially of agents is given to AI models. Unlike lots of brands in the consumer and the industry are catching up on this.

Speaker Change: Opportunities around the customer journeys and how we can drive the incremental visit we have.

Speaker Change: You have.

Leading the fifth business bone formation in multiple areas of your operations whatnot curious how you think about this area on advertising and marketing spend this is going to be a big focus going forward for your sales and traffic driver.

Operator: Ladies and gentlemen, that concludes today's call. You may now disconnect.

Speaker Change: And we have a few exciting things planned on how we can leverage the digital environment to create more of a community and we'll be sharing more on that in future calls.

Robert: Robert Thanks for the question I do think it's a huge opportunity we've been leveraging AI across the business in a number of use cases, whether it be workforce management talent selection and <unk>.

Speaker Change: Thank you.

Robert: Customer service etcetera, and I think theres, a lot of opportunities to leverage AI in terms of our in terms of loyalty and customer acquisition as well, so we're exploring and testing a bunch of things today, where.

Speaker Change: Our next question comes from the line of Brian Harper with Morgan Stanley. Please go ahead.

Speaker Change: Yes, thanks, good afternoon.

Speaker Change:

Robert: We're hopeful that it can help us in terms of our cost per acquisition of customers in our retention, but I'd say, it's still early days, but a number of tests and pilots of the team is all over right now.

Speaker Change: I guess.

Speaker Change: Youre going through another CLO transition to euro rate could you just comment on.

Speaker Change: If you think any of the priorities there will change or if it's more of a continuation of what you were doing is there anything.

Robert: Thank you.

Speaker Change: That you thought was sort of you know.

Speaker Change: Behind timing or or needs to be shifted what will.

Robert: Ladies and gentlemen that concludes today's call you may now disconnect.

Speaker Change: What could evolve sort of operations priorities.

Speaker Change: Absolutely. So we're really excited for Jason to join Us and he brings a wealth of experience specifically in restaurants.

Speaker Change: The focus areas for us really are in terms of tightening up our standards.

Speaker Change: To deliver consistently the quality food that customers expect.

Speaker Change: Also see a big opportunity I mentioned earlier on our on our digital make lines and making sure we're delivering accurately and with the right portion size, we see a big opportunity. There and then the last thing I'll say is with the growth plans. We have ahead, we want to make sure. Our people flywheel has unlocked today, we're seeing about 50% of <unk>.

Speaker Change: <unk> is being promoted internally, we would like to take that number up over time, we see our internal promotes being more successful so.

Speaker Change: Other thing is how we can build better leadership capability and have a pipeline of future leaders.

Speaker Change: It's operations, it's really a it's all the little details to deliver whether it's the right tools the right systems and most importantly, the right culture and leadership in each and every store and we're very confident in the wealth of leadership and experience that Jason will bring as well as the rest of our ops leadership team to continue to deliver on.

Speaker Change: The speaker and promise.

Speaker Change: Okay. Thanks.

Speaker Change: And our final question comes from the line of Rahul Paul.

Speaker Change: Polly.

Rahul Paul: With J P. Morgan. Please go ahead.

Speaker Change: Hey, guys.

Speaker Change: Jonathan a lot has been discussed in terms of how advertising costs could get very low on a per transaction business I think especially as agencies given to AI models. Unlike lots of brands in the consumer and the industry are catching up on this.

Speaker Change: Do you have you have.

Speaker Change: Leading the fifth business transformation in multiple areas of your operations whatnot curious how you think about this area on advertising and marketing spend this is going to be a big focus going forward part of your sales and traffic driver.

Robert: Thank you.

Robert: Ladies and gentlemen that concludes today's call you may now disconnect.

Robert: Yes.

Robert: Yeah.

Robert:

Robert: Yeah.

Robert:

Robert: Yeah.

Robert: Sure.

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