Sweetgreen sees positive results from price increases in Q1
Sweetgreen is benefiting from price increases as the Los Angeles-based brand – which implemented a 10% price increase over the course of a year – increased same-store sales by 35% for the first quarter which ended on March 27.
The fast food chain implemented a 6% increase in January 2022 and 4% in January 2021. However, Sweetgreen saw “virtually no inflationary pressure against the 6% price increase” during the first quarter according to Chief Financial Officer Mitch Reback.
“We have a very vegan menu and it’s a locally sourced vegan menu. And in the environment we’re in, those are two big advantages,” Reback said. “Around 88% of our feed is under contract…right now we are seeing pressure on our costs, particularly in chicken, sunflower oil and distribution. »
Sweetgreen expects sales to decline in the second quarter due to inflation, Reback warned. The company expects same-store sales increases for the rest of the year to be closer to 20% to 26%.
“The path to recovery is neither linear nor consistent; however, the strength of our brand, product, digital platform and team gives us confidence to reach our goal of 1,000 restaurants in the United States by the end of the decade. We are well equipped and steadfastly focused on building a sustainable business and on our path to profitability,” Reback said.
The new stores in Colorado and Florida have been standout performers in terms of new markets for Sweetgreen, the company said. With suburban stores outperforming city stores, 90% of the pipeline for 2022 is suburban focused.
“While our urban stores have recovered, we haven’t seen any change in our suburban stores, which is really encouraging,” Reback said.
Since the end of the fourth quarter, 90-day retention of team members has increased 10%, and by the end of the first quarter, stores were 95% staffed.
During the quarter, 66% of total revenue came from digital sales, with 43% of total revenue coming from the channel’s own digital channels.
“We want to make the Sweetgreen app the best place to order Sweetgreen,” said CEO Jonathan Neman.
The first “Sweetlane,” a Sweetgreen location with a drive-through pickup lane, will open in Schaumburg, Illinois next year. There, customers will be able to place orders in advance through the app.
“Our native delivery channel was our fastest growing channel in the quarter, outpacing third-party delivery growth,” Neman said.
It’s not the only new store prototype using digital channels. Also on Friday, Sweetgreen announced the pilot for its first pickup kitchen, in Washington, DC, where customers can pick up digital orders. The location will not have counter service or indoor catering.
” We are waiting [the Sweetlane and the pickup kitchen] to meet or exceed our return on capital,” Neman said.
The chain also added 98 new outposts, or delivery-only locations, in the first quarter, ending the quarter with 579 total outposts.
Sweetgreen is also experimenting with loyalty. After ending its loyalty app in January 2021, the chain reintroduced the app in December and piloted a program called Sweetpass in January, allowing customers to purchase a $10 pass valid for 30 days, which earns them a $3 credit on $9.95 app or website orders or Suite.
During the few weeks it was active, 16,600 passes were sold. Ninety percent of customers surveyed said they would buy the pass again. New stale and low-frequency customers accounted for 60% of Sweetpass users and records show they placed five additional orders, according to Neman.
“We believe a redesigned loyalty program that includes both subscription and personalized promotion capabilities will have a forced multiplier effect when you combine it with our healthy menu designed to be eaten every day,” he said. he declares.
Earlier this week, Sweetgreen launched a partnership with Phoenix Suns player Devin Booker. Over the next few weeks, customers will be able to find orders from Sweetgreen employees on TikTok and discover even more ways to personalize their bowls.
Sweetgreen currently has over 150 locations.