Q3 2025 Sweetgreen Inc Earnings Call

November 6, 2025

You've been placed on mute to prevent any background noise after.

The speaker's remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press star followed by the number one on your telephone keypad.

If you would like to withdraw your question simply press Star one again.

I would now like to turn the call over to Rebecca <unk> head of Investor Relations you may begin.

Thank you and good afternoon, everyone.

On today's call will be Jonathan and co founder and Chief Executive Officer, and Jane Mcconnell Chief Financial Officer.

Both will be available for questions during the Q&A session. Following the prepared remark.

Today's call is being webcast live and recorded for replay the earnings release and today's announcement regarding the sale of space.

<unk> on the Investor Relations section of <unk> website at Investor <unk>, Sweet Green Dot com.

I'd like to remind everyone that the information under the heading forward looking statements included in our earnings release and Spice announcements 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 statement.

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 their 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.

Thank you Rebecca and thank you all for joining us this afternoon.

We are addressing the headwinds from the current operating environment with agility and focus we have.

Beginning operations accelerating menu innovation and deepening guest engagement. The team is focused on delivering an exceptional guest experience improving operational execution and serving delicious high quality food and every restaurant.

The actions, we're taking are designed to expand our value proposition strength in transactions enhanced restaurant performance and position Sweet Green for a return to profitable growth for.

For the third quarter, we reported sales of $172 4 million in the same store sales decline of nine 5%.

Restaurant level margin was 13, 1% and adjusted EBITDA was a loss of $4 4 million.

Performance was impacted by softer sales trends in our northeast and Los Angeles markets, which together represent about 60% of our comp base. This was coupled with lighter spending among younger guests, particularly that 25% to 35 year old age group, where we over index.

As we look to Q4 and beyond our new leadership team has taken the learnings from here and focused our actions around five key strategies could transform our business, we're calling it the suite growth transformation plan. Our strategies are one operational excellence two brand relevance three food quality and menu innovation.

<unk> for personalized digital experience and five disciplined profitable investment.

Now, let me share some of the work being done under each of these strategic priorities starting with operational excellence.

Since joining earlier this year, our COO, Jason Cochrane has been instrumental in leading the work to strengthen operational execution. He has brought greater accountability and a new culture, how we run our restaurants.

Building on the foundation, we introduced last quarter, Jason and his team are continuing to deploy project one best way our system wide effort to elevate operational excellence through clear operating standards performance base leadership and measured execution.

As part of this project, we launched CPAP framework that helps every team member understand what running a great restaurant looks like its sweet green to CPAP brakes, each restaurant into clear zones from the frontline to the back of house with simple consistent behaviors and standards for how we show up every day.

Jason also introduced a new restaurants scorecard this quarter. It gives our teams greater visibility into performance across a streamline set of metrics sales throughput customer satisfaction food quality and labor performance that helps our team celebrate wins brought opportunities and focus on what drives results.

In mid September we kicked off a new throughput initiatives that defines what it means to be ready for peak lunch and ties progress directly to the scorecard early results are encouraging showing improved peak hour throughput and building momentum towards the operational excellence, we expect from ourselves.

To improve throughput further our technology team has begun rolling out scan to pay for a faster and simpler frontline checkout experience with a single App scan that can pay earn and redeem rewards instantly using safe payment methods, including credit cards, Sweet Green credits and gift cards.

Disciplined system level changes under project, one best way will take time to mature, but they are already building the structure and habits that will define how we operate going forward.

As we shared last quarter about one third of our restaurants met or exceeded our internal operational standards today that number is approximately 60% an important step forward.

Additionally, turnover and retention continue to improve and we expect this progress to translate into stronger restaurant level performance over the year ahead.

Now turning to brand relevance.

I'm excited to welcome support Allan our Chief commercial officer, who leads marketing menu innovation and the overall customer experience and our first two months <unk> has brought new energy and focus for our marketing team shaping the strategy that positions sweet green as a lifestyle brand with a focus on acquiring and inviting more customers to live this free life.

Operator: 2025 earnings call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, simply press star one again. I would now like to turn the call over to Rebecca Nounou, Head of Investor Relations. You may begin.

In the near term, we have redirected marketing to support New York, Our most challenged market. We are optimizing our media investments to drive new guest acquisition and expand our share of voice in the long term, we are focused on creating culture through distinct brand moments.

Translate into stronger restaurant level performance over the year ahead.

Now turning to brand relevance.

Cited to welcome support Allan our Chief commercial officer, who leads marketing menu innovation and the overall customer experience and our first two months <unk> has brought new energy and focus for our marketing team shaping the strategy that positions sweet green as a lifestyle brand with a focus on acquiring and inviting more customers to live this realized.

This will include a more structured approach to engagement with content creators that are an authentic connection with sweet green as well as brand partnerships that will broaden awareness with new audiences.

Rebecca Nounou: Thank you, and good afternoon, everyone. Speaking on today's call will be Jonathan Neman, Co-founder and Chief Executive Officer, and Jamie McConnell, Chief Financial Officer. Both will be available for questions during the Q&A session following the prepared remarks. Today's call is being webcast live and recorded for replay. The earnings release and today's announcement regarding the sale of Spice are available on the Investor Relations section of Sweetgreen'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 and Spice announcement 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.

For our food quality and menu innovation pillar, we are focusing our attention on driving awareness around the quality of our ingredients.

Next week, we are launching a protein focused campaign, highlighting the real fuel that our customers get when they choose one of our nine chef curated menu items with more than 30 grams of protein.

We're also introducing a new macros calculator in our digital experience.

This protein campaign gives us a great opportunity to educate customers about our larger protein portions and as the first step to broadly communicating the key differentiators that make our menu just think in the market.

For our food quality and menu innovation pillar, we are focusing our attention on driving awareness around the quality of our ingredients next.

Youll see us continue to message our high quality ingredients into next year claims that differentiate us from our competition such as made from scratch chickens taken salmon raised responsibly with no antibiotics ever seed oil free proteins grains, and roasted vegetables, no artificial flavors colors or dies and sourcing organic and low.

Next week, we are launching a protein focused campaign, highlighting the real fuel that our customers get when they choose one of our nine chef curated menu items with more than 30 grams of protein.

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 their corresponding GAAP measures. Our earnings release can be found on our investor website. I'll turn the call over to Jonathan to kick things off.

We're also introducing a new macros calculator in our digital experience.

Will produce from farmers and partners, we know and trust.

These will take a more prominent role in our messaging going forward.

Additionally, in two weeks, we will launch a new staple in state play to strengthen variety and value.

You'll see us continue to message our high quality ingredients into next year claims that differentiate us from our competition such as made from scratch chickens taken salmon raised responsibly with no antibiotics ever seed oil free proteins, Greens, and roasted vegetables, no artificial flavors colors or dies and sourcing organic and low.

Jonathan Neman: Thank you, Rebecca, and thank you all for joining us this afternoon. We are addressing the headwinds from the current operating environment with agility and focus. We are tightening operations, accelerating menu innovation, and deepening guest engagement. The team is focused on delivering an exceptional guest experience, improving operational execution, and serving delicious, high-quality food in every restaurant. The actions we're taking are designed to expand our value proposition, strengthen transactions, enhance restaurant performance, and position Sweetgreen for a return to profitable growth. For the third quarter, we reported sales of $172.4 million and a same-store sales decline of 9.5%. Restaurant-level margin was 13.1%, and adjusted EBITDA was a loss of $4.4 million. Performance was impacted by softer sales trends in our Northeast and Los Angeles markets, which together represent about 60% of our comp base.

We continue to strengthen our menu innovation muscle with our pipeline of menu items entering our new stage gate process. In Q4. This is a cross functional testing process that we'll use for every menu item going forward.

This will give us more precision and predictability in the results that we can expect some of our menu development efforts.

<unk> produced from farmers and partners, we know entrust.

We continue to leverage seasonal menu to drive frequency with our existing customers and we've right sized our marketing investment to reflect the role that these menu items play on our menu at the same time, we are expanding our core menu offering could be relevant for more occasions and consumer needs through our pipeline test.

These will take a more prominent role in our messaging going forward.

Additionally, in two weeks, we will launch a new staple in stake play to strengthen variety and value.

We continue to strengthen our menu innovation muscle, but the pipeline of menu items entering our new stage gate process. In Q4. This is a cross functional testing process that we will use for every menu item going forward.

Our new handheld product will go into a market test in early 2026.

In Q4 and heading into Q1, we are also reviewing our menu and pricing architecture as we continue to strengthen our value proposition.

This will give us more precision and predictability in the results that we can expect from our menu development efforts.

Know that we can do a better job of creating clear entry prices and logical trade up opportunities across our create your own and checked curated menu options. So that our customers understand the value across every menu tier.

Jonathan Neman: This was coupled with lighter spending among younger guests, particularly the 25 to 35-year-old age group, where we over-index. As we look to Q4 and beyond, our new leadership team has taken the learnings from last year and focused our actions around five key strategies to transform our business. We're calling it the Sweet Growth Transformation Plan. Our strategies are: one, operational excellence; two, brand relevance; three, food quality and menu innovation; four, personalized digital experience; and five, disciplined, profitable investments. Now, let me share some of the work being done under each of these strategic priorities, starting with operational excellence. Since joining earlier this year, our COO, Jason Cochran, has been instrumental in leading the work to strengthen operational execution. He has brought greater accountability and a new culture to how we run our restaurants.

When guests know, what theyre getting and feel good about it it builds trust and drives loyalty overtime.

Our new handheld product will go into market tests in early 2026.

Now turning to personalized digital experience earlier this year, we launched <unk> rewards to create a platform for a more personalized experience powered by enhanced customer data. We just reached the six month Mark of this program and are continuing to see positive trends on frequency among our most loyal guests.

In Q4 and heading into Q1, we are also reviewing our menu and pricing architecture as we continue to strengthen our value proposition.

The program unlocks the ability to leverage the data to drive frequency and retention through our CRM efforts and during the fourth quarter, you will see us leverage this channel to invest more in targeted discounts and promotions to improve value perceptions and drive increased frequency with lighter users.

When guests know, what theyre getting and feel good about it builds trust and drives loyalty over time.

Now turning to personalized digital experience.

Earlier this year, we launched <unk> rewards to create a platform for a more personalized experience powered by enhanced customer data. We just reached the six month Mark of this program and are continuing to see positive trends on frequency among our most loyal guests.

Shifting to our last pillar, which is disciplined profitable investment in the third quarter, we opened eight restaurants, including six infinite kitchen. We also entered a new market, Arizona with our Scottsdale location delivering the second strongest opening of the year.

Jonathan Neman: Building on the foundation we introduced last quarter, Jason and his team are continuing to deploy Project One Best Way, our system-wide effort to elevate operational excellence through clear operating standards, performance-based leadership, and measured execution. As part of this project, we launched Sweetpath, a framework that helps every team member understand what running a great restaurant looks like at Sweetgreen. The Sweetpath breaks each restaurant into clear zones, from the front line to the back of house, with simple, consistent behaviors and standards for how we show up every day. Jason also introduced a new restaurant scorecard this quarter. It gives our teams greater visibility into performance across a streamlined set of metrics: sales, throughput, customer satisfaction, food quality, and labor performance. It helps our team celebrate wins, spot opportunities, and focus on what drives results.

Following the quarter, we added a second Arizona location further deepening our presence. The continued success of these openings reinforces our confidence in the white space opportunity ahead.

In the fourth quarter, we will open 17, new restaurants, and entered three new markets, Sacramento, Cincinnati and northwest, Arkansas. Our Q4 openings include our first suite Lane, featuring the infinite kitchen in Costa Mesa.

Shifting to our last pillar, which is disciplined profitable investments in the third quarter, we opened eight restaurants, including six infinite kitchen. We also entered a new market, Arizona with our Scottsdale location delivering the second strongest opening of the year.

Altogether, we expect to complete construction of 40, new restaurants. This year ending 2025 with 37 net openings. This reflects the closures of our bleecker in Astor place restaurants in the third quarter. It also includes shifting to restaurant openings into early 2026th to ensure the best possible experience for our guests and team members.

Following the quarter, we added a second Arizona location further deepening our presence. The continued success of these openings reinforces our confidence in the white space opportunity ahead.

Jonathan Neman: In mid-September, we kicked off a new throughput initiative that defines what it means to be ready for peak lunch and ties progress directly to the scorecard. Early results are encouraging, showing improved peak-hour throughput and building momentum toward the operational excellence we expect from ourselves. To improve throughput further, our technology team has begun rolling out Scan to Pay for a faster and simpler front-line checkout experience. With a single app scan, guests can pay, earn, and redeem rewards instantly using saved payment methods, including credit cards, Sweetgreen credits, and gift cards. These disciplined, system-level changes under Project One Best Way will take time to mature, but they're already building the structure and habits that will define how we operate going forward. As we shared last quarter, about 1/3 of our restaurants met or exceeded our internal operational standards. Today, that number is approximately 60%, an important step forward.

The construction will be completed this year.

We expect to open a relocated nomad restaurant in December and Union Square in January both locations are being relocated to stronger sites and will include infinite kitchens.

Altogether, we expect to complete construction of 40, new restaurants. This year ending 2025 with 37 net openings.

We're prioritizing the strength of our financial position by improving cash flow and maintaining greater discipline in how we invest which will include a slowdown of new restaurant openings.

This reflects the closures of our bleecker in Astor place restaurants in the third quarter. It also includes shifting to restaurant openings into early 2026th to ensure the best possible experience for our guests and team members.

Looking ahead to 2026, we plan to open 15 to 20 net new restaurants with about half featuring infinite kitchen technology and enter two to three new markets, including Salt Lake City. We believe this strikes the right balance between growth and financial discipline as we focus on lowering capital expenditures and driving strong returns we remain focused on.

Construction will be completed this year.

We expect to open a relocated nomad restaurant in December and Union Square in January both locations are being relocated to stronger sites and will include infinite kitchens.

Quality growth and continue to target cash on cash returns above 40%.

We're prioritizing the strength of our financial position by improving cash flow and maintaining greater discipline in how we invest which will include a slowdown of new restaurant openings.

As announced today, we've made the strategic decision to sell space, our business unit responsible for developing the infinite kitchen to wonder.

Looking ahead to 2026, we plan to open 15 to 20 net new restaurants with about half featuring infinite kitchen technology and entered two to three new markets, including Salt Lake City. We believe this strikes the right balance between growth and financial discipline as we focus on lowering capital expenditures and driving strong returns.

Jonathan Neman: Additionally, turnover and retention continue to improve, and we expect this progress to translate into stronger restaurant-level performance over the year ahead. Now, turning to brand relevance, I'm excited to welcome Zipora Allen, our Chief Commercial Officer, who leads marketing, menu innovation, and the overall customer experience. In her first two months, Zipora has brought new energy and focus to our marketing team, shaping the strategy that positions Sweetgreen as a lifestyle brand, with a focus on acquiring and inviting more customers to live the sweet life. In the near term, we have redirected marketing to support New York, our most challenged market. We are optimizing our media investments to drive new guest acquisition, and expand our share of voice. In the long term, we are focused on creating culture through distinct brand moments.

This will allow us to unlock greater scale lower operating cost and strengthen our financial foundation for the future.

First and foremost the infinite kitchen remains central to Sweet Green future. The technology has consistently proven its ability to deliver faster throughput improved accuracy and consistency and elevated food quality in the third quarter. The infinite kitchen restaurants continued to realize approximately 700 basis points of labor savings.

Remained focus on quality growth and continue to target cash on cash returns above 40%.

As announced today, we've made the strategic decision to sell space, our business unit responsible for developing the infinite kitchen to wonder.

And nearly 100 basis points of Cogs improvement compared to restaurants, a similar agent volume.

This will allow us to unlock greater scale lower operating cost and strengthen our financial foundation for the future.

Under our agreement with Wonder trigger and we will continue to utilize and expand infinite kitchen technology across our restaurants partnering with wonder enables us to leverage their manufacturing scale R&D investments and shared innovation accelerating the refinement and rollout of additional <unk> units.

Jonathan Neman: This will include a more structured approach to engagement with content creators that have an authentic connection with Sweetgreen, as well as brand partnerships that will broaden awareness with new audiences. For our food quality and menu innovation pillar, we are focusing our attention on driving awareness around the quality of our ingredients. Next week, we're launching a protein-focused campaign highlighting the real fuel that our customers get when they choose one of our nine chef-curated menu items with more than 30 grams of protein. We are also introducing a new macros calculator in our digital experience. This protein campaign gives us a great opportunity to educate customers about our larger protein portions and is the first step to broadly communicating the key differentiators that make our menu distinct in the market. You'll see us continue to message our high-quality ingredients into next year.

This transaction also allows us to sharpen our focus on our core restaurant business allocating more of our talent and financial resources toward accelerating growth and achieving profitability.

And nearly 100 basis points of Cogs improvement compared to restaurants, a similar agent volume.

The $186 $4 million sale is expected to infuse our balance sheet with approximately $100 million in liquidity strengthening our financial position and enhancing our flexibility to fund future growth initiatives.

We're incredibly proud of the work the Spice team has done to develop scale and commercialize one of the world's most advanced food automation technologies under Sweet Green.

This transaction also allows us to sharpen our focus on our core restaurant business allocating more of our talent and financial resources toward accelerating growth and achieving profitability.

Want to especially thank <unk> co founders, Michael Free Kale Rogers, Brady night, and Luc schluter for their vision and phenomenal technical execution.

Jonathan Neman: Claims that differentiate us from our competition, such as made from scratch, chicken, steak, and salmon raised responsibly with no antibiotics ever, feed oil-free proteins, grains, and roasted vegetables, no artificial flavors, colors, or dyes, and sourcing organic and local produce from farmers and partners we know and trust, will take a more prominent role in our messaging going forward. Additionally, in two weeks, we will launch a new steak bowl and steak plate to strengthen variety and value. We continue to strengthen our menu innovation muscle with a pipeline of menu items entering our new Stagegate process in Q4. This is a cross-functional testing process that we will use for every menu item going forward. This will give us more precision and predictability in the results that we can expect from our menu development efforts.

We look forward to partnering with you and the wonder team as we enter this next chapter of innovation together.

For menu development to our App to the infinite kitchen, we've always been pioneers and re imagining how real food source prepared and served that spirit of innovation is core to our DNA and we will continue to guide us.

We're incredibly proud of the work the Spice team has done to develop scale and commercialize one of the world's most advanced food automation technologies under Sweet Green.

Before I conclude my prepared remarks, I want to take a moment to recognize Mitch <unk>, who retired in September as our CFO and express my deep gratitude for everything he has done for Sweet Green mid joined US when we were still a small regional brand over 10 years ago and has been a driving force behind our growth ever since.

Want to especially thank <unk> co founders, Michael Free Kale Rogers, creating night and Luc Sluder for their vision and phenomenal technical execution.

We look forward to partnering with you and the wonder team as we enter this next chapter of innovation together.

He built the financial foundation that supports our business today guided us through our IPO and has been a true partner mentor and friend.

Packed on Sweet Green on all of US personally can't be overstated, we're deeply grateful for his leadership and wish him all the best in his retirement.

Jonathan Neman: We continue to leverage seasonal menus to drive frequency with our existing customers, and we have right-sized our marketing investment to reflect the role that these menu items play on our menu. At the same time, we are expanding our core menu offering to be relevant for more occasions and consumer needs through our pipeline tests. Our new handheld product will go into market tests in early 2026. In Q4 and heading into Q1, we are also reviewing our menu and pricing architecture as we continue to strengthen our value proposition. We know that we can do a better job of creating clear entry prices and logical trade-up opportunities across our create-your-own and chef-curated menu options, so that our customers understand the value across every menu tier. When guests know what they're getting and feel good about it, it builds trust and drives loyalty over time.

Before I conclude my prepared remarks, I want to take a moment to recognize Mitch <unk>, who retired in September as our CFO and express my deep gratitude for everything he has done for Sweet Green Mitch joined US when we were still a small regional brand over 10 years ago and has been a driving force behind our growth ever since.

We are also excited to welcome Jamie Mcconnell as our new Chief Financial Officer, and her short time. She has already brought a sharp focus on financial discipline returns and efficiency for background and experience in high growth operationally disciplined businesses will be instrumental as we strengthen our operating model and position Sweet Green for long.

He built the financial foundation that supports our business today guided us through our IPO and has been a true partner mentor and friend.

<unk> success.

Over the years <unk> has navigated some of the toughest moments from growing through the great recession to leading through Covid threw it all I've never wavered in my belief in our vision or the impact we can make we've proven that our brand resonates across markets and demographics and the opportunity ahead remains significant.

Pact on Sweet Green on all of US personally can't be overstated, we are deeply grateful for his leadership and wish him all the best in his retirement.

Our focus now is combining the creativity and cultural relevance that makes <unk> unique with greater discipline and a continued focus on the guests.

Jonathan Neman: Now, turning to personalized digital experience. Earlier this year, we launched S3 Rewards to create a platform for a more personalized experience powered by enhanced customer data. We just reached the six-month mark of this program and are continuing to see positive trends on frequency among our most loyal guests. The program unlocks the ability to leverage the data to drive frequency and retention through our CRM efforts. During the fourth quarter, you will see us leverage this channel to invest more in targeted discounts and promotions to improve value perceptions and drive increased frequency with lighter users. Shifting to our last pillar, which is disciplined, profitable investment. In the third quarter, we opened eight restaurants, including six Infinite Kitchens. We also entered a new market, Arizona, with our Scottsdale location, delivering the second-strongest opening of the year.

The <unk> brand remains strong and continues to deeply resonate with our guests. We know the work we need to do to raise our execution and reignite, our flywheel to drive traffic and set the stage for long term profitable growth.

<unk> success.

We are taking the steps needed to get back on track and position Sweet Green for long term success.

Want to thank every sweet Green team member for their focus resilience and commitment to excellent.

Our focus now is combining the creativity and cultural relevance that makes <unk> unique with greater discipline and a continued focus on the guests.

Together, we're positioning sweet green to reach its full potential all while staying true to our purpose of connecting people to real food.

Now I will turn over the call to Jamie to review our financial results in detail.

Thank you Jonathan and good afternoon, everyone as a longtime sweet green gas I could not be more excited to join the team. This is an important time for the brand and I'm grateful for the track Jonathan The board and the company have placed in me to help shape. The next chapter over the past few weeks I spent time in our restaurants listening and learning.

Jonathan Neman: Following the quarter, we added a second Arizona location, further deepening our presence. The continued success of these openings reinforces our confidence in the white space opportunity ahead. In the fourth quarter, we will open 17 new restaurants and enter three new markets: Sacramento, Cincinnati, and Northwest Arkansas. Our Q4 openings include our first Sweet Lane featuring the Infinite Kitchen in Costa Mesa. Altogether, we expect to complete construction of 40 new restaurants this year, ending 2025 with 37 net openings. This reflects the closures of our Bleeker and Aster Place restaurants in the third quarter. It also includes shifting two restaurant openings into early 2026 to ensure the best possible experience for our guests and team members, though construction will be completed this year. We expect to open our relocated Nomad restaurant in December and Union Square in January.

Taking the steps needed to get back on track and position <unk> for long term success.

I want to thank every sweet Green team member for their focus resilience and commitment to excellence together, we're positioning sweet green to reach its full potential.

From our teams what stood out immediately with the care our people bring to the food, we serve and ingredients we sorry.

While staying true to our purpose of connecting people to real food.

Now I will turn over the call to Jamie to review our financial results in detail.

<unk> began as a dishwasher six years ago and now leads her own restaurant as a head coach theme, how she has grown within sweet Green and her pride in our restaurants show me what makes this company so special.

Thank you Jonathan and good afternoon, everyone as the long term sweet Green gas I could not be more excited to join the team. This is an important time for the brand and I'm grateful for the track Jonathan The board and the company have placed in me to help shape. The next chapter over the past few weeks I've spent time in our restaurants listening and learning.

Since stepping into the CFO role a little over six weeks ago I've been focused on gaining a clear understanding of our economic model and the levers that drive our results. It's clear there's a meaningful work ahead.

From our team.

Yeah that immediately with the care our people bring to the food, we serve and the ingredients we sorry.

I've launched a full review of our restaurant level expenses and G&A structure to ensure we're operating as efficiently as possible identifying savings simplifying processes and investing only in what drives our business forward overtime. This work will drive margin improvement stronger cash flow and tighter financial discipline.

<unk> began as a dishwasher six years ago and now leads her own restaurant as a head coach theme actually has grown within sweet Green and her pride in the restaurant show me what makes this company so special.

Jonathan Neman: Both locations are being relocated to stronger sites and will include infinite kitchens. We're prioritizing the strength of our financial position by improving cash flow and maintaining greater discipline in how we invest, which will include a slowdown of new restaurant openings. Looking ahead to 2026, we plan to open 15 to 20 net new restaurants, with about half featuring infinite kitchen technology, and enter two to three new markets, including Salt Lake City. We believe this strikes the right balance between growth and financial discipline, as we focus on lowering capital expenditures and driving strong returns. We remain focused on quality growth and continue to target cash-on-cash returns above 40%. As announced today, we've made the strategic decision to sell Spice, our business unit responsible for developing the infinite kitchen, to Wonder.

Since stepping into the CFO role a little over six weeks ago I had been focused on gaining a clear understanding of our economic model and the levers that drive our results. It's clear there's a meaningful work ahead I'm.

Across the company to deliver steady stable results.

More to share in future quarters, I will now walk you through our third quarter results.

Third quarter sales were $172 $4 million compared to $173 $4 million last year with same store sales decline of nine 5% restaurant level margin was 13, 1% down from 21% a year ago.

Launched a full review of our restaurant level expenses and G&A structure to ensure we're operating as efficiently as possible identifying savings simplifying processes and investing only in what drives our business forward overtime. This work will drive margin improvement stronger cash flow and tighter financial discipline across.

EBITDA was negative $4 $4 million compared to positive $6 $8 million last year.

The company to deliver steady stable results.

We'll have more to share in future quarters, I will now walk you through our third quarter results.

Jonathan Neman: This will allow us to unlock greater scale, lower operating costs, and strengthen our financial foundation for the future. First and foremost, the Infinite Kitchen remains central to Sweetgreen's future. The technology has consistently proven its ability to deliver faster throughput, improved accuracy and consistency, and elevated food quality. In the third quarter, the Infinite Kitchen restaurants continue to realize approximately 700 basis points of labor savings and nearly 100 basis points of COGS improvement compared to restaurants of similar age and volume. Under our agreement with Wonder, Sweetgreen will continue to utilize and expand Infinite Kitchen technology across our restaurants. Partnering with Wonder enables us to leverage their manufacturing scale, R&D investments, and shared innovation, accelerating the refinement and rollout of additional IK units.

The comp decline reflects an 11, 7% decrease in traffic and mix, partially offset by a two 2% benefit from menu price increases the comp decline reflects softer sales trends and the transition from Sweet pass plus our new rewards program, which eliminated subscription revenue and includes our loyalty.

Third quarter sales were $172 $4 million compared to $173 $4 million last year with same store sales decline of nine 5% restaurant level margin was 13, 1% down from 21% a year ago.

For them.

Third quarter food beverage and packaging costs were at 37% of revenue at 320 basis point increase year over year benefit from pricing was more than offset by higher protein costs, reflecting our investment in increased chicken until two portions to reinforce the value for our guests and higher ingredient.

Adjusted EBITDA was negative $4 $4 million compared to positive $6 $8 million last year.

Comp decline reflects an 11, 7% decrease in traffic and mix, partially offset by a 2.2% benefit from menu price increases the comp decline reflects softer sales trends and the transition from Sweet pass plus our new rewards program, which eliminated subscription revenue and includes our loyalty.

We expect to offset the 140 basis point person investment through a combination of in restaurant and supply chain initiatives with savings beginning in 2020 and fully realized in the second half of the year.

Oh.

Jonathan Neman: This transaction also allows us to sharpen our focus on our core restaurant business, allocating more of our talent and financial resources toward accelerating growth and achieving profitability. The $186.4 million sale is expected to infuse our balance sheet with approximately $100 million in liquidity, strengthening our financial position and enhancing our flexibility to fund future growth initiatives. We're incredibly proud of the work the Spice team has done to develop, scale, and commercialize one of the world's most advanced food automation technologies under Sweetgreen. I want to especially thank Spice co-founders Michael Farid, Kale Rogers, Brady Knight, and Luke Schluter for their vision, and phenomenal technical execution. We look forward to partnering with you and the Wonder team as we enter this next chapter of innovation together.

Third quarter food beverage and packaging costs were at 37% of revenue at 320 basis point increase year over year.

The quarter also included a 50 basis point impact related to impose tariffs and duties on our packaging and other menu items. This is a level, we expect and continue in the near term. Additionally, the third quarter was impacted by a onetime 60 basis point right off and discontinued materials.

Benefit from pricing was more than offset by higher protein costs, reflecting our investment in increased chicken until two portions to reinforce the value for our guests and higher ingredient usage.

We expect to offset the 140 basis point portion of investment through a combination of in restaurant and supply chain initiatives with savings beginning in 2020 and fully realized in the second half of the year.

Third quarter Labor and related expenses were 29, 1% of revenue an increase of 170 basis points from last year. The increase was primarily driven by deleverage from lower sales volume and higher wage rates, partially offset by menu price increases.

The quarter also included a 50 basis point impact related to impose tariffs and duties on our packaging and other menu items.

Other operating expenses were 17, 6% of revenue an increase of 130 basis points from last year.

This is a level, we expect and continue in the near term. Additionally, the third quarter was impacted by a onetime 60 basis point right off and discontinued materials.

Third quarter operating support center costs decreased $2 $3 million from last year on a dollar basis as a percentage of revenue operating support center costs improved to 14% from 15, 2% last year.

Jonathan Neman: From menu development to our app to the Infinite Kitchen, we've always been pioneers in reimagining how real food is sourced, prepared, and served. That spirit of innovation is core to our DNA, and will continue to guide us. Before I conclude my prepared remarks, I want to take a moment to recognize Mitch Reback, who retired in September as our CFO, and express my deep gratitude for everything he's done for Sweetgreen. Mitch joined us when we were still a small regional brand over 10 years ago, and has been a driving force behind our growth ever since. He built the financial foundation that supports our business today, guided us through our IPO, and has been a true partner, mentor, and friend. His impact on Sweetgreen, and on all of us personally, can't be overstated.

Third quarter Labor and related expenses were 29, 1% of revenue an increase of 170 basis points from last year. The increase was primarily driven by deleverage from lower sales volumes and higher wage rates, partially offset by menu price increases.

Decrease was primarily driven by lower bonus expense due to company performance.

As a reminder, we've streamlined parts of our organization during the quarter eliminated roughly 10% of open in existing roles to drive greater focus and efficiency.

Other operating expenses were 17, 6% of revenue an increase of 130 basis points from last year.

Third quarter operating support center costs decreased $2 $3 million from last year on a dollar basis as a percentage of revenue operating support center costs improved to 14% from 15, 2% last year.

Third quarter net loss was $36 $1 million compared to a net loss of $28 million last year. The higher net loss, primarily reflects at $12 $4 million decrease in restaurant level profit and increased impairment charges, driven by a $4 $3 million impairment charge for <unk>.

Jonathan Neman: We're deeply grateful for his leadership and wish him all the best in his retirement. We are also excited to welcome Jamie McConnell as our new Chief Financial Officer. In her short time, she's already brought a sharp focus on financial discipline, returns, and efficiency. Her background and experience in high-growth, operationally disciplined businesses will be instrumental as we strengthen our operating model and position Sweetgreen for long-term success. Over the years, Sweetgreen has navigated some of the toughest moments, from growing through the Great Recession to leading through COVID. Through it all, I've never wavered in my belief in our vision or the impact we can make. We've proven that our brand resonates across markets and demographics, and the opportunity ahead remains significant. Our focus now is combining the creativity and cultural relevance that makes Sweetgreen unique with greater discipline and a continued focus on the guests.

Decrease was primarily driven by lower bonus expense due to company performance.

As a reminder, we've streamlined parts of our organization during the quarter eliminated roughly 10% of open in existing roles to drive greater focus and efficiency.

Under performing restaurants.

This was partially offset by lower stock based compensation as IPO related grants continued to roll off adjusted EBITA was a locked up for $4 million compared to positive $6 $8 million last year. The decline was primarily driven by lower restaurant level profit.

Third quarter net loss was $36 $1 million compared to a net loss of $20 $8 million last year. The higher net loss, primarily reflects at $12 $4 million decrease in restaurant level profit and increased impairment charges, driven by a $4 $3 million impairment charge for <unk>.

During the quarter, we opened eight restaurants, six of which were infinite kitchen, we closed two restaurants during the quarter Bleecker in Astor place for a third quarter net in a row count of six and we ended the quarter with 266 restaurants.

Underperforming restaurants.

We ended the quarter with a cash balance of $130 million as you heard earlier from Jonathan and read in our release. This afternoon, the strategic sales price to wonder marks an exciting milestone for sweet Green.

Jonathan Neman: The Sweetgreen brand remains strong and continues to deeply resonate with our guests. We know the work we need to do to raise our execution and reignite our flywheel to drive traffic and set the stage for long-term profitable growth. We are taking the steps needed to get back on track and position Sweetgreen for long-term success. I want to thank every Sweetgreen team member for their focus, resilience, and commitment to excellence. Together, we're positioning Sweetgreen to reach its full potential, all while staying true to our purpose of connecting people to real food. Now, I'll turn over the call to Jamie to review our financial results in detail. Thank you, Jonathan, and good afternoon, everyone. As a longtime Sweetgreen guest, I could not be more excited to join the team.

Financial standpoint, this transaction reflects and disciplined capital decision that both strengthens our liquidity position and enhances our path to profitability. The sale is expected to infuse our balance sheet with approximately $100 million in cash upon closing, we expect the spice sales to close in either the fourth quarter of 2025.

During the quarter, we opened eight restaurants, six of which were infinite kitchen, we closed two restaurants during the quarter Bleecker and Axa place for a third quarter net interim count of six and we ended the quarter with 266 restaurants.

Early in the first quarter of 2026.

We also expect to realize approximately $8 million in annualized G&A savings as the space team transitioned to wonder together. These actions are being taken to create meaningful leverage in our model and reinforce our focus on balancing growth with disciplined cost management.

Through our ongoing collaboration with Wonder we have found a way to continue to benefit from the long term success of the platform, while keeping our focus on expanding and enhancing the sweet green experience.

Jonathan Neman: This is an important time for the brand, and I'm grateful for the trust Jonathan, the board, and the company have placed in me to help shape the next chapter. Over the past few weeks, I've spent time in our restaurants listening and learning from our teams. What stood out immediately was the care our people bring to the food we serve, and the ingredients we source. I met Yuri, who began as a dishwasher six years ago and now leads her own restaurant as a head coach. Seeing how she has grown within Sweetgreen, and her pride in the restaurant, showed me what makes this company so special. Since stepping into the CFO role a little over six weeks ago, I've been focused on gaining a clear understanding of our economic model and the levers that drive our results. It's clear there's meaningful work ahead.

The <unk> sale to close in either the fourth quarter of 2025 early in the first quarter of 2026.

Now turning to guidance, we are updating 2025 guidance to the following 37 net new restaurant openings revenue ranging from $682 million to $688 million negative same store sales of $8 five to seven 7% restaurant level margin at <unk>.

14, 5% to 15% and adjusted EBITDA between negative 13 and negative $10 million.

As John said, we plan to slow new unit growth next year to approximately 15 to 20 net new restaurants with about half featuring the Internet kitchen.

Now turning to guidance, we're updating 2025 guidance to the following 37 net new restaurant openings revenue ranging from $682 million to $688 million negative same store sales of $8 five to seven 7% restaurant level margin at Fort.

Jonathan Neman: I've launched a full review of our restaurant-level expenses and G&A structure to ensure we're operating as efficiently as possible, identifying savings, simplifying processes, and investing only in what drives the business forward. Over time, this work will drive margin improvement, stronger cash flow, and tighter financial discipline across the company to deliver steady, stable results. I will have more to share in future quarters. I'll now walk you through our third-quarter results. Third-quarter sales were $172.4 million compared to $173.4 million last year, with same-store sales decline of 9.5%. Restaurant-level margin was 13.1%, down from 20.1% a year ago. Adjusted EBITDA was negative $4.4 million compared to positive $6.8 million last year. The comp decline reflects an 11.7% decrease in traffic and mix, partially offset by a 2.2% benefit from menu price increases.

We'll continue to evaluate opportunities to increase development as operating cash flow improves.

I came to sweet Green because I believe in what we're building and the impact. This brand can have I'm incredibly passionate about our mission and confident in the opportunity ahead and now I will turn the call over to the operator to begin Q&A operator.

14, 5% to 15% and adjusted EBITDA between negative 13 and negative $10 million.

As John said, we plan to slow new unit growth next year to approximately 15 to 20 net new restaurants with about half featuring the infinite kitchen.

Thank you the floor is now open for questions.

And we'd like to ask a question. Please press star one on your telephone keypad to raise your hand and join the queue.

We'll continue to evaluate opportunities to increase development as operating cash flow improved.

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And for today's session. We do request that you please limit yourself to one question.

Your first question comes from the line of Brian Mullan of Piper Sandler Your line is open.

Thank you the floor is now open for questions.

Hey, Thank you in the prepared remarks, you mentioned starting to evaluate sweet Greens menu and pricing architecture. I think you said in Q4 and into Q1.

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Jonathan Neman: The comp decline reflects softer sales trends and the transition from Sweetpass Plus to our new rewards program, which eliminated subscription revenue and includes a loyalty deferral. Third quarter, food, beverage, and packaging costs were 30.7% of revenue, a 320 basis point increase year over year. The benefit from pricing was more than offset by higher protein costs, reflecting our investment in increased chicken and tofu portions to reinforce the value for our guests, and higher ingredient usage. We expect to offset the 140 basis point portion investment through a combination of in-restaurant and supply chain initiatives, with savings beginning in 2026 and fully realized in the second half of the year. The quarter also included a 50 basis point impact related to imposed tariffs and duties on our packaging and other menu items. This is a level we expect to continue in the near term.

And can you just give a sense of the scope of what you're looking at what you're hoping to accomplish maybe you could characterize how difficult do you think this will or won't be and I ask because they know absolute price points. It's only one part of the value equation, but it's an important one so would just love to get your thoughts on what you think needs to be done.

If you are called upon to ask a question or listening via loud speaker on your device. Please pickup your handset and ensure that your phone is not on mute when asking a question.

And for today's session. We do request that you please limit yourself to one question.

Your first question comes from the line of Brian Mullan of Piper Sandler Your line is open.

Absolutely. Thank you Brian So yes, we're looking at menu and pricing architecture, as we mentioned and I think there's a few ways.

Hey, Thank you in the prepared remarks, you mentioned starting to evaluate sweet Greens menu and pricing architecture. I think you said in Q4 and into Q1.

We're considering it first is our pricing ladders and menu and new entry points as you know in the quarter. We tested a few things around $13 Bowl drops we saw really to understand the price elasticity, we saw a lot of engagement around it but given the fact that it was mostly marketing to existing customers.

Jonathan can you just give a sense of the scope of what you're looking at what you're hoping to accomplish maybe you could characterize how difficult do you think this will or won't be and I ask because I know absolute price points. It's only one part of the value equation, but it's an important one so just wanted to get your thoughts on what you think needs to be done.

Relative high degree of cannibalization, but it did show us that there is a real opportunity around more entry price entry price points around our menu as we look at menu innovation, we also see opportunities to.

Absolutely. Thank you Brian So yes, we're looking at menu and pricing architecture, as we mentioned and I think there's a few ways.

Jonathan Neman: Additionally, the third quarter was impacted by a one-time 60 basis point write-off of discontinued materials. Third quarter, labor and related expenses were 29.1% of revenue, an increase of 170 basis points from last year. The increase was primarily driven by deleverage from lower sales volumes and higher wage rates, partially offset by menu price increases. Other operating expenses were 17.6% of revenue, an increase of 130 basis points from last year. Third quarter, operating support center costs decreased $2.3 million from last year on a dollar basis. As a percent of revenue, operating support center costs improved to 14% from 15.2% last year. The decrease was primarily driven by lower bonus expense due to company performance. As a reminder, we streamlined parts of our organization during the quarter, eliminating roughly 10% of open and existing roles to drive greater focus and efficiency.

To create different price points and again entryways into the brand.

We've also looked at how we present menu price points on our menu boards again to really show the different pricing options we have.

Lastly, I'll just follow up on the things that I talked about in the prepared remarks, we can do a much better job of talking about the value we provide whether it would be made from scratch or our proteins cooked without seat oils or are all of our proteins being having no antibiotics ever there is a much better job, we can do around around really delivering on.

A relatively high degree of cannibalization, but it did show us that there is a real opportunity around more entry price entry price points around our menu as we look at menu innovation, we also see opportunities to create different price points and again entryways into the brand.

The value message that we are offering lastly, we've increased our protein portions by about 25% and we've been relatively quiet on that but starting next week, we have a big campaign around the increased portion around protein and with all the crazy around protein and we think that will also do well so.

We've also looked at how we present menu price points on our menu boards again to really show the different pricing options we have.

Close with on this is a lot of the pricing work as going into stage gate.

In the coming months, and we do think that theres going to be a lot of opportunity around these different pricing tiers.

Jonathan Neman: Third quarter net loss was $36.1 million compared to a net loss of $20.8 million last year. The higher net loss primarily reflects a $12.4 million decrease in restaurant-level profit and increased impairment charges, driven by a $4.3 million impairment charge for four underperforming restaurants. This was partially offset by lower stock-based compensation as IPO-related grants continued to roll off. Adjusted EBITDA was a loss of $4.4 million compared to positive $6.8 million last year. The decline was primarily driven by lower restaurant-level profits. During the quarter, we opened eight restaurants, six of which were infinite kitchens. We closed two restaurants during the quarter, Bleeker and Aster Place, for a third-quarter net inner row count of six, and we ended the quarter with 266 restaurants. We ended the quarter with a cash balance of $130 million.

On the value message that we are offering lastly, we've increased our protein portions by about 25% and we've been relatively quiet on that but starting next week, we have a big campaign around the increased portion around protein and with all the crazy around protein and we think that will also do well so I'll close with on this is.

Thank you.

Your next question comes from the line of Jon Tower of Citi. Your line is open.

Great.

Thanks for taking the question.

I guess maybe.

Just looking at the guidance for the balance of the year or the implied guidance for the balance of the year and its.

Effectively suggesting the fourthquarter has taken a step down I don't think that's really too much of a surprise to people on the line, but I'm. Just curious if you could kind of walk through what youre seeing in the current environment.

A lot of the pricing work as going into stage gate.

In the coming months, and we do think that theres going to be a lot of opportunity around the different pricing tiers.

Thank you.

Specifically.

Your next question comes from the line of Jon Tower of Citi. Your line is open.

I would think given where your stores are located in the northeast and what's going on with the government shutdown if you've seen anything.

Great.

Thanks for taking the question.

I guess maybe.

Worsen in the most recent months with respect to consumer demand and frankly, how it's showing up in your business are you seeing it specifically during certain parts of the week.

Just looking at the guidance for the balance of the year for the implied guidance for the balance of the year.

Secondly, suggesting the fourthquarter has taken a step down I don't think that's really too much of a surprise to people on the line, but I'm. Just curious if you could kind of walk through what youre seeing in the current environment.

Our lunch or dinner getting hit more so than other day parts and how people are spending at your stores relative to the past.

Jonathan Neman: As you heard earlier from Jonathan and read in our release this afternoon, the strategic sale of Spice to Wonder marks an exciting milestone for Sweetgreen. From a financial standpoint, this transaction reflects a disciplined capital decision that both strengthens our liquidity position and enhances our path to profitability. The sale is expected to infuse our balance sheet with approximately $100 million in cash upon closing. We expect the Spice sale to close in either the fourth quarter of 2025 or early in the first quarter of 2026. We also expect to realize approximately $8 million in annualized G&A savings as the Spice team transitions to Wonder. Together, these actions are being taken to create meaningful leverage in our model, and reinforce our focus on balancing growth with disciplined cost management.

Specifically.

Hi, John Yeah, Youre right, we are seeing a step down so in July we saw a slight pick up from Q2 and that was due to the seasonal menu rolling out. However in August we saw a step down of about 200 basis points and then we saw another step down and September of about 200 basis points October.

I would think given where your stores are located in the northeast and what's going on with the government shutdown if you've seen anything.

Worsen in the most recent months with respect to consumer demand and frankly, how it's showing up in your business are you seeing it specifically during certain parts of the week.

Is holding flat to September so we're running at low negative double digits right now I will tell you you're absolutely right about the consumer so the 25 to 35 consumer is the most under pressure and they make up about 30% of our consumer base and they're down about 15% and then our northeast.

Our lunch or dinner getting hit more so than other day parts and how people are spending at your stores relative to the past.

Hey, John Yeah, Youre right, we are seeing a step down so in July we saw a slight pick up from Q2 and that was due to the seasonal menu rolling out. However in August we saw a step down of about 200 basis points and then we saw another step down and September of about 200 basis points October.

L a markets make up about 60% of our base and the comp and Theyre, making up about 800 basis points of negative comp compared to the rest of the fleet. So we're definitely seeing that impact and then we are seeing some declines in dinner.

Jonathan Neman: Through our ongoing collaboration with Wonder, we have found a way to continue to benefit from the long-term success of the platform while keeping our focus on expanding and enhancing the Sweetgreen experience. Now, turning to guidance, we are updating 2025 guidance to the following: 37 net new restaurant openings, revenue ranging from $682 to $688 million, negative same-store sales of 8.5% to 7.7%, restaurant-level margin of 14.5% to 15%, and adjusted EBITDA between negative $13 and negative $10 million. As Jon said, we plan to slow new unit growth next year to approximately 15 to 20 net new restaurants, with about half featuring the infinite kitchen. We'll continue to evaluate opportunities to increase development as operating cash flow improves. To close, I came to Sweetgreen because I believe in what we're building and the impact this brand can have.

It's holding flat to September so we're running at low negative double digits right now I will tell you you're absolutely right about the consumer so the 25 to 35 consumer is the most under pressure and they make up about 30% of our consumer base and they are down about 15% and then our northeast.

Okay. Thank you.

Maybe just in terms of the kitchen agreement that you guys made today can you just walk us through how thats going to impact you going forward, obviously, it sounds like in a license agreement.

Will there be any incremental costs that youll have to pay going forward like a royalty for the technology into the future.

La markets make up about 60% of our base and the comp and Theyre, making up about 800 basis points of negative comp compared to the rest of the fleet. So we're definitely seeing that impact and then we are seeing some declines in dinner.

Yes, John I'll take that so we think that this strategic agreement with Wonder is really a win win win for the business not only do we infuse the company with about $100 million in cash and another $86 million in wonder stock. We also reduce our G&A by about $8 million and allows us to focus more of our time in <unk>.

Okay. Thank you.

And maybe just in terms of the kitchen agreement that you guys made today can you just walk us through how thats going to impact you going forward, obviously, it sounds like in a license agreement.

Sources on the customer and really on the food and the experience.

Will there be any incremental costs that youll have to pay going forward like a royalty for the technology into the future.

On that around the around Ik going for forward. It will continue to be a huge part of our business.

Jonathan Neman: I'm incredibly passionate about our mission and confident in the opportunity ahead. I will turn the call over to the operator to begin Q&A. Operator, thank you. The floor is now open for questions. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. If you're called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. For today's session, we do request that you please limit yourself to one question. Your first question comes from the line of Brian Hugh Mullan of Piper Sandler. Your line is open. Hey, thank you.

Like we said, it's continuing to scale in many of our new stores and we're pleased with the results and we've formed a.

Really favorable agreement with wonder, where we're able to have the units add about around cost plus 5% and then maintain the current costs around around delivery install and service. So.

<unk> on the customer and really on the food and the experience beyond that around the around <unk> going for forward. It will continue to be a huge part of our business.

It's just a huge win for us enable to still use that technology as we continue to scale.

But pretty much the same costs that we've had so far without without the financial burden that it was causing.

Like we said, it's continuing to scale in many of our new stores and we're pleased with the results and we've formed a.

Got it thank you.

A really favorable agreement with wonder, where we're able to have the units add about around cost plus 5% and then maintain the current cost around around delivery install and service. So.

Your next question comes from the line of Andrew Charles with Cowen. Your line is now open.

Jonathan Neman: In the prepared remarks, you mentioned starting to evaluate Sweetgreen's menu and pricing architecture, I think you said, in Q4 and into Q1. Jonathan, can you just give a sense of the scope of what you're looking at, what you're hoping to accomplish? Maybe you could characterize how difficult you think this will or won't be. I ask because I know absolute price points, it's only one part of the value equation, but it's an important one. We'd just love to get your thoughts on what you think needs to be done. Absolutely. Thank you, Brian. Yes, we're looking at menu and pricing architecture, as we mentioned. I think there's a few ways that we're considering it. First is our pricing ladders and new entry points. As you know, in the quarter, we tested a few things around $13 bowl drops.

Great. Thanks, just first one quick bookkeeping on the 15 to 20 net openings for 2026, what's contemplated a number of closures for next year and my real question. It's good to hear the handheld is making a reappearance. After you first talked about around a year ago. What are the key unlock from the operational side to get it to the market tests, where I know you're going.

It's just a huge win for us enable to still use that technology as we continue to scale.

But that's pretty much the same costs that we've had so far without without the financial burden that it was causing.

Figure out more on the operations side, but what were the key unlocks he did in the planning phase to get it to the market test.

Got it thank you.

Yeah.

Your next question comes from the line of Andrew Charles with Cowen. Your line is now open.

I'll start with the net 15 store openings so.

Great. Thanks, just first one quick bookkeeping on the 15 to 20 net openings for 2026, what's contemplated a number of closures for next year and then my real question. It's good to hear the handheld is making a reappearance. After you first talked about around a year ago. What are the key unlock from the operational side to get it to the market tests, where I know you're going.

We've identified two that are going to close and then we're also looking at lease explorations and being really diligent on if we should renew those leases. So we still expect about net 15, we've identified two.

Jonathan Neman: We saw, really, to understand the price elasticity. We saw a lot of engagement around it, given the fact that it was mostly marketed to existing customers, a relatively high degree of cannibalization. It did show us that there is a real opportunity around more entry price points around our menu. As we look at menu innovation, we also see opportunities to create different price points and, again, entryways into the brand. We've also looked at how we present menu price points on our menu boards, again, to really show the different pricing options we have. Lastly, I'll just follow up on the things that I talked about in the prepared remarks. We can do a much better job of talking about the value we provide, whether it be made from scratch, our proteins cooked without seed oils, or all of our proteins having no antibiotics ever.

That 15 is our number.

And on the unlocks I think we've tested this with consumers. We know we know we have a really really killer product.

Figure out more on the operations side, but what were the key unlocks you did in the planning phase to get it to the market test.

The point of the market test is to make sure that we can operationalize it and really understand any impacts the throughput. So it's a bit early to talk about it but we've run some internal testing and are very confident that we can come up with something that is accretive and incremental to the business unlock new day parts and really be a big acquisition driver for us.

I'll start with the net 15 store openings so.

<unk> 15, as our number.

So it's something that we've known for a while Jason our COO and team are very confident that this is something that we can operationalize, but as I mentioned in the prepared remarks. The stage gate process is really critical to getting this right and that's why we're not rushing this out we want to make sure both the product offering and menu assortment is right the pricing is.

And on the unlocks I think we've tested this with consumers. We know we know we have a really really killer product.

The point of the market test is to make sure that we can operationalize it and really understand any impacts the throughput. So it's a bit early to talk about it but.

We've run some internal testing and are very confident that we can come up with something that is accretive and incremental to the business unlock new day parts and really be a big acquisition driver for us. So it's something that we've known for a while Jason our COO and team are very confident that this is something that we can operationalize, but as I mentioned in the prepared remarks.

Jonathan Neman: There's a much better job we can do around really delivering on the value message that we are offering. Lastly, we have increased our protein portions by about 25%. We've been relatively quiet on that, but starting next week, we have a big campaign around the increased portioning around protein. With all the craze around protein, we think that will also do well. I'll close with on this is a lot of the pricing work is going into Stagegate in the coming months, and we do think that there's going to be a lot of opportunity around these different pricing tiers. Thank you. Your next question comes from the line of Jon Michael Tower of Citigroup. Your line is open. Great. Thanks for taking the question. I guess maybe.

Right and most importantly that we can operationalize this.

Yeah.

Thank you.

Your next question comes from the line of Rahul CRO of Jpmorgan. Your line is open.

Good evening, guys, Firstly kudos on making the changes to the protein portion increases jumped on that quite visible.

Stage gate process is really critical to getting this right and that's why we're not rushing this out we want to make sure both the product offering and menu assortment is right. The pricing is right and most importantly that we can operationalize. This.

Currently hitting the 100 grams school, but happy to see that being executed well.

The question is on the net cash proceeds after tax component associated with the Spice.

Yeah.

Given the cost basis, I'm factoring in stock and the initial purchase price of space.

Thank you.

Your next question comes from the line of Rohit <unk> of Jpmorgan. Your line is open.

Can you give us some detail on the actual cash that would be realized on the balance sheet.

Good evening, guys, Firstly kudos on making the changes to the protein portion increases jumped on that are quite visible on <unk>.

Jonathan Neman: I'm just looking at the guidance for the balance of the year or the implied guidance for the balance of the year, and it's effectively suggesting the fourth quarter is taking a step down. I don't think that's really too much of a surprise to people on the line. I'm just curious if you could kind of walk through what you're seeing in the current environment. Specifically, I would think, given where your stores are located in the Northeast and what's going on with the government shutdown, if you've seen anything worse in the most recent months with respect to consumer demand and, frankly, how it's showing up in your business. Are you seeing it specifically during certain parts of the week, or lunch or dinner getting hit more so than other day parts, and how people are spending at your stores relative to the past? Hi, John.

And.

Also like does it impact the future I can mix given the hurdle rate given the cost plus 5% comment you made Jonathan any color on that would be great.

Currently hitting the 100 grams scoop, but happy to see that being executed well.

The question is on the net cash proceeds after any tax component associated with the spice.

I'll take the second part of your question I'll, let Jamie Jamie I'll take the first so in terms of the actual costs I think it is actually a huge a huge benefit to us because today.

Given the cost basis, I'm factoring in stock and the initial purchase price of space.

Can you give us some detail on the actual cash that would be realized on the balance sheet.

At our scale, there's only so many so much economies of scale, we can achieve with the machine at a cost plus model and just a very small 5%, which would be about $25000 on the cost of the machine we benefit from the economies of scale as they begin to scale production and also have access to future technologies. So we actually think.

And.

Also like does it impact the future Aitken mix given the hurdle rate given the cost plus 5% comment you made Jonathan any color on that would be great.

I'll take the second part of the question I'll, let Jamie So let me take the first so in terms of the actual costs I think it is actually a huge a huge benefit to us because today at.

This will help us bring the unit cost down have them invest more in the R&D and innovation of potentially cheaper.

Jonathan Neman: Yeah, you're right. We are seeing a step down. In July, we saw a slight pickup from Q2, and that was due to the seasonal menu rolling out. However, in August, we saw a step down of about 200 basis points, and then we saw another step down in September of about 200 basis points. October is holding flat to September, so we're running at low negative double digits right now. I will tell you, you're absolutely right about the consumer. The 25 to 35 consumer is the most under pressure, and they make up about 30% of our consumer base, and they're down about 15%. Our Northeast and LA markets make up about 60% of our base, and they're making up about 800 basis points of negative comp compared to the rest of the fleet. We're definitely seeing that impact.

Cheaper and more effective.

At our scale there is only so many so much economies of scale, we can achieve with the machine at a cost plus model.

Automation units and so.

Overall, a win win in that scenario.

And then following up on the cash we're still going through the tax analysis and the valuation. So I don't expect it to be a material amount of tax that we're going to pay them.

The very small, 5%, which would be about $25000 on the cost of the machine we benefit from the economies of scale as they begin to scale production and also have access to future technologies. So we actually think this will help us bring the unit cost down have them invest more in the R&D and innovation of of potential.

And then we're still going through the tax and legal fees et cetera, but I don't expect any of them to be material.

Thank you.

Cheaper faster cheaper and more effective tech.

Your next question comes from the line of Sara Senatore of Bank of America. Your line is open.

Automation units and so.

Oh. Thank you can we I just I guess, one one confirmation or clarification and then a question I think you said that dinner is where you have seen some softness so I guess is that mean sort of disproportionate.

Overall, a win win in that scenario.

And then following up on the cash we're still going through the tax analysis and the valuation. So I don't expect it to be a material amount of tax that we're going to pay and then marcel going through the tax and legal fees et cetera, but I don't expect any of them to be material.

Jonathan Neman: We are seeing some declines in dinner. Okay. Thank you. Maybe just in terms of the Infinite Kitchen agreement that you guys made today, can you walk us through how that's going to impact you going forward? Obviously, it sounds like a license agreement. Will there be any incremental costs that you'll have to pay going forward, like a royalty for the technology into the future? Yeah, John, I'll take that. We think that this strategic agreement with Wonder is really a win-win-win for the business. Not only do we infuse the company with about $100 million in cash and another $86 million in Wonder stock, we also reduce our G&A by about $8 million, and allow us to focus more of our time and resources on the customer, and really on the food and the experience. Beyond that, around.

Some of what I've seen is that lines has actually been more vulnerable just because it's it's something where people can kind of back end and bring from home. So I wanted to understand the the day part impact.

Thank you.

Your next question comes from the line of Sara Senatore of Bank of America. Your line is open.

Impact.

You kind of control for sort of suburban or urban mix.

Thank you Jamie I, just I guess, one one confirmation or clarification and then a question I think you said that dinner is where you're seeing some softness. So I guess is that mean sort of disproportionate at some of what I've seen is that lines has actually been more.

Yeah, Hi, Sarah we actually are not seeing a slowdown in our quarter over quarter, we're actually seeing a slight decrease though really is spent in our time that we're seeing that decrease.

Okay. Thank you and then another question was on just again on the sort of sale.

Normal just because it's it's something where people can kind of back end and bring from home. So I wanted to understand the the day part.

What what I guess is the impetus for doing that now I mean other than perhaps your cash position I just want to ask because John to your point about being kind of sub scale. My sense is that a lot of restaurants generally will outsource technology unless there, they're really bad and some just wanted to understand kind of the.

Impact.

You kind of control for sort of suburban or urban mix.

Yeah, Hi, Sarah we actually are not seeing a slowdown in our lightest quarter over quarter, we're actually seeing a slight decrease though really is spent in our time that we're seeing that decrease.

Jonathan Neman: IK going forward, it will continue to be a huge part of our business. Like we said, it's continuing to scale in many of our new stores, and we're pleased with the results. We've formed a really favorable agreement with Wonder where we're able to have the units at around cost plus 5% and then maintain the current costs around delivery, install, and service. It's just a huge win for us and able to still use that technology as we continue to scale, but at pretty much the same cost that we've had so far without the financial burden that it was causing. Got it. Thank you. Your next question comes from the line of Andrew Charles of TD Cowen. Your line is open. Great. Thanks. Just first, one quick bookkeeping.

<unk> processes.

As elegant and packing in house versus maybe just going forward.

Okay. Thank you and then.

Decided to just keep the outsourcing.

Another question was on just again on the sale.

Approach.

Yeah, absolutely so when we when we bought when we bought Spice originally there was no automation.

What what I guess is the impetus for doing that now I mean other than perhaps your cash position I guess I ask because you don't need to your point about being kind of sub scale. My sense is that a lot of restaurants generally will outsource technology unless there they're really bad.

Automation platform that we could have we could have bought from there and so we took what was a nascent idea really of prototype in a couple of stores, we perfected it for sweet Green, we've commercialized that we've gotten those manufacturing setup and we've now scaled it and it's now this year over half of the new Nro's again next year and you're really at that.

So I just wanted to understand kind of the thought process.

Relevant and packing house versus maybe just going forward.

Deciding to go to the outsourcing.

Point, where us fully owning it has not needed as long as we have a level of control and license around the technology and now we can benefit from the economies of scale and future innovation under wonder so.

Approach.

Yeah, absolutely. So when we bought when we bought Spice originally there was no automation.

Jonathan Neman: On the 15 to 20 net openings for 2026, what's contemplated the number of closures for next year? My real question is, it's good to hear the handheld is making a reappearance after you first talked about it around a year ago. What were the key unlocks on the operational side to get it to the market test? I know you're going to figure out more on the operation side, but what were the key unlocks you did in this planning phase to get it to the market test? I'll start with the net 15 store openings. We've identified two that are going to close, and we're also looking at lease expirations and being really diligent on if we should renew those leases. We still expect about net 15. We've identified two, but net 15 is our number.

Automation platform that we could've would've bought from there and so we took what was a nascent idea really of prototype in a couple of stores, we perfected it for sweet Green, we've commercialized that we've gotten those manufacturing setup and we've now scaled it and it's now this year over half of the new <unk> again next year and you're really at that.

Not only provides cash and lowers our G&A at this critical moment. It allows us to focus on our business and we believe over time it will actually bring the unit cost of the technology down. So we can actually we can put it in more and more restaurants.

Thank you.

Your next question comes from the line of Logan <unk> of RBC capital markets. Your line is open.

Hey, good afternoon. Thanks for taking my question I just had one on the unit growth guidance for next year and in the pipeline.

Obviously pulling back a little bit on unit development here.

But I guess the question is is there any potential for that.

Jonathan Neman: On the unlocks, I think we've tested this with consumers. We know we have a really, really killer product. The point of the market test is to make sure that we can operationalize it and really understand any impacts to throughput. It's a bit early to talk about it, but we've run some internal testing and are very confident that we can come up with something that is creative and incremental to the business, unlock new day parts, and really be a big acquisition driver for us. It's something that we've known for a while. Jason, our COO and team, are very confident that this is something that we can operationalize. As I mentioned in the prepared remarks, the Stagegate process is really critical to getting this right, and that's why we are not rushing this out.

That number to creep a little bit higher.

Thank you.

Scenario, where.

Same store sales it gets back to growth in industrial comfortable about the operations.

Your next question comes from the line of Logan <unk> of RBC capital markets. Your line is open.

Hey, good afternoon. Thanks for taking my question I just had one on the unit growth guidance for next year and in the pipeline.

Curious if there's any flexibility in the pipeline to maybe scale that number a couple of the IRA for next year.

Yes, absolutely. There is the decision was made one from a financial discipline perspective, but also a focus perspective as we really focus on menu innovation and store experience in order to inflect, our transaction calm and we do have a very robust pipeline over the next couple of years and we made the strategic decision to kind of.

Obviously pulling back a little bit on unit development here.

But I guess the question is is there any potential for.

That number to creep a little bit higher.

The scenario where.

Same store sales gets back to growth in industrial comfortable about the operations.

Cherry pick the best approximately 20 restaurants, but do have some flexibility depending on how things go to accelerate and we are planning a reacceleration into 2027, not all the way to the 15% unit growth, but do expect some reasonable step up from the 20th stores in 26 inch.

Jonathan Neman: We want to make sure both the product offering and the menu assortment is right, the pricing is right, and most importantly, that we can operationalize this. Thank you. Your next question comes from the line of Rahul Krotthapalli of JPMorgan. Your line is open. Good evening, guys. Firstly, kudos on making the changes to the protein portion increases, Jonathan. They are quite visible and consistently hitting the 100g scope. Happy to see that being executed well. The question is on the net cash proceeds after any tax components associated with the Spice sale. Given the cost basis and factoring in stock in the initial purchase price of Spice, can you give us a detail on the actual cash that would be realized on the balance sheet? Also, does it impact the future IK mix given the hurdle rate, given the cost plus 5% comment you made, Jonathan?

Curious if there's any flexibility in the pipeline to maybe scale that number a couple of the IRA for next year.

2007.

If we are able to.

<unk> comp, we feel really good about our overall operations and how we're delivering on the experience. We do have the potential to slightly increase next year's unit count.

Cherry pick the best approximately 20 restaurants, but do have some flexibility depending on how things go to accelerate and we are planning.

Your next question comes from the line of Brian <unk> of Morgan Stanley. Your line is open.

Reacceleration into 2027, not all the way to the 15% unit growth, but do expect some reasonable step up from the 28 stores in 2006 into 2007. So if we are able to.

Hi. Thank you. This is Kelly Merrell on for Brian I'm, just curious can we get an update on loyalty and where that stands today I think on the last call. You noted it as an uplift to the beginning of Q3. So just wondering if that sustained throughout the quarter or if you're seeing anything different now.

Comp and feel really good about our overall operations and how we're delivering on the experience. We do have the potential to slightly increase next year's unit count.

Yes, we've been generally pleased with loyalty, we just had our six month Mark. We are seeing continued activations that are almost 20000 per week in terms of new customers and we have seen some frequency increases of those loyalty members. We are right now in the process of really perfecting the different customer journeys and.

Jonathan Neman: Any color on that would be great. I'll take the second part of the question, and I'll let Jamie take the first. In terms of the actual cost, I think it's actually a huge benefit to us because today, at our scale, there's only so many. So much economies of scale we can achieve with the machine. At a cost-plus model, at just a very small 5%, which would be about $25,000 on the cost of the machine, we benefit from the economies of scale as they begin to scale production and also have access to future technologies. We actually think this will help us bring the unit cost down, have them invest more in the R&D and innovation of potentially cheaper and more effective automation units. Overall, a win-win in that scenario.

Your next question comes from the line of Brian <unk> of Morgan Stanley. Your line is open.

Hi. Thank you. This is Kelly Merrell on for Brian I'm, just curious can we get an update on loyalty and where that stands today.

And how we can get get them to be more personalized and really understanding the different promo levers you one of the things you will see us do especially in this.

On the last call you noted it as an uplift to the beginning of Q3. So just wondering if that's sustained throughout the quarter or if you're seeing anything different now.

This kind of cost conscious environment for consumers is leaning a bit more uncertain kind of breakthrough promos to drive acquisition, So youll see us trying and testing a bunch more things.

With a lot of discipline, making sure that it can be accretive, but its still I would say very early stages of the loyalty program.

Over the next six months, we expect that to be more of a comp driver for us, especially at some of the overhang from this fee pass plus starts to fall off.

We can get get them to be more personalized and really understanding the different promo levers one of the things you will see us do especially in this.

Jonathan Neman: Following up on the cash, we're still going through the tax analysis and the valuation. I don't expect it to be a material amount of tax that we are going to pay. We're still going through the tax and legal fees, etc., but I don't expect any of them to be material. Thank you. Your next question comes from the line of Sarah Sanator of Bank of America. Your line is open. Oh, thank you. Jamie, I just, I guess, one confirmation or clarification and then a question. I think you said that dinner is where you're seeing some softness. Does that mean sort of disproportionate? Some of what I've seen is that lunch has actually been more vulnerable just because it's something where people can kind of pack and bring from home. I wanted to understand the day part.

And then.

And this kind of cost conscious environment for consumers is leaning a bit more uncertain kind of breakthrough promos to drive acquisition, So youll see us trying and testing a bunch more things.

Again, it's really about how we leverage that data very excited about <unk>, because it being here and her expertise in loyalty and CRM and again, we see a lot of opportunity to kind of leverage that digital flywheel.

There's a lot of discipline, making sure that it can be accretive, but still I would say very early stages of the loyalty program.

Your next question comes from the line of Jeff Bernstein of Barclays. Your line is open.

Over the next six months, we expect that to be more of a comp driver for us, especially as some of the overhang from the C pass plus starts to fall off.

Hi, this is a niche on for Jack.

With only one quarter remaining in the year restaurant level margins were cut significantly can you break down what's driving that if it's labor deleverage commodity inflation or other factors.

And then again, it's really about how we leverage that data very excited about <unk>.

Because it being here and her expertise in loyalty and CRM and again, we see a lot of opportunity to kind of leverage that digital flywheel.

Yes, so youre right its about half of sales deleverage and then the next biggest piece is the protein increase so we have about 140 bps and protein related to the increased portions of chicken and tofu, those we plan to offset less supply chain initiatives.

Your next question comes from the line of Jeff Bernstein of Barclays. Your line is open.

Jonathan Neman: Impact if you kind of control for sort of suburban or urban mix. Yeah. Hi, Sarah. We actually are not seeing a slowdown in our lunch quarter over quarter. We're actually seeing a slight decrease, so really, it's the dinner time that we're seeing that decrease. Okay. Thank you. The question was on just, again, on the sort of sale. What, I guess, is the impetus to doing that now? I mean, other than perhaps your cash position, I guess I ask because to your point about being kind of subscale, my sense is that a lot of restaurants generally will outsource technology unless they're really big. I just wanted to understand kind of the thought process of developing tech in-house versus maybe just going forward, just deciding to just to the outsourcing approach. Yeah, absolutely. When we bought Spice originally, there was no automation.

Hi, This is Michelle on for Jack.

With only one quarter remaining in the year restaurant level margins were significantly can you break down what's driving that if it's labor deleverage commodity inflation or other factors.

Restaurant initiatives and then we have tariffs, which we expect to hold that about 50 bet.

Okay.

Thank you.

Yes, so you're right it's about half the sales deleverage and then the next biggest piece is the protein increase that we have about 140 bps and protein related to the increased portions of chicken and tofu, those we plan to offset less supply chain initiatives.

Your next question comes from pretty firmly of Goldman Sachs. Your line is open.

Thanks for taking the question one more on the loyalty program for me.

Pricing and menu architecture review inclusive of a review of the rewards redemption staff press. Your words, just kind of making sure that your competitive versus peers with validated not only on the core menu, but also with regards to the point redemption opportunities.

And restaurant initiatives and then we have tariffs, which we expect to hold that about 50 bet.

Okay.

<unk>.

Yes, absolutely it's a really good point, we've gone in with relatively modest.

Thank you.

Your next question comes from <unk> <unk> of Goldman Sachs. Your line is open.

Programmatic benefits. So it gives us a lot of opportunity to move up and also leverage more on the personalized offers and CRM. So we're evaluating all of it including the potential for tears and other benefits for members. So.

Thanks for taking the question one more on the loyalty program for me.

Jonathan Neman: Platform that we could have bought from there. We took what was a nascent idea, really a prototype in a couple of stores. We perfected it for Sweetgreen, we've commercialized it, we've gotten the manufacturing set up, and we've now scaled it. It's now, this year, over half of the new NROs, again, next year. We're really at that point where us fully owning it is not needed as long as we have a level of control and license around the technology. Now we can benefit from the economies of scale and future innovation under Wonder. It not only provides cash and lowers our G&A in this critical moment, it allows us to focus on our business. We believe over time it'll actually bring the unit cost of the technology down so we can put it in more and more restaurants. Thank you.

The pricing and menu architecture review inclusive her review of the rewards redemption staff for STI Awards, just kind of making sure that your competitive versus peers with value not only on the core menu.

The loyalty the loyalty program will be a huge lever for us the one thing I will add on loyalty.

So with regards to the point redemption opportunities. Thanks.

It was in the prepared remarks, but we recently rolled out the ability to scan to pay and the good thing about that is we're now able youre now able to very seamlessly use loyalty in store.

Yes, absolutely it's a really good point, we've gone in with relatively modest.

Capturing more since we've done that we are seeing a step up of customers using loyalty in restaurants. It also helps us from a throughput perspective, so lot more improvements coming on that side and generally in our digital experience. We have a lot of exciting things planned over the next six to 12 months to continue to drive that digital side.

The loyalty the loyalty program will be a huge lever for us the one thing I will add on loyalty.

Which it was in the prepared remarks, but we recently rolled out the ability to scan to pay and the good thing about that is we're now able you are now able to very seamlessly use loyalty in store. So we're capturing more since we've done that we are seeing a step up of customers using loyalty in restaurants. It also helps us from a throughput perspective.

Bill.

Awesome. Thanks.

With no further questions that concludes our Q&A session and today's conference call. We thank you for your participation you may now disconnect.

Jonathan Neman: Your next question comes from the line of Logan Reich of RBC Capital Markets. Your line is open. Hey, good afternoon. Thanks for taking my question. I just had one on the unit growth guidance for next year and the pipeline. Obviously, pulling back a little bit on unit development here. I guess the question is, is there any potential for that number to creep a little bit higher in a scenario where same-store sales gets back to growth and you guys feel comfortable about the operations? Curious if there's any flexibility in the pipeline to maybe scale that number up a little bit higher for next year. Yeah, absolutely, there is. The decision was made, one, from a financial discipline perspective, but also a focus perspective as we really focus on menu innovation and store experience in order to inflect our transaction comp.

So lot more improvements coming on that side and generally in our digital experience. We have a lot of exciting things planned over the next six to 12 months to continue to drive that digital flywheel.

Awesome. Thanks.

With no further questions that concludes our Q&A session and today's conference call.

Thank you for your participation you may now disconnect.

Yeah.

Jonathan Neman: We do have a very robust pipeline over the next couple of years, and we made the strategic decision to kind of cherry-pick the best. Approximately 20 restaurants, but do have some flexibility depending on how things go to accelerate. We are planning a re-acceleration into 2027. Not all the way to the 15% unit growth, but do expect some reasonable step up from the 20-ish stores in 2026 into 2027. If we are able to inflect comp and feel really good about our overall operations and how we're delivering on the experience, we do have the potential to slightly increase next year's unit count. Your next question comes from the line of Brian Harbour of Morgan Stanley. Your line is open. Hi, thank you. This is Kelly Merrill on for Brian. I'm just curious, can we get an update on loyalty and where that stands today?

[noise].

Yeah.

Jonathan Neman: I think on the last call, you noted it as an uplift to the beginning of Q3. Just wondering if that's sustained throughout the quarter or if you're seeing anything different now. Yeah, we've been generally pleased with loyalty. We just hit our six-month mark. We are seeing continued activations that are almost 20,000 per week in terms of new customers, and we have seen some frequency increases of those loyalty members. We are right now in the process of really perfecting the different customer journeys and how we can get them to be more personalized, and really understanding the different promo levers. One of the things you will see us do, especially in this kind of cost-conscious environment for consumers, is lean a bit more on certain kind of breakthrough promos to drive acquisition. You'll see us trying and testing a bunch more things.

Jonathan Neman: With a lot of discipline, making sure that it can be creative, but still, I'd say, very early stages of the loyalty program. Over the next six months, we expect that to be more of a comp driver for us, especially as some of the overhang from the Sweetpass Plus starts to fall off. It's really about how we leverage that data. Very excited about Zipora, we call Zip, being here and her expertise in loyalty and CRM. We see a lot of opportunity to kind of leverage that digital flywheel. Your next question comes from the line of Jeff Bernstein of Barclays. Your line is open. Hi, this is Anisha on for Jeff. With only one quarter remaining in the year, restaurant-level margins were cut significantly. Can you break down what's driving that, if it's labor deleverage, commodity inflation, or other factors?

Jonathan Neman: Yeah, you're right. It's about half of sales deleverage. The next biggest piece is the protein increase. We have about 140 basis points in protein related to the increased portions of chicken and tofu. Those we plan to offset with supply chain initiatives and restaurant initiatives. We have tariffs, which we expect to hold at about 50 basis points. Thank you. Your next question comes from Teddy Farley of Goldman Sachs. Your line is open. Thanks for taking the question. One more on the loyalty program for me. Is the pricing and menu architect review inclusive of a review of the rewards redemption stack for S3 Rewards? Just kind of making sure that you're competitive versus peers with value, not only on the core menu, but also with regards to the point redemption opportunities. Thanks. Yes, absolutely. It's a really good point.

Jonathan Neman: We've gone in with relatively modest programmatic benefits. It gives us a lot of opportunity to move up and also leverage more on the personalized offers in CRM. We are evaluating all of it, including the potential for tiers and other benefits for members. The loyalty program will be a huge lever for us. The one thing I will add on loyalty, which was in the prepared remarks, is that we recently rolled out the ability to scan to pay. The good thing about that is we're now able to very seamlessly use loyalty in store. We're capturing more since we've done that, and we are seeing a step up of customers using loyalty in restaurants. It also helps us from a throughput perspective. A lot more improvements are coming on that side.

Jonathan Neman: In our digital experience, we have a lot of exciting things planned over the next six to 12 months to continue to drive that digital flywheel. Awesome. Thanks. With no further questions, that concludes our Q&A session and today's conference call. We thank you for your participation. You may now disconnect.

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