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Operator
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 one on your telephone keypad. If you would like to withdraw your question, press the pound key. As a reminder, today's call is being recorded. I will now hand today's call over to Rebecca Nunu, VP, Head of Investor Relations. Please go ahead.
Rebecca Nunu
Thank you and good afternoon, everyone. Here with me today are Jonathan Neiman, co-founder and chief executive officer, and Mitch Reback, chief financial officer. Before we begin, we have a couple of reminders. Our earnings release is available on our website at investor.sweetgreen.com. During this call, we will be making comments of a forward-looking nature. Actual results may differ materially from those expressed or implied as a result of various risks and uncertainties. For more information about some of these risks, Please review the company's SEC filings, including the section titled Risk Factors, in our latest annual report on Form 10-K filing. 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. Additionally, we will be discussing certain non-GAAP financial measures, which are an addition to and not a substitute for measures of financial performance prepared in accordance with GAAP. A reconciliation of these items to the nearest U.S. gap measure can be found in this afternoon's press release available on our IR website. With that, it's my pleasure to turn the call over to Jonathan to kick things off.
Jonathan Neiman
Thank you, Rebecca, and good afternoon, everyone. My passion to connect people to real food is why I started Sweetgreen with my co-founders Nathaniel and Nicholas. In 2007, we began our journey to build a category-defining brand with the goal of serving delicious meals to local communities. What started as a single restaurant in Washington, D.C., now has 225 restaurants in 18 states across the country, as well as D.C. We are creating and defining the category of better for you fast casual dining, while remaining acutely focused on building an innovative and enduring business that drives both growth and profitability. In 2023, we were aggressive with initiatives that we believe will benefit us for years to come, such as Menu Innovation, SweetPass, and the Infinite Kitchen. We ended the year with increasing momentum that gives me optimism for the year ahead. We reported sales of $584 million, representing 24% year-over-year growth. Total digital sales represented 59% of our total fiscal year revenue, with over 60% of those sales coming via our own digital channels. Restaurant-level margin for the fiscal year was 17.5%. On a full year basis, our adjusted EBITDA loss was $2.8 million, representing a $47 million improvement over the same period in 2022. For 2024, we are guiding adjusted EBITDA profitability. This profitability milestone will allow us to reinvest into the business with the goal of accelerating our growth. Our focus remains on building a category-defining brand that has tremendous value for our customers, team members, and our shareholders. Our strategic priorities are quite simple. One, Continue building our brand by creating great products and guest experiences. And two, expand our connection to guests by building and operating great restaurants. If we do both of these things well, aided by best-in-class technology, we should continue to amplify our already strong brand, widen our customer reach, drive customer traffic, and in turn, continue to drive margin expansion. Our brand has significantly greater reach than our current physical footprint of 225 restaurants. In 2023, we entered three new markets, Milwaukee, Tampa, and Rhode Island, and we are pleased with how our 2023 class is tracking towards our financial targets. So far this year, we've opened four restaurants, including our first of many in Seattle, Washington. Totem Lake, a suburb of Seattle, has been performing in line with our top urban restaurants in recent weeks. Openings like these reinforce our confidence that our brand resonates across the country. Core to Sweetgreen's culture is innovation. We have been consistently ahead of the market in culinary and supply chain development, as well as introducing new technology to drive a better customer experience, both online and in our restaurant. In the fourth quarter, we opened our second Infinite Kitchen in Huntington Beach. The Infinite Kitchen continues to deliver many benefits to our operating model, such as higher throughput, better order accuracy, portioning consistency, and substantially lower team member turnover. In addition to these benefits, we've also seen the average ticket at both locations more than 10% higher than their respective markets. As a result, we are seeing the Infinite Kitchen continuing to deliver margins well ahead of our internal projections. We are proud that we have built the industry leader in restaurant automation with the Infinite Kitchen. We are confident that it will unlock revenue growth and restaurant-level margin expansion and drive increasing returns for our shareholders. To be clear, we have a clear path to 20% plus four-wall margins with our current operating models. and we believe restaurants with the Infinite Kitchen will be accretive to restaurant-level sales and margins. We remain focused on traffic driving initiatives to drive positive same-source sales growth. Our multifaceted approach to driving traffic includes accelerating culinary innovation, continuing to activate our rewards program, improving throughput, focusing on running great restaurants, as well as increasing advertising spend in 2024 while maintaining G&A leverage. We see menu and culinary innovation as a key lever to expand customer reach, positively impact seasonality, and drive traffic. While Sweetgreen has historically been known as a salad company, we're broadening our menu while remaining committed to our ethos of building healthier communities by connecting people to real food. On October 24th, we launched protein plates featuring new proteins such as herb-roasted chicken and miso-glazed salmon. While early, plates have exceeded internal expectations. Our plates category, with the tagline, you don't have to be a salad person to be a sweet green person, was designed to appeal to a wide audience. We are pleased with the early data points to broaden our brand appeal. In the first 60 days after introducing protein plates, we've seen our dinner date part grow with plates. Plate sales are over-indexing in markets such as Texas and the Southeast. On February 6th, we launched our test of caramelized garlic steaks. a slow-roasted, marinated, tender cut of grass-fed, grass-finished tri-chip steak finished with slow-roasted caramelized garlic and onion in Boston. If steak passes our market test process, we will look to roll this out later this year. We've made great strides in marrying customer insights with menu innovation, and we have a multi-year menu innovation roadmap. I'm pleased with the operational strides we have made over the last few quarters, and in particular, how it has translated into frontline growth. there is still opportunity to capture additional demand, particularly at peak periods, and we've identified additional areas to drive throughput, including improving labor deployment. Our average head coach tenure continues to improve, and stability in restaurants for both our coaches and team members is the highest it's been in recent years. This, coupled with our decision to adjust head coach schedules to spend more time on the floor, is translating into improved operations and margins. Additionally, launching Tipping last year has supplemented team member wages by nearly $2 an hour. I want to take a moment to welcome our new Chief Operating Officer, Rossanne Williams. Rossanne is an accomplished global operations executive, bringing more than 30 years of experience leading international retail businesses. She brings a proven track record in driving sustainable growth of global iconic brands. Rossanne's passion for Sweetgreen's mission will further our work of bettering the communities we serve. I look forward to partnering with Rossanne and bringing her incredible skill set to our leadership team as we embark on the next phase of our growth journey. In the fourth quarter, we delivered our 11th consecutive quarter of over 20% sales growth and significantly expanded our restaurant-level margins year over year. We continue to demonstrate operationally and financially our commitment to building a sustainable business with a category-defining brand known for quality and transparency. What gets me excited today is the innovation you're seeing from the company. The infinite kitchens and our expanded menu offerings are just two powerful examples that, when coupled with the significant improvements we have made to our operations, have the potential to unlock significant value in the years ahead. My gratitude to all of our team members who continue to deliver a win-win-win for our customers, communities, and stakeholders. Because of our team, we had a great 2023 and achieved several milestones, including launching ProteinPlate, launching Two Infinite Kitchens, and expanding our unit economics. I couldn't be more optimistic and excited for the year ahead. And now, I'll turn it over to Mitch to walk through the financials.
Rebecca
Thank you, Jonathan, and good afternoon, everyone. In 2023, we set out to strengthen our financial model as we guide towards adjusted EBITDA profitability in 2024. Total revenue for the fourth quarter was $153 million, up from $118.6 million in the fourth quarter of 2022, growing 29% year-over-year. Our 11th consecutive quarter of over 20% year-over-year sales growth. For the quarter, same-store sales grew 6% year-over-year. This consisted of a 5% benefit from menu prices and a 1% benefit from traffic and mix. After a sluggish October, our momentum increased each month into quarter. Our average unit volume in the fourth quarter was 2.9 million. Restaurant-level profit margin in the fourth quarter was 16.2%, and more than 500 basis point improvement from the fourth quarter of 2022. Restaurant-level profit for the fourth quarter was 25 million, nearly double from a year ago. Our restaurant-level profit margin for the year was 17.5%. For a reconciliation of restaurant-level margins to comparable gap figures, please refer to the earnings release. This year, we've opened 35 net new restaurants, including one new restaurant in the fourth quarter, for a total of 221 restaurants at the end of 2023. In the first quarter of 2024, we opened four restaurants, including Totem Lake, a Seattle suburb. In 2024, we anticipate opening between 23 and 27 new restaurants. Approximately seven new restaurants will contain the Infinite Kitchen. Our restaurant openings will be weighted towards the back half of the year, with approximately 40% of the openings in the second half containing the Infinite Kitchen. In 2025, we plan to re-accelerate our unit growth. Food, beverage, and packaging costs were 28% of revenue for the quarter. a 100 basis point improvement from the fourth quarter of 2022. This improvement was primarily due to menu price increases and a decrease in both chicken and fish costs. Labor-related expenses were 29% of revenue for the fourth quarter, a 300 basis point improvement from the comparable period in 2022. This improvement is primarily attributable to head coach schedule optimization we began implementing in the spring. Occupancy and related expenses were 9% of revenue, down 100 basis points from the fourth quarter of 2022. General and administrative expense was 35.5 million, or 23% of revenue for the fourth quarter of 2023, as compared to 43.5 million, or 37% of revenue in the prior year period. This decrease in general and administrative expenses was primarily due to a $6.4 million decrease in stock-based compensation expense. Stock-based compensation for fiscal year 2023 was $49.5 million, down from $78.7 million in 2022. We anticipated declining to the mid-$30 million range in 2024 and mid-teens in 2025. The significant reduction is primarily related to the accounting treatment of pre-IPO related grants. Our net loss for the quarter was $27 million compared to a loss of $49 million in the prior year period. The $22 million improvement net loss is primarily due to a $12 million increase in our restaurant level profit, a $6.4 million decrease in stock-based compensation expense as previously discussed, partially offset by an increase in depreciation and amortization associated with additional restaurants. Adjusted EBITDA, which excludes stock-based compensation and certain other adjustments, was a loss of $1.8 million for the fourth quarter, an improvement of $16.1 million from the fourth quarter of 2022 loss of $17.9 million. This $16.1 million improvement was primarily due to an increase in restaurant-level profits and a decrease in general and administrative expenses as described previously. Adjusted EBITDA for the fiscal year 2023 was a loss of $2.8 million, representing a $47.1 million improvement over the same period in 2022. We ended the year with a cash balance of $257 million. Now turning to our 2024 outlook. For the fiscal year 2024, we anticipate the following. Twenty-three to twenty-seven net new restaurant openings. Revenue ranging from $655 million to $670 million. Same-store sales growth between 3% and 5%. Restaurant-level margins of 18% to 19.5%. And adjusted EBITDA between $8 million to $15 million. Our guidance is based on new restaurant opening pipeline being weighted to the back half of the year. Additionally, we plan to renovate three to four large urban restaurants with the infinite kitchen. These restaurants will be offline for some period of time, and we have built this revenue adjustment into our guidance. We expect these stores to grow significantly in revenue and margin in 2025 to higher throughput as well as provide significant second-order benefits, including better customer satisfaction with accuracy and lower team member turnover. Based on what we know today, we expect the Infinite Kitchen to cost between $450,000 and $550,000 and generate at least seven points of margin improvement, as well as deliver significant second-order benefits previously described. For the first quarter, we anticipate five to six net new restaurant openings, revenue ranging from $150 million to $154 million, same-store sales growth of approximately 3%, restaurant-level margins of 16% to 17%, and an adjusted EBITDA loss between 4 million to a loss of 2 million. Our same-store sales guidance reflects timing shifts for New Year's and Easter, both of which did not fall in the comparable base of Q1 2023. Additionally, January was impacted by weather throughout much of the country. As weather has normalized, our sales trends have strengthened. I am pleased with the progress we've made strengthening our financial model in 2023. We're committed to building a durable company that balances both growth and profitability. In 2023, we grew revenue 24%, expanded four-wall margins nearly 300 basis points, and improved adjusted EBITDA by $47 million as we remain committed to disciplined, capital-efficient growth. We're guiding 2024 to be our first year of adjusted EBITDA profitability. We believe this profitability milestone coupled with a healthy balance sheet will set us up for growth and expansion in the years to come. With that, I'll turn the call back to the operator to start Q&A.
Operator
If you'd like to ask a question, press star 1 on your telephone keypad. Your first question is from the line of Brian Bittner with Oppenheimer.
Brian Bittner
Thanks. Good afternoon. Congratulations. The traffic mix was positive in this quarter after being slightly negative last quarter. And I know you rolled out protein plates at the beginning of the quarter. Was that kind of the biggest driver of that underlying traffic improvement? And if so, how does the performance of that innovation inform you about your strategies to continue to drive sales in 2024, particularly as you are testing this new stake item.
spk06
Hey, Brian, thank you very much.
Rebecca
I would say in the fourth quarter, our traffic mix was together about a one-point positive, both pretty small numbers. We are very happy with the protein plates and seeing great reception of them. I think as we alluded to in the script, that's particularly been true in the new markets in the southeast. And we think it will continue to be a source of traffic growth for us in 2024.
Brian Bittner
And just on the margin, on the margins, the expansion in those restaurant margins in 23 was pretty strong up, you know, almost 300 basis points. And your 2024 restaurant margin guidance suggests, you know, more than 100 basis points at its midpoint of expansion. So we can obviously see, you know, what's happened in 23 and how you drove margins, but how do you continue this margin momentum in 24? Can you maybe unpack some of the buckets where you see the greatest opportunity to continue to improve margins on top of a really strong year in 23?
Rebecca
Yeah, thanks, Brian. I think I would say at a high level, we see the margin improvement in 2024 coming from three big sources. One, continuing to gain benefit from our labor schedule optimization, much of which was started in 2023 first quarter. We see strong improvement coming out of our new markets. They continue to grow and improve significantly from a profit standpoint. And there is some price leverage built into the model where we see approximately four points of price rolling through 2024. And we see inflation pressures in really low single digits in cogs and labor.
Operator
Your next question is from the line of Sharon Bexia with William Blair.
Sharon Bexia
Hi, good afternoon. Thanks for taking the question. I guess I wanted to come back to Infinite Kitchen and then maybe ask a question about SweetPass. The 450 to 550K, is that the cost of a retrofit? And would it be fair to assume that that would be the incremental cost on a new build as well? And if you could tell us kind of where your new build cost is running these days, that would be helpful.
Jonathan Neiman
Sure. Hi, Sharon. So on the IK cost, what we're guiding to is 450 to 550 incremental build out for a new restaurant. I would like to say that is the current cost in this current fleet. We do expect that number to come down as we continue to scale this and see some economies of scale, as well as engineer some of the costs down. So expect that to come down over time. Here, in terms of retrofits, retrofits will have the cost of the machine plus some renovations. It really depends how invasive it has to be. So it will be slightly more than that, and it really depends on the restaurant, plus there will be some downtime which we have modeled into our guide as we close some of those stores. We will be choosing some of the stores we're retrofitting will be stores with very high-demand, real big throughput unlocks, and so we're excited to see what that does, especially in some of those urban environments where we are capacity-constrained. Anything else? Does that answer your IK question before I move on to SweetPass?
Sharon Bexia
Yeah, and actually, let me ask my SweetPass question. I guess I was just curious. I remember last spring when you rolled it out, I mean, clearly your most frequent users were the ones who signed up right away. And I know at the end of September, I think, you started to implement signups in brick and mortar. So I'm just curious if you've seen SweetPass kind of neutralize or even start to benefit Mix somewhat and how you're thinking about that as you go throughout 24.
Jonathan Neiman
Yeah, so on SweetPass, I'd say, like most loyalty programs, it's a very iterative process. And I think what we've done is we've built a lot of good technology capabilities to enable a great loyalty program. We have not yet seen the benefit of that program. So something that we're actively working on are optimizations and simplifications of the program to make it simpler, better for the customer, and better for the company to drive more transactions. The bad news is it hasn't had a huge impact on our business so far. The good news is there's a lot of upside to be gained, and the investments have largely been made. And so that is a big priority for us as we look forward this year.
Operator
Your next question is from the line of Chris Correll with RBC Capital Markets.
Chris Correll
Hi. Thanks, and good afternoon. So, Mitch, you noted the improvement in sales following, I think, a softer October. Can you maybe provide any more detail on what you saw in terms of sales or comp trends over the course of the last couple of months of the year, and maybe a little bit more detail on what you're seeing quarter to date relative to the guide you provided for the 1Q? I think you also mentioned some improvement following some of the weather impact earlier in the quarter. So any detail would be great.
Rebecca
Thank you, Chris. What I would say is in the fourth quarter, what we saw was kind of a sluggish October that began to pick up momentum in November and a really relatively strong December, which gave us great outlook as we headed into 2024. January, and that's been reported by many companies, what we saw was some very strong days offset by weather day. It ended up being a relatively weak January. The business has been building pretty steadily as weather has normalized.
Chris Correll
Got it. Thank you. And then, Jonathan, you mentioned that I think performance in newer markets is tracking in line with your expectations. Could you expand maybe a bit more on how you're thinking about the balance of new and existing markets here from the development picture here going forward? Sure.
Jonathan Neiman
So, in terms of the newer markets, what's been good to see recently is a lot of those newer markets we've seen a lot of momentum in. Places where, you know, we had talked before had been open historically a little bit lower than we expected in the southeast in Texas. Some of our fastest-growing markets today gives us a lot of optimism and confidence as we think about our longer-term TAM. In terms of new markets, this year we look to open three new markets. We opened Seattle. We're going to be opening in Charlotte, and we're going to be opening in Columbus. So those three markets expect a pretty similar cadence as we go forward, kind of two to three new markets. And there's just so much opportunity still in our existing markets to continue to densify and extend. So just a lot of runway for us, and we'd like to balance our risk between new and existing. So expect a very similar cadence between the two. One thing that, I mean, just to add, sorry, you know, Mitch mentioned a reacceleration of our pipeline. You know, we very intentionally slowed down this year to better integrate the Infinite Kitchen, but we do expect A significant uptake next year in our pipeline and longer term do expect to get back to at least 15% unit growth each year. And hopefully we can, as we get some confidence, we can, we can begin to expand that. 1 of the ways in which we're doing that is we've, we've developed some smaller, smaller format unit. Lower cost can go more places and with that. With that smaller format unit, we think there's a lot of opportunity to continue to accelerate building out our footprint.
Operator
Your next question is from the line of John Ivanco with JPMorgan.
John Ivanco
Hi, thank you. You know, so thank you for just mentioning the re-acceleration and growth in fiscal 25. Is it, you know, just because most of us probably have our models anchored on this, is there at least a loose range you know, that we should be thinking at fiscal 25 that you'd be comfortable, you know, seeing in the models at this point when we talk about significant?
Jonathan Neiman
I mean, what I can say is really what I just said is we'd like to be at that at least 15% unit growth per year number. So that kind of gives you an idea of where we should be landing.
John Ivanco
All right. And that obviously, that's just not a long-term number. That's also a 25 number. So that's helpful. Right, yeah. Okay, perfect. All right, I got that. Maybe I missed it. And then secondly, if 40% of units to open in the second half will have infinite kitchen, is it fair to assume that a number like that would be the mix going forward? Do you expect it to kind of tick up even higher?
Jonathan Neiman
We'd expect over time for it to tick up higher, especially as we're able to bring down the cost of those units. So, you know, over time, we'd like them to be as many restaurants as possible. We've seen such benefits, you know, in terms of lower turnover, more consistent customer experience in many places, much higher throughput. And so we hope that we can get it. We can eventually put it as many places as possible, but we want to make sure it makes sense from a capital allocation perspective.
Catherine
So the answer is hopefully yes.
Operator
Your next question is from the line of Andrew Charles with TD Cowan.
Andrew Charles
Hi, congrats on the hiring of Rossanne. I'm curious, can you help me understand what her priority is going to be? Is it more on the throughput side? Is it on Infinite Kitchen, margin improvements? Just love your thoughts.
Brian Bittner
Sure.
Jonathan Neiman
So Rossanne, we're really pleased to have her join us. The role she's taking on is a COO, and so she'll be leading our field operations, our operations services team. our store development team and our supply chain team. So really giving her a lot of ownership around the four walls of our business. Key priorities for her will be driving transaction growth through great operations and great customer experiences in restaurants. That's probably number one. Number two would be re-accelerating our pipeline with great unit economics. So driving down the capex of our stores, figuring out the smaller format units that can help us with that acceleration. And, of course, in all of that, also driving margins is a huge part of it between both owning supply chain as well as the in-store experience.
Rossanne
We think there's a lot of opportunity for margin expansion at the restaurant level. Got it. Thank you very much.
Operator
Your next question is from the line of John Tower with Citigroup.
John Tower
Great. Thanks. I appreciate you taking the questions. First, maybe circling back to the conversation on infinite kitchens, just curious. You mentioned you're seeing so far a 10% or so bump on checks at stores, a couple of stores that you have, the Infinite Kitchen. And I'm just curious, is that kind of when you think about the AUV potential of these new stores with the Infinite Kitchen, like how are you penciling those out for targeted returns?
Rebecca
Hey, John, thank you for the question. We are seeing about a 10% bump in the two stores that have the IK. We believe that that's largely coming from our kiosk ordering that those stores have. We have not modeled that into any of our IK calculations at this point. We kind of consider that more or less a second-order benefit.
John Tower
Got it. Thank you. I appreciate that. And then in terms of what you mentioned, John, the idea of getting into smaller format units Can you just talk about the opportunity you believe there is for, you know, driving down the new build costs? Obviously, you'll be adding infinite kitchens to a number of these, which will bring them up relative to the historic base. But, you know, I think there's the targeted historically about $1.2 million in build-out costs, net FTI. So, you know, how much further lower do you feel like you can get that?
Jonathan Neiman
Yeah, so pre-IPO, pre all the inflation that we saw, we were targeting about $1.2 million per store for a classic restaurant, net of TI. Today, we're seeing that number closer to $1.5 million. We are working very aggressively to bring that number down. I'm not going to guide to exactly what that is, but it's a very big priority for us to bring that capex number down partially through smaller units. partially through other value engineering and optimizations. And, of course, with any of those, if it's an infinite kitchen store, you have to add the incremental cost of the infinite kitchen, which, again, with scale, costs will come down from that 450 to 550 level we described.
Operator
Your next question is from the line of Katherine Griffin with Bank of America.
spk09
Hi, thanks for the question. I wanted to ask just like a clarifying question on the retrofitting restaurants with IK. How should we think about what that means for throughput and a lift to sales at those stores?
Jonathan Neiman
You know, it's one of the things we're really looking to test in those restaurants. You know, the Infinite Kitchen can handle about 500 bowls per hour. So it is very, very fast in the stores that are there today. They're in two suburban deployments, so we're not seeing that level of demand. But some of the places that we're going to be testing it this year are going to be those heavy urban environments where it does have that. So we do expect a sales lift in those restaurants. We're not going to we're not ready to say exactly what, but that's one of the key things we're trying to understand. As we mentioned, we've been able to learn a lot about customer experience. savings on labor, savings on getting things more accurate, lower turnover costs, less hiring because the teams are just smaller, but the throughput and the greater capture of revenue is something that we'll be able to talk a lot more about later this year.
spk09
Okay, thank you. And then just another question on IK, just on the margin benefits that you're seeing, I think it's clear definitely on the labor side sort of where you're getting the benefits, but I'm curious if there are If there's anywhere else, you know, in the restaurant operating costs where you're seeing, you know, some benefits from IK versus the traditional stores, whether it's COGS or anywhere else. Yeah.
Rebecca
Thanks, Catherine. The majority of it, of course, is labor, but there is an improvement of COGS that comes from perfect portioning.
Catherine
Yes. Our next question is from Brian Harbor with Morgan Stanley.
spk06
Yeah, thank you. Good afternoon, guys.
spk03
John, could you elaborate maybe just on your comments about SweetPass? Is the reason there hasn't been an impact yet just because sort of the cost of it isn't yet offset by the benefits, or have sort of frequency, what you've seen with frequency been different than what you might have expected? And, you know, what do you think kind of needs to change with that to see more of those benefits over time?
Jonathan Neiman
Yeah, so when we talk about SweetPass, we're talking about the overall program, both the membership, the SweetPass Plus, and the core SweetPass program. The Plus program, we are seeing some incrementality out of those guests, but it's not a huge, you know, it's not a huge member base. So it's not really driving the overall transaction growth in a big way. When I speak to the overall optimization of SweetPass, I'm talking about the core rewards program. And I think there's a lot of things we can do to improve it. Rewards that are simpler, the better experience in the app, more one-to-one personalization of a lot of that. And I think there's a lot we can do around CRM and campaigns to drive that incremental visit. So look for some pretty significant changes and optimizations coming that we will be working on. We do think it can be a really big transaction driver for us, as well as a customer acquisition driver for us. So the good news, as I mentioned, is, you know, we built the technology. The tech stack is there, you know, and there's a pretty long time in investment in order to get that.
Rossanne
And we're able to use the foundation in order to improve this program to work for us.
spk08
Okay.
spk06
Thanks. Makes sense.
spk03
And then, you know, your comments about sort of Infinite Kitchen can do 500 bowls per hour. Do you have a lot of stores that you think are, in fact, kind of throughput constraints? And I guess my question is, you know, does it make sense to put that in the majority of stores or, you know, or some suburban stores, for example, that
Jonathan Neiman
you know maybe it's it's not warranted right i guess i'm just curious where you think it's kind of more impactful versus perhaps less impactful to a given store yeah so the technology obviously works best in higher volume high throughput locations that's where you see the most leverage but it also i mean the two places that we've been testing it in are kind of average for our fleet average locations in suburban in suburban neighborhoods and it We intentionally tested it there because we wanted to make sure that it would work not just in these urban locations, but really all over the country. So the throughput is an extra benefit in those super high volumes of stores. Think about the Midtown New York type of restaurants. But we also have a lot of confidence that it will work in suburban neighborhoods. You may not hit that 500 per hour peak, but you still get all of the other benefits around less labor, less turnover, less CX costs, better portioning. I mean, the food quality is better.
Rossanne
Many of you have been there and tried it, but we think that there's a ton of opportunity for this over time.
Operator
Your next question is from the line of Brian Mullen with Piper Sadler.
Brian Mullen
Thank you. Just another question that I think it should In the prepared remarks, Mitch, I think you said it would be a 7% benefit to margins, but just a clarification, what is that 7% lift related to? Is that related to your current store margins, or is that lift relative to maybe the 20% target that you have for the existing base stores?
spk06
That 7% at some points is relative to the current fleet. Okay. Thank you for that.
Brian Mullen
Could you just talk about how things are progressing with your manufacturing partner? You know, are there complicating factors that come up along the way? Are things going smoothly, generally speaking? And then, just as it stands today, what kind of lead time do they require from you if you wanted to order new units?
Jonathan Neiman
So, it's been a very smooth process. We feel very good about the manufacturing and the supply, and we're excited to get these new units up and deployed. There is a bit of a lead time for new units, but we do have supply lasting us for quite a while, and we do have confidence that we can, you know, we will be able to put in the orders to be able to scale this in the way we need. So we don't see manufacturing being a huge issue for us at this point. A lot of it has been de-risk in our mind. And as I mentioned, we do see a lot of cost savings as we're able to build more units. We do see economies of scale in our ability to bring the cost down.
Operator
This does conclude today's call. Thank you for joining. You may now disconnect your lines.
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