Sweetgreen Seeks $312.5 Million IPO

Sweetgreen revealed Tuesday that it's looking to raise as much as $312.5 million in its IPO.

The fast casual is offering 12.5 million shares and estimating a stock price of $23 to $25. At the high end of that range, Sweetgreen would be valued at $2.7 billion. In January, the company was valued at $1.78 billion after raising $156 million from Durable Capital Partners.

After beginning inside a 560-square-foot space in Washington, D.C. in 2007, the better-for-you brand has expanded to roughly 140 locations across 13 states, including major markets like Austin, Miami, New York, and Pasadena, California. The chain wants to double its footprint in the next three to five years, and it plans to do so by growing in new and existing markets and opening prototypes, like drive-thru and pickup only.

In 2019, Sweetgreen's AUV rose to $3 million and its same-store sales increased 15 percent year-over-year, but both of those numbers dipped during 2020 due to COVID, with volumes lowering to $2.2 million and comps dropping 26 percent for the fiscal year. But the chain has rebounded in 2021, with AUV rising to $2.5 million and same-store sales increasing 21 percent year-to-date. The company has also earned $243 million in net revenue through September 26, after making only $221 million for all of 2020.

The company's improvement can be traced to its strengthening digital channels. Two years ago, digital represented 50 percent of sales, but that soared to 75 percent in 2020 and has peeled back slightly to 68 percent thus far in 2021. Sweetgreen said it leverages its digital platform to better understand customer preferences and evolve its menu. This includes the addition of Warm Bowls, Sides, and Plates, which now mix 43 percent. The menu expansion has helped the chain utilize multiple dayparts to increase revenue and AUV.

Sweetgreen saw $87 million in operating loss through September, after losing $142 million in 2020. The brand said it has experienced significant losses since it was founded, and that it expects those figures to continue as it grows business, opens more restaurants, and invests in technology.

"We will need to generate and sustain increased revenue levels and decrease proportionate expenses in future periods to achieve profitability in many of our largest markets, and even if we do, we may not be able to maintain or increase profitability," the company states in its filing.

Sweetgreen's overall mission is to "lead conversations on the importance of what we eat." To that end, the brand's plant-forward menu is 30 percent less carbon intensive than the average U.S. diet, according to Watershed, the restaurant's third-party climate technology partner.

"We believe the choices we make about what we eat, where it comes from and how it is prepared have a direct impact on our health, our communities and the planet," the filing states. "This is our Food Ethos, and it is firmly rooted in every aspect of our business."

Sweetgreen will become the fifth restaurant to go public this year, after Krispy Kreme, Dutch Bros Coffee, First Watch, and Portillo's.