Fleet Financing

Sweetgreen Raises $ 364 Million In IPO

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Sweetgreen, the 140-unit quick and casual salad chain founded by three new college graduates 14 years ago, pegged its stock price at $ 28 Wednesday night, $ 3 more than the top of its marketed range, as it prepares to go public on the New York Stock Exchange on Thursday, according to a statement from the chain.

Sweetgreen is offering 13 million shares of its shares, which will trade under the symbol SG, for a total of $ 364 million when it goes public. That’s about $ 89 million more than the expected IPO amount for the middle of Sweetgreen’s previous price range of $ 23 to $ 25 per share. Sweetgreen also filed a last-minute offer of approximately half a million more shares on top of its previous prospectus.

That would put Los Angeles-based Sweetgreen at a valuation of around $ 3 billion, although it has not reported any profitable quarters at any time since its founding.

“To date, we have not achieved profitability in any year, in large part because we have consciously invested in our operational and technology base,” Sweetgreen noted in his original S-1 filing.

The chain said its profit margin at the restaurant level this year is 12%, on average unit volumes of $ 2.5 million. In 2019, Sweetgreen’s margins were 16%, with 3 million AUVs. The brand, which operates in 13 states, saw same-store sales drop 26% in 2020, with losses of $ 142 million that year. This year, same-store sales turned 21% positive, with losses of $ 87 million.

Sweetgreen has a portfolio of largely urban stores, built to serve $ 12 salads topped with Buffalo cauliflower and hot quinoa to downtown office workers. With these cabin dwellers sent home during the pandemic, the chain’s traffic has taken a major hit.

In addition to its traditional locations, Sweetgreen operates many of what it calls “outposts” – order pickup areas in office buildings – designed to make delivery more cost effective for the chain.

Before going public, the company was the darling of private investors. Sweetgreen raised $ 156 million in January from Durable Capital Partners, after some $ 350 million in fundraising the previous year.

Sweetgreen will likely use some of its IPO funding to develop its technology infrastructure as it seeks to double its number of units over the next three to five years.

In its prospectus, Sweetgreen noted that 68% of its revenue in the last fiscal year came from its digital channels, with 47% of revenue coming from digital channels owned by the chain.

That’s down a bit from the peak of the pandemic when Sweetgreen’s digital revenues accounted for three-quarters of all sales. But that’s a big jump from 2019 and 2018, when digital revenues were 50% and 42% respectively. In 2016, Sweetgreen’s digital revenue represented only 30% of all sales.

Sweetgreen also intends to develop the technology behind Spyce, the robot-powered bowl concept with an electric delivery fleet that he purchased a few months ago.

With its IPO, Sweetgreen joins a veritable parade of restaurant brands that have taken to Wall Street this year. Brazilian steakhouse chain Fogo de Chao filed its IPO documents on Wednesday, becoming the seventh restaurant brand to do so in 2021. Krispy Kreme, Dutch Bros, Portillo’s and First Watch are also on the list. Panera Brands recently announced its intention to go public but has yet to file a case.

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