Sweetgreen, Inc.

joining us and welcome to the Sweetgreen Incorporated first quarter 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Rebecca Nunu, Vice President, Head of Investor Relations. Please go ahead.

Thank you, everyone, and good afternoon. Speaking on today's call will be Jonathan Neiman, co-founder and chief executive officer, and Jamie McConnell, chief financial officer. Both will be available for questions during the Q&A session following the prepared remarks. Today's call is being webcast live and recorded for replay. The earnings release is available on the investor relations section of Sweetgreen's website at investor.sweetgreen.com. I'd like to remind everyone that the information under the heading forward looking statements included in our earnings release also applies to our comments made during the call. 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. We also direct you to our earnings release for additional information regarding our use of non-GAAP financial measures, including reconciliations of non-GAAP financial measures mentioned on the call with their corresponding GAAP measures. Our earnings release can be found on our investor website. And now I'll turn the call over to Jonathan to kick things off.

Thank you, Rebecca, and thank you everyone for joining us today. We entered 2026 focused on executing our sweet growth transformation plan with a clear priority on strengthening our fundamentals and improving execution across our restaurants. As we communicated last quarter, this work takes time to translate into results, and we expected the first quarter to be the most challenging. Given a difficult comparison to the prior year ripple fries launch weather related headwinds and more work to be done on our transformation plan. While the quarter was pressured we saw improvement as the quarter progress, but the further step up in April reflecting early progress from the actions we have underway through the sweet growth transformation plan. As restaurant operations continue to improve, we are bringing innovation to market with stronger discipline. Yesterday, we launched wraps nationwide following a rigorous stage gate process that validated both the consumer opportunity and our ability to execute in restaurant. Test results were strong, driving incremental traffic from new and returning guests while expanding our ability to serve more occasions. Now turning to results. For the first quarter of fiscal 2026, revenue was $161.5 million with comparable sales down 12.8%. we opened four net new restaurants, including three infinite kitchens. Restaurant-level margin was 10%, and adjusted EBITDA was a loss of $8.1 million. As we moved into April, traffic trends improved, supported by stronger execution in our restaurants, the performance of our Chicken Sesame Crunch Bowl, and early contribution from wraps and test markets, which ran in about a quarter of our restaurants, including New York, our largest market. This reflects a deliberate sequencing, strengthening operations first to build a more consistent foundation, and then layering in menu innovation to drive more durable traffic. New York is an important example of the progress we are beginning to see. Given its significance to our footprint, it has been a key focus as we strengthened leadership, improved head coach stability, and drove more consistent execution through Project One Best Way. While we still have work to do, transaction trends improved in April, supported by better operations in the RAPS test. We view the progress in New York as an early signal of how the broader system can respond as we continue to execute through the RAPs launch and beyond. We know there is more work ahead of us, and we remain focused on executing against the five strategic priorities under our Sweet Growth Transformation Plan. One, operational excellence. Two, food quality and menu innovation. Three, personalized experience. Four, brand relevance. And five, disciplined profitable investment. Starting with operational excellence, which remains the foundation of our ability to deliver a consistent high quality and hospitable experience for our guests. We continue to strengthen consistency across the system to project 1 best way, which defines what great looks like at sweet green across craveable food, hospitality, operational flow and people culture. The program is grounded in both customer and restaurant-level performance data and is focused on building scalable systems and routines that allow every restaurant to execute at a high level, not just the best ones. Work like this takes time to translate into results, but we are beginning to see improvement in several key operational metrics, including throughput during peak periods, ingredient availability, and fewer quality complaints, reflecting stronger operational readiness across the fleet. At the same time, we recognize there's still meaningful opportunity ahead, and we will continue raising the bar as performance improves. That stronger foundation has been critical as we move into the national rollout of RAPs. We have taken a disciplined stage gate approach to get here, with teams spending months in development and testing, including extensive work in restaurants to build capability, train teams, and ensure operational readiness. One of the core principles for our RAPs experience is that the first bite should be the best bite. To deliver on that consistently, we refined our preparation process through multiple rounds of testing and iteration, including in-restaurant ops shakedowns to validate equipment, positioning, and workflows. This work ensured we can deliver on quality while maintaining throughput at peak. We then validated the concept through a multi-month market test across approximately 70 restaurants, where we saw strong guest response alongside solid execution in the field. The energy in the field is strong, and we are encouraged by how teams are performing out of the gate. Our focus remains on execution, ensuring every wrap is made right, throughput is strong, and the guest experience is consistent from day one. This quarter, we brought our New York market head coaches together for an impact day focused on reconnecting our restaurant leaders to the guest experience through culture and hospitality. Two weeks ago, we also brought our area leaders together for a two-day summit to reinforce consistent execution across markets. The focus was on three major themes, strengthening head coach performance, building a culture of hospitality where speed and service work together, and delivering consistent food quality that drives repeat visits. Together, these sessions are helping create greater alignment on the experience we want to deliver and the standards required to deliver it every day. To continue this focus, we will bring our head coaches together for impact days across our remaining regions in the coming weeks. What stood out most to me from impact day and the area leader summit was the importance of the connection between our restaurant support center and our field teams. Delivering a better guest experience starts with strong alignment between the teams closest to our guests and those supporting them. Our head coaches and area leaders are closest to day-to-day operations and their input is critical in helping us refine how we deliver on our standards, across food, hospitality, and operations. The best ideas come from our restaurants. Building on that operational foundation, one of our key priorities this year is menu innovation, led by the national launch of our wraps platform. This represents our most significant menu expansion in several years, designed to expand occasions and introduce a more accessible entry point into the brand. We launched wraps with a core lineup of craveable flavors, including the classic chicken Caesar, Chicken Jalapeno Ranch, and Cali Chicken Club, along with the limited-time KBBQ Chicken. We started with our food ethos, delivering flavors through ingredients that don't just taste good, but also make you feel good. That means preparing seasonal ingredients from scratch every day, cooking our grains, vegetables, and antibiotic-free proteins without seed oils, and using no artificial flavors, colors, or dyes. We were intentional about every component of the wrap, starting with the tortilla. Early in development, we were unable to find a tortilla in the food service market that met our standards, so we partnered to create one made with only four ingredients, extra virgin olive oil, unbleached and unenriched wheat flour, sea salt, and water with no preservatives. Guests can taste and feel the difference, with social reviews consistently highlighting the quality and flavor of the tortilla. The energy around the test leading into yesterday's launch has been incredible. Raps are already appearing in a meaningful share of social content tagging Sweetgreen with positive sentiment of around 85%. Guests are responding to the value with entry price points starting at 1045 and ranging up to 1495. This launch is supported by one of our largest social marketing campaigns to date, partnering with hundreds of micro and scaled creators who authentically represent culture to drive awareness and engagement across a range of diverse communities. Our confidence in Wraps is based on the results we saw in testing. Over a multi-month period across approximately 70 restaurants in New York, the Midwest, and Los Angeles, Wraps drove incremental traffic from new and returning guests, helped re-engage lapsed customers, and showed strong repeat behavior. We are pleased with the combination of incremental traffic and improved customer retention, reflecting strength as a new platform and expanding how guests engage with the brand. Importantly, execution remains strong, with throughput maintained and lower than average guest complaints. Taken together, these results give us confidence in both the strength of the RAPS platform and our ability to scale it nationally. We are also continuing to innovate and strengthen our core menu. The Chicken Sesame Crunch Bowl, which launched in March, is already our second-highest mixing salad and contributed to improving trends as the quarter progressed. It is now a permanent menu item, reflecting strong guest response. At the same time, we have rebuilt our pipeline of both core and seasonal innovation for the balance of the year, including summer and fall menu updates, new core offerings, continued expansion of the wraps platform and upcoming collaborations with leading chefs, bringing distinctive chef driven flavors into the menu that reflect the core of our brand. This approach allows us to stay relevant with our existing guests while continuing to bring new guests into the brand. I'm encouraged by the product innovation we're bringing this year, as well as the progress we're making to elevate the quality and consistency of our core menu. We've continued to see an increase in salmon entree sales following our internal Miso My Salmon campaign, which was designed to sharpen execution and elevate quality across the system. We've taken the same approach to our other core menu ingredients. For example, we've refined our measurement of protein cook cycles and hold times to ensure dishes are served at peak freshness and have elevated seven of our core ingredients like romaine, quinoa, carrots, Napa cabbage slaw, and breadcrumbs. This remains an area of focus as we continue to drive greater consistency across the fleet. Looking ahead, we will begin testing a re-architected pricing ladder in late June. Central to this work is the introduction of clear entry price points and a new create your own construct that is designed to deliver greater price clarity and a more intuitive ordering experience. Together, these efforts will make pricing clear and make it easier for guests to choose and order, supporting incremental transactions across price points. We are pacing these initiatives deliberately, using disciplined reads on guest response and P&L impact to guide rollout decisions, with a focus on bringing more guests into the brand and increasing frequency over time. Turning to our personalized digital experience, our strategy focuses on deepening our connection with customers. driving engagement, and increasing customer lifetime value through more targeted one-to-one interactions. At the center of this strategy is our SG Rewards loyalty program, which enables us to deliver personalized offers, incentives, and experiences that make it easier for customers to engage with the brand while driving frequency and spend. At the beginning of the year, we introduced our Craving of the Month program, a key pillar within SG Rewards and a loyalty exclusive limited time offer available through the Sweetgreen app at a compelling value. The retention and incremental spend signals are encouraging. Of guests who redeemed a craving of the month offer, we see higher frequency and higher net average revenue per user. We also see that this program draws in at-risk and lapsed customers while driving incremental visits with lighter frequency cohorts. While still nascent, this exclusive platform within our loyalty program is helping us win back customers, drive incremental transactions, and incremental spend. Later in the second quarter, we will introduce lower redemption thresholds to our loyalty program, designed to be achievable in fewer visits, making the program more accessible and engaging for a broader set of customers. These new redemption thresholds will include a $3 credit at 700 points, a $5 credit at 1,200 points, and a free wrap reward at 2,000 points. Based on the current customer redemption behavior, we expect these changes to drive increased loyalty engagement and higher visit frequency, especially in our lower frequency customer cohorts. Before I close, we are excited to welcome Ryan Sleeman as our new Chief Development Officer. Ryan brings deep experience across real estate design, construction, and portfolio management with a strong track record of scaling high quality growth across leading retail and restaurant concepts. His focus on thoughtful design and site selection will be critical as we expand our footprint, reimagine our spaces, and create better experiences for our guests and team members. It will also reinforce discipline around build-out costs and capital allocation, supporting consistent high return unit growth. To close, while the quarter was pressured, we are still in the early innings of our transformation, and we are beginning to see signs that the actions we are putting in place are gaining traction. We are seeing improvement in execution across our restaurants, greater consistency in the guest experience, and stronger alignment across our teams. The progress through the quarter and into April, along with the energy in the field, reinforces that we are focused on the right operational priorities and building a stronger foundation for Sweetgreen. I want to thank our restaurant teams for leaning in and embracing the higher bar we are setting on hospitality and execution, especially as we build momentum coming out of our recent Area Leader Summit. At the same time, we are operating with greater focus as we rebuild the top line. The national launch of RAPS is an important step forward and a clear example of how we are approaching innovation differently. We took the time to test, learn, and ensure we could execute at a high level. and the early response gives us confidence in the opportunity to drive incremental traffic and expand into new occasions. As we move through the year, we will continue to build on this foundation by improving execution, refining our menu and pricing architecture, strengthening the guest experience, and driving greater discipline in our investments. As these actions take hold, we expect to see stronger restaurant-level performance over time. We are confident in the path we are on and in our ability to build a more consistent, profitable and durable Sweetgreen brand. With that, I'll turn it over to Jamie.