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

The last thing I will say on it is, this is just the beginning of building out this category. So, we launched three protein plates last week. You could expect us over the coming quarters and years to continue to build on top of this. So, think about different unique base options, other proteins that will build on to it. And over time, I see protein plates really broadening the consumer, helping us win dinner and really helping us increase the TAM of the company.

Unidentified Analyst: Great. Thanks. And next one for me is, can you expand a bit more on Sweetpass? Any detail around the frequency or spend versus non-loyalty customers would be great? And how you are thinking about the next steps regarding the Sweetpass user base?

Jonathan Neman: Absolutely. So, we launched Sweetpass earlier this year. It’s been approximately six months since launch. We have been very focused on enrollment in both tiers, both the free tier and the paid tier, the membership tier. We just launched, as I mentioned, the ability to use Sweetpass in stores. So, for the first – for most of the history of Sweetpass, it was a digital-only program, starting just a few weeks about a month ago, you can now use it in restaurants, so you could scan to earn loyalty points and use rewards in store, which is a very important and large channel for us. So, we are really starting to learn a lot more about what it can do. What I can say is, we expect to beat our internal targets from an enrollment perspective on Sweetpass, and we are seeing some nice incrementality out of it.

However, I do believe there is a lot of opportunity for us to make minor tweaks around how we leverage the CRM and the different customer journeys, to see more incrementality out of that. So, as we look forward to 2024 and the comp drivers, focused comp drivers for us, continuing to optimize and leverage Sweetpass was very high on the list.

Unidentified Analyst: Great. Thanks guys.

Jonathan Neman: Thank you.

Operator: Your next question comes from the line of Katherine Griffin with Bank of America. Your line is open.

Katherine Griffin: Hi. Thanks for the question. First, I wanted to ask about just the increase in discounting this quarter and sort of what you are seeing in terms of customer sentiment right now, if you can speak a little bit to quarter-to-date trends? And if that’s sort of why you are seeing a little bit more discounting? Is it a response to that or is it more about customer acquisition with loyalty? I am just sort of curious about the ethos with discounting. And I think what we should think in terms of maybe headwinds going forward, just on the mix component from that?

Mitch Reback: Hi Katherine. Thanks. It’s Mitch. I think what we would say is that we are really seeing no real change in kind of our customer sentiment, although we are watching very closely and kind of in line with everything we read, showing some degree of concern on the future. Our discounting is up slightly in the quarter, largely due to the launch of Sweetpass Plus, more than increased discounting by the company.

Katherine Griffin: Okay. So yes, I mean I guess the question then is, just as you think about iterating the loyalty program, to what extent do you plan to incorporate discounting? And I guess, sort of how should we think about kind of how long that sort of headwind exists, before you start to see the return on that in terms of your expectations for loyalty?

Mitch Reback: No. I would say, at this point in time, we don’t see a need to increase discounting for Sweetpass Plus.