Sweetgreen, Inc. (NYSE:SG) Q3 2023 Earnings Call Transcript

Jonathan Neman: Absolutely. So as you know, our business is all about seconds and cents. So we’ve really been working towards pulling all the levers we have. In terms of the labor specifically, the gains have been around better deploying it. Some of it has been having our head coaches working more time on the floor, consistent with the rest of the industry. Although it’s been getting tighter with our labor deployment models, we have also seen a pretty significant increase in our head cook stability. And as I mentioned on the call, we have seen turnover come down 15 points. So, we expect turnover to continue to improve, and the biggest indicator on productivity is a more stable team and teams that are more tenured. So, at Sweetgreen, we invest a lot in our teams, in our training, in our culture.

It’s a huge part of what we do to provide that touch to our customers. And as our teams get more time enrolled, they are more productive, not only in providing a better experience, but a more profitable experience. So, a lot of the gains have been just more stable teams and better leadership and just really strong head coach – really strong head cook performance. And we expect that to continue. As you know, COVID brought a lot of noise around the labor market, and we have now seen the stabilization. And then the last thing I will say on that is we introduced tipping this quarter, and we have seen some really positive results. Our team members are loving it and we see that as another accelerant to start to continue to bring turnover down.

Brian Bittner: Awesome. Thank you.

Operator: Your next question comes from the line of Chris Carril with RBC Capital Markets. Your line is open.

Unidentified Analyst: Hi Jonathan and Mitch. This is Khadijah [ph] on for Chris here. My first question is, just when thinking about your priorities around menu innovation, can you talk about your current market share at different dayparts and the specific opportunities the brand has to lean into, as it relates to the dayparts?

Jonathan Neman: Sure. So, one of the most exciting things we have done in a long time, the biggest menu launch we have had in years, has been what we launched last Tuesday with protein plate. So, as I mentioned on the call, it’s a new category. I love the tagline, the marketing tagline that we have with it, which is you don’t have to be a salad person to be a Sweetgreen person. And the goal there is a few things. One is to broaden the consumer. There is many people that want to eat healthy, real, delicious craveable food, but may not want to eat a salad all the time. So, this really starts to capture that broader consumer. It really removes the veto vote in many cases, which we are really focused on driving that with our kids meals.

And it does help us on dinner as well. We have talked about the fact that dinner is about 35% of our business today. So, we see a huge opportunity in growing share at dinner and really balancing that out, and that should be really accretive to our unit level economics. What I can share is, it’s only been nine days, but really encouraged by the early – by the launch of protein plate. One, the feedback from guests has been just phenomenal. People are loving it. It’s delicious and craveable. But the product mix has exceeded our expectations, and that we are actually seeing it really over-indexed in some of our Southeastern markets, almost doubling what we expected. So, certain markets like Texas and the Southeast, we are seeing really strong receptivity to it.