Salad-Making Robots Have Powered Sweetgreen’s Stock To Triple-Digit Gains. Next On The Menu: More Robots. – The Average Joe
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    Salad-Making Robots Have Powered Sweetgreen’s Stock To Triple-Digit Gains. Next On The Menu: More Robots.


    May 12, 2024

    Roses are red, and salads are green — just like the color of Sweetgreen’s ($SG) stock this year. The urban salad sensation, popular in urban centers like NYC and Chicago, is spreading its leafy goodness nationwide while doubling down on its robot-powered kitchens.

    Sweet success: After reporting earnings, $SG shot up by a whopping 34% on Friday, marking an impressive 240% surge over the past year — now trading at its highest point since its 85% nosedive after going public in 2021. The company had a strong first quarter, boasting its first-ever positive adjusted earnings (EBITDA) and a 26% year-over-year sales jump to $158M.

    • Big losses had been a problem for years — but Sweetgreen has shown major improvements as restaurant profit margins climbed to 18% in the recent quarter, up from 14% a year ago.
    • Rising labor costs are pushing restaurants to explore automation — a bet that’s playing out nicely for Sweetgreen’s new robotic kitchens, called Infinite Kitchens, which debuted last year.

    Robots and salads cross-contaminate

    While these automated kitchens require heavier upfront investments, they can handle up to 70% of a salad’s assembly, a move hailed as “positive” by Citigroup analyst Jon Tower (BBG). Last year, Sweetgreen’s CEO expressed his vision, foreseeing “eventually all Sweetgreen stores to be automated.” The company has ambitious plans for 2024 — aiming to install seven more automated kitchens, retrofitting another three or four, and opening 23-27 new stores.

    • Sweetgreen is also eyeing drive-thrus, a lucrative growth area for other chains, and last week, added beef to its menu, putting its salad bowls in closer competition with Chipotle.
    • A shift towards healthier ingredients has pushed consumers towards brands like CAVA ($CAVA) and Chipotle ($CMG), up 93% and 44% this year, respectively.

    Not like the big guys: Sweetgreen’s first-quarter in-store traffic remained flat, bucking a nationwide slowdown — with US fast-food traffic falling 3.5% in the same period. Consumers have had enough of endless price increases — with many starting to ditch leading chains like Starbucks ($SBUX), which reported US traffic declining 7% in the first quarter of 2024. And $18 Big Mac Meals? Consumers are ditching those, too.

    Read: It’s Not Just You, Your Coworker Is A Robot: Why Companies Are Embracing the Humanoid Hype

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