TenQ

The Sweetgreen story

Sweetgreen operates a salad, bowl, and plate restaurant chain whose central question is whether better restaurant execution, digital loyalty, and Infinite Kitchen automation can rebuild profitability as expansion slows.

Sweetgreen stock reportTenQ Score 12/36 · every chart and check from its filings
  • $10.04share price, last close
  • $1.2Bmarket value
  • 12/36TenQ Score checks passed

The story in brief

  • Restaurant focus deepens. Sweetgreen transferred its Spyce automation business to Wonder for $100 million in cash and preferred shares valued at $86.4 million, retaining access to Infinite Kitchen through a long-term agreement.
  • Expansion masks weaker demand. Revenue rose 3.8% in the quarter to June 2026, but same-store sales declined 6.2% and restaurant-level profit margin fell to 13.1% from 18.9%.
  • Cash generation remains absent. Over the last twelve months, free cash flow was -$116 million against cash and short-term investments of $143 million.

What drives the business

  • Sweetgreen owned and operated 281 restaurants across 24 states and Washington, D.C., as of December 28, 2025, offering customizable salads, bowls, and plates through a standardized ingredient system and regional supply networks.
  • The December 2025 transfer of Spyce to Wonder shifted the focus toward core restaurant operations, while a long-term supply and services agreement preserved access to Infinite Kitchen automation.
  • Its Sweet Growth Transformation Plan emphasizes restaurant execution, food quality, personalized digital engagement, and disciplined investment rather than expansion alone.
  • In the quarter to June 2026, revenue reached $192.7 million, with $18.4 million of incremental revenue from 36 net new restaurants opened during or after the comparable period offset partly by an $11.2 million decline in comparable restaurant revenue.
  • Digital revenue reached 66.3% of revenue from 60.8% a year earlier, while owned digital revenue rose to 38.8% from 33.4%, a measure that also includes restaurant purchases using SG Rewards scans.

What the price assumes

At $9.16, the reverse DCF cannot measure an implied growth rate because free cash flow and operating earnings are negative, leaving the valuation dependent on future profits.

The $1.1 billion market value represents 1.6x revenue, against revenue growth of -0.6% over the last twelve months and annual growth of 13.1% over the last three years.

Sweetgreen passes 0 of 6 TenQ Value checks, with a free cash flow yield of -10.7% against the check's requirement for a yield above 3%.

What could change the story

  • The fiscal 2026 outlook reflects weaker demand for fresh prepared foods following the multistate cyclosporiasis outbreak since mid-July, with the pace and timing of recovery uncertain.
  • In the quarter to June 2026, traffic declined 2.0% and product mix declined 4.2%, while promotions, higher ingredient usage, and larger chicken and tofu portions pressured restaurant profitability.
  • Restaurant-level profit excludes corporate expenses and other costs, and the last twelve months' operating margin of -21.4% shows that positive restaurant margins have not translated into operating profitability.
  • The first half of fiscal 2026 included a gain on disposal of business, so reported net profitability does not by itself establish recurring operating earnings or cash generation.
  • Sweetgreen passes 1 of 6 TenQ Financial health checks, with cash covering 1.23 years at the measured burn rate, while continued Infinite Kitchen deployment depends on timely and cost-effective technology supply and support.

What to watch next

  • The next releases will show whether traffic and menu mix recover toward fiscal 2026 guidance for same-store sales change between (8.0)% and (7.0)%, particularly after the demand disruption linked to food safety concerns.
  • Ingredient usage, promotional activity, and restaurant costs will test guidance for restaurant-level profit margin of 10.5% to 11.0% and Adjusted EBITDA between $(27.0) million and $(23.0) million.
  • Sweetgreen expects approximately 13 net new restaurants in fiscal 2026, about half featuring Infinite Kitchen, making opening progress, automation deployment, and cash use important measures of its more restrained expansion.

Sources

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