Layoffs Hit Sweetgreen as Healthy Salad Chain Lowers 2022 Guidance
Sweetgreen announced its Q2 financial results, reporting that revenue grew 45% year over year, but says it experienced a “softness” around Memorial Day
Sweetgreen, a healthy lifestyle salad chain aiming to build healthier communities with real food, has released its financial results for the second quarter, stating that the external environment has become more challenging and uncertain and announcing layoffs. The upscale eatery made its Wall Street debut just last fall.
On Sweetgreen’s recent earnings call, the healthy fast casual restaurant brand attributed its slowdown in sales growth due to an unprecedented increase in summer travel, recent waves of Covid cases, a slower than expected return to office, and an erratic urban recovery.
“We are pleased with our Q2 performance. From a profitability standpoint, we delivered above our expectations. Restaurant-level margin and Adjusted EBITDA on both a year over year basis and since Q1 ’22 saw meaningful improvements,” said Mitch Reback, CFO. “However, we began to see softness in revenue around Memorial Day and are therefore lowering our 2022 guidance. We will continue to manage corporate overhead and efficiently run our restaurants as we work towards profitability.”
For fiscal year 2022, Sweetgreen says it now anticipates at least 35 net new restaurant openings and revenue ranging from $480 million to $500 million.
In a move to manage operating expenses, Sweetgreen announced layoffs of approximately 5 percent of its staff at its support center and reduction in its real estate footprint by moving to a smaller office space.
Despite current challenges, the healthy eatery concept, founded in 2006 by three Georgetown University students, intends to expand into both new and existing markets. Sweetgreen representatives stated on the earnings call that the company will also look to improve digital experiences in order to add new customer channels and increase restaurant volume, as well as solidify its brand by promoting healthy lifestyles.
“Thanks to our team’s execution, second quarter revenue grew 45% year over year and restaurant level margins increased to 18.5%,” said Sweetgreen co-founder and CEO Jonathan Neman. “The team remains laser focused on operational discipline and our path to profitability. We will continue to invest in our key strategic initiatives to drive long term growth and are committed to being a positive force on the food system, while creating a sustainable and durable brand and business loved by customers.”
Sweetgreen will open a digital-only pick-up kitchen in Washington, D.C.’s Mount Vernon neighborhood in September for “hyper convenience.”
