Sweetgreen (NYSE:SG), the modern fast food chain, reported a 23.7% year-over-year (YoY) increase in Q3 FY2023 revenues, reaching $153.4 million. Despite the growth, the figures fell short of analysts' expectations, causing a 2.27% decline in the company's share price to $10.78 per share.
Although Sweetgreen missed its revenue targets, it posted a positive Adjusted EBITDA and an increase in its GAAP gross margin from 16% to 19%. The company also reported a 4% YoY growth in same-store sales and added 45 new store locations, bringing the total to 220.
However, Sweetgreen's full-year revenue guidance of $580 million and GAAP loss of $0.22 per share also did not meet estimates. Despite this, CEO Jonathan Neman highlighted the strong performance of the quarter with over 20% revenue growth and positive adjusted EBITDA.
In terms of expansion, the company has seen significant progress. Sweetgreen increased its number of stores by 25.7% to 220 locations in the most recent quarter, indicating a healthy demand for its meals and opportunities for further growth. Over the past eight quarters, the company has averaged a 24.7% annual increase in new locations.
Despite having a market capitalization of $1.17 billion and more than $274.7 million in cash on hand, Sweetgreen’s Q3 results were considered mediocre as gross margin, revenue, and full-year revenue guidance fell short of Wall Street's expectations.
Sweetgreen's same-store sales growth has consistently outpaced the broader restaurant sector, averaging a 10.4% YoY increase over the last eight quarters. This is largely attributed to its quality-centric menus offered at premium prices.
Founded in 2007 and led by CEO Jonathan Neman, Sweetgreen has seen an impressive annualized revenue growth rate of 45% over the past four years due to its smaller base, despite the recent miss on the revenue targets.
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