What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2024-02-29 compared with 2023-02-23 · 283 added, 346 removed, 1038 unchanged (38% of the section changed)

7 unchanged sentences

Notes to Consolidated Financial Statements

Tab le o f Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors of Sweetgreen, Inc.

To the shareholders and the Board of Directors of Sweetgreen, Inc.

Opinion on the Financial Statements

3 unchanged sentences

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 29, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

Change in Accounting Principle

As discussed in Notes 1 and 9 to the financial statements, the Company has changed its method of accounting for leases in the fiscal year ended December 25, 2022, due to the adoption of FASB ASC Topic 842, Leases .

Basis for Opinion

14 unchanged sentences

Critical Audit Matter Description

Long-lived assets at restaurants are comprised of property and equipment and operating lease assets.

Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows, which is at the store-level for restaurant assets (“store asset group”).

The carrying value of property and equipment and operating lease assets as of December 25, 2022 was $235.3 million and $256.7 million, respectively, a majority of which are part of the store asset groups.

If a store asset group with indicators of impairment is determined not to be recoverable, an impairment charge will be recognized in the amount by which the carrying amount of the store asset group exceeds its fair value.

The Company’s evaluation of long-lived assets at restaurants (which include property and equipment, and subsequent to the adoption of ASC 842, operating lease assets) for impairment involves reviewing for events or changes in circumstances that indicate the carrying amount of the asset may not be fully recoverable.

Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows and the asset group is at the store-level for restaurant assets (“store asset group”).

When events or circumstances indicate that impairment may be present, management evaluates the probability that future undiscounted net cash flows received will be less than the carrying amount of the store asset group.

The Company uses a discounted cash flow model to measure the fair value of a store asset group.

We identified the impairment of long-lived assets as a critical audit matter because of the significant judgments made by management in estimating future cash flows used to determine recoverability of long-lived assets of a store asset group.

An impairment charge will be recognized in the amount by which the carrying amount of the store asset group exceeds its fair value.

A number of significant assumptions and estimates are involved in the application of the model to project future cash flows, which are largely unobservable inputs, including revenue projections.

Changes in these assumptions could have a significant impact on either the fair value, the amount of any impairment charge, or both.

We identified the impairment of long-lived assets of a store asset group as a critical audit matter because of the significant judgments made by management in estimating future cash flows used to determine recoverability of

Tab le o f Contents

long-lived assets of a store asset group.

Specifically, significant judgment is required by management in the determination of projected future revenue assumptions by considering sales trends.

1 unchanged sentence

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to management’s projected future revenues utilized in the Company’s cash flow model for store asset groups with indicators of impairment included the following, among others:

Our audit procedures related to management’s projected future revenues utilized in its cash flow model for store asset groups with indicators of impairment included the following, among others:

• Tested the effectiveness of controls over management’s review of the long-lived asset impairment analysis for store asset groups, including key assumptions utilized to project future revenues.

6 unchanged sentences

We have served as the Company's auditor since 2012.

Tab le o f Contents

SWEETGREEN, INC.

8 unchanged sentences

Prepaid expenses

Tenant improvement receivable

Current portion of lease acquisition costs

8 unchanged sentences

27,407 30,562

Lease acquisition costs, net

Security deposits

Other assets 4,767 —

Lease acquisition costs, net

Restricted cash

Other assets 4,218 4,767

$ 856,557 $ 908,935

LIABILITIES, PREFERRED STOCK AND STOCKHOLDERS’ (DEFICIT) EQUITY

LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY

Current liabilities:

6 unchanged sentences

Gift cards and loyalty liability

Current portion of deferred rent liability

Other current liabilities

Total current liabilities

1 unchanged sentence

Operating lease liabilities, net of current portion 271,439 271,097

Deferred rent liability, net of current portion

Accrued payroll, net of current portion

Contingent consideration liability 8,350 21,296

4 unchanged sentences

COMMITMENTS AND CONTINGENCIES (Note 16)

Preferred Stock:

Stockholders’ (deficit) equity:

7 unchanged sentences

482,597 541,226

Total liabilities, preferred stock and stockholders’ (deficit) equity

Total liabilities and stockholders’ (deficit) equity

$ 856,557 $ 908,935

The accompanying notes are an integral part of these consolidated financial statements.

Tab le o f Contents

SWEETGREEN, INC.

42 unchanged sentences

379 1,345 147

$ ( 113,384 ) $ ( 190,441 ) $ ( 153,175 )

Earnings per share:

4 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

Tab le o f Contents

SWEETGREEN, INC.

5 unchanged sentences

Balances at December 27, 2020 62,562,051 $ 505,638 — $ — 16,731,625 $ 17 $ 19,662 $ ( 4,000 ) $ ( 323,041 ) $ ( 307,362 )

62,562,051 $ 505,638 — — 15,340,159 $ 15 $ 12,607 $ ( 4,000 ) $ ( 181,817 ) $ ( 173,195 )

— — — — — — — ( 141,224 ) ( 141,224 )

Exercise of stock options

— — — — 1,391,466 2 2,143 — — 2,145

Stock-based compensation expense

— — — — — — 4,912 — — 4,912

Balances at December 27, 2020

62,562,051 $ 505,638 — $ — 16,731,625 $ 17 $ 19,662 $ ( 4,000 ) $ ( 323,041 ) $ ( 307,362 )

— — — — — — — — ( 153,175 ) ( 153,175 )

Net loss — — — — — — — — ( 153,175 ) ( 153,175 )

Stock-based compensation expense — — — — — — 28,897 — 28,897

— — — — — — 28,897 — 28,897

Issuance of common stock related to restricted shares — — — — 15,000 — — — — —

— — — — 15,000 — — — — —

Exercise of stock options — — — — 5,247,279 5 26,023 — — 26,028

11 unchanged sentences

Balances at December 26, 2021 — — — — 109,345,697 109 1,129,224 — ( 476,216 ) 653,117

— $ — — $ — 109,345,697 $ 109 $ 1,129,224 $ — $ ( 476,216 ) $ 653,117

Adoption of ASC 842 — — — — — — — — ( 4,944 ) ( 4,944 )

4 unchanged sentences

Balances at December 25, 2022 — — — — 111,132,993 111 1,212,716 — ( 671,601 ) 541,226

Net loss — — — — — — — — ( 113,384 ) ( 113,384 )

Stock-based compensation expense — — — — — — 49,532 — — 49,532

Issuance of common stock related to restricted shares — — — — 587,078 — — — — —

Exercise of stock options — — — — 929,963 2 5,387 — — 5,389

Shares repurchased for employee tax withholding — — — — ( 10,888 ) — ( 166 ) — — ( 166 )

Balances at December 31, 2023 — $ — — $ — 112,639,146 $ 113 $ 1,267,469 $ — $ ( 784,985 ) $ 482,597

The accompanying notes are an integral part of these consolidated financial statements.

Tab le o f Contents

SWEETGREEN, INC.

15 unchanged sentences

Non-cash operating lease cost 29,113 28,447 —

Loss on fixed asset disposal

Loss on disposal of property and equipment

Stock-based compensation

23 unchanged sentences

781 177 ( 498 )

Other noncurrent liabilities ( 458 ) — —

Deferred rent liability

Other non-current liabilities

( 533 ) ( 458 ) —

Net cash used in operating activities

Deferred rent liability

Net cash provided by (used in) operating activities

26,480 ( 43,169 ) ( 64,529 )

12 unchanged sentences

Cash flows from financing activities:

Repayment on long term debt

— — ( 15,000 )

Proceeds from long term debt

Proceeds from preferred stock issuance, net of issuance costs

1 unchanged sentence

5,388 4,758 26,028

Payment of contingent consideration

( 10,421 ) — —

Payment of loan origination fees — ( 126 ) —

1 unchanged sentence

Proceeds from issuance of common stock in connection with initial public offering, net of underwriting discounts and issuance costs — — 384,692

Payment associated to shares repurchased for tax withholding

Proceeds from issuance of Series F warrants in connection with the initial public offering — — 1,803

Proceeds from related party loan — — 5,158

Net cash provided by financing activities

Net cash (used in) provided by financing activities

( 5,199 ) 4,632 531,611

3 unchanged sentences

$ 331,739 472,299 102,765

Tab le o f Contents

Cash and cash equivalents and restricted cash—end of year

2 unchanged sentences

Cash paid for interest

$ — $ — $ 383

Non-cash investing and financing activities:

7 unchanged sentences

The accompanying notes are an integral part of these consolidated financial statements.

Tab le o f Contents

SWEETGREEN, INC.

5 unchanged sentences

As of December 31, 2023, the Company owned and operated 221 restaurants in 18 states and Washington, D.C.

The Company opened 36 Net New restaurants in fiscal year 2022.

The Company had 35 Net New Restaurant Openings in fiscal year 2023.

The Company was founded in November 2006 and incorporated in the state of Delaware in October 2009 and currently is headquartered in Los Angeles, California.

3 unchanged sentences

The Company received net proceeds of approximately $ 384.7 million from the IPO after deducting underwriting discounts and commis sions of $ 26.4 million and offering costs of approximately $ 7.5 million subject to certain cost reimbursements.

In connection with the IPO, (i) 69,231,197 outstanding shares of preferred stock were converted into an equivalent number of shares of common stock and (ii) 1,843,493 shares of outstanding Class S stock issued in connection with our acquisition of Spyce Food Co.

(“Spyce”) in September 2021 were converted into 1,316,763 shares of common stock, resulting in an aggregate of 92,754,432 outstanding shares of common stock.

1 unchanged sentence

Additionally, in connection with the IPO, warrants to purchase 1,557,686 shares of Series J Preferred Stock were automatically exercised for an equivalent number of shares of Class A common stock, and an aggregate of 13,477,303 shares of Class A common stock held by Messrs.

Neman, Jammet, and Ru, our co-founders, were exchanged for an equivalent number of shares of Class B common stock pursuant to the terms of an exchange agreement entered into with us.

Neman, Jammet, and Ru, the Company’s co-founders, were exchanged for an equivalent number of shares of Class B common stock pursuant to the terms of an exchange agreement entered into with the Company.

Furthermore, the Series F Warrants, which were exercised during fiscal year 2021, converted into 235,000 shares of Class A common stock.

2 unchanged sentences

All intercompany balances and transactions have been eliminated in consolidation.

Fiscal Year —The Company’s fiscal year is a 52- or 53-week period that ends on the Sunday closest to the last day of December.

Fiscal years 2022, 2021 and 2020 were 52-week periods that ended December 25, 2022, December 26, 2021 and December 27, 2020.

respectively.

In a 52-week fiscal year, each quarter includes 13 weeks of operations.

Fiscal Year —The Company’s fiscal year is a 52- or 53-week period that ends on the last Sunday of the calendar year.

Fiscal year 2023 was a 53-week period that ended December 31, 2023.

Fiscal years 2022 and 2021 were 52-week periods that ended December 25, 2022 and December 26, 2021, respectively.

In a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations, and the fourth quarter includes 14 weeks of operations.

In a 52-week fiscal year, each quarter includes 13 weeks of operations.

Management’s Use of Estimates —The consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and the rules and regulations of the Securities and Exchange Commission (“SEC”).

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and

expenses during the reporting period.

Significant accounting estimates made by the Company include the income tax valuation allowance, impairment of long-lived assets and right-of-use assets (“ROU assets”), legal liabilities, valuation of the contingent consideration liability, lease accounting matters, valuation of intangible assets acquired in business combinations, goodwill, and stock-based compensation.

Significant accounting estimates made by the Company include the income tax valuation allowance, impairment of long-lived assets and right-of-use assets (“ROU assets”), legal

Tab le o f Contents

liabilities, valuation of the contingent consideration liability, lease accounting matters, valuation of intangible assets acquired in business combinations, goodwill, and stock-based compensation.

These estimates are based on information available as of the date of the consolidated financial statements;

therefore, actual results could differ from those estimates.

Reclassification — The Company has elected to reclassify prior period costs related to utilities and repairs and maintenance costs to conform with the current presentation of occupancy and other related cost within the consolidated statement of operations.

As such, prior period financial information has been reclassified , and as a result of the change, the Company reclassified $ 19.8 million, $ 14.3 million, and $ 11.5 million for the fiscal years ended December 25, 2022, December 26, 2021, and December 27, 2020 respectively, from other occupancy and other cost to other restaurant operating costs.

Cash and Cash Equivalents —The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents.

8 unchanged sentences

$ 257,230 $ 331,614

Restricted cash, noncurrent

Restricted cash, non-current

Total cash, cash equivalents and restricted cash shown on statement of cash flows

4 unchanged sentences

As of December 31, 2023, December 25, 2022, and December 26, 2021, approximately 28 %, 32 %, and 33 %, respectively, of the Company’s revenue was generated from the Company’s restaurants located in the New York City metropolitan area.

Other Assets — Other Assets primarily consist of deferred costs, which are capitalized implementation costs from cloud computing arrangements in relation to a new enterprise resource planning system (“ERP”).

These costs amounted to $ 5.8 million as of December 25, 2022 and are recorded within other current assets and other assets in the condensed consolidated balance sheets.

The amortization of these costs are recognized within the Company’s condensed consolidated statement of operations under general and administrative expenses over a useful life of seven years .

Prior to the Company’s IPO, deferred costs also included direct incremental legal, consulting, accounting, and other fees relating to the sale of the Company’s Class A Common Stock which were reclassified into stockholder’s deficit as a reduction of IPO proceeds upon offering.

Subsequent to the adoption of ASC 842, other current assets also consist of tenant improvement allowance receivables for locations that have no corresponding operating lease asset and liability due to their rent payments being entirely variable, and amount to $ 0.3 million as of December 25, 2022.

Accounts Receivable — Accounts receivable primarily consists of receivables from the Company’s Marketplace and Outpost Channels.

Other Current Assets — Other current assets primarily consist of the Employee Retention Credit “ERC”, outstanding receivables from the Company’s distributors and current amortization of deferred costs.

Other Assets — Other Assets primarily consist of deferred costs, which are capitalized implementation costs from cloud computing arrangements in relation the Company’s enterprise resource planning system (“ERP”).

These costs amounted to $ 4.2 million and $ 4.8 million as of December 31, 2023 and December 25, 2022 and were recorded within other assets in the consolidated balance sheets.

The amortization of these costs are recognized within the Company’s consolidated statement of operations under general and administrative expenses over a useful life of seven years .

Accounts Receivable — Accounts receivable primarily consists of receivables from distributors and receivables from the Company’s Marketplace and Outpost and Catering Channels.

Inventory — Inventory, consisting primarily of food, beverages and supplies, is valued at the lower of cost first-in, first-out cost or net realizable value.

Tab le o f Contents

Prepaid Expenses — Prepaid expenses primarily include prepaid insurance, which is expensed in the period for which it relates.

16 unchanged sentences

In addition, for fiscal year 2022, the Company recorded $ 0.6 million of costs related to abandoning certain potential future restaurant sites in an effort to streamline the Company’s future new restaurant openings which is recorded within restructuring charges.

Restructuring Charges — Restructuring charges are expenses that are paid in connection with reorganization of the Company’s operations.

Restructuring Charges — Restructuring charges are expenses that are paid in connection with reorganization of the Company’s operations during fiscal year 2022.

Additionally, in conjunction with the Company’s implementation of ASC Topic 842 (“ASC 842”), operating lease assets were evaluated for impairment, and any impairment charges incurred in conjunction with the Company’s restructuring was considered a restructuring charge.

For fiscal year 2022, the Company incurred total pre-tax restructuring and related charges of approximately $ 14.4 million.

This included a $ 13.0 million non-cash restructuring expense, due to a reduction of the Company’s real estate footprint by vacating the premises of the Company’s existing sweetgreen Support Center and moving to a smaller office space adjacent to the existing location, of which $ 6.8 million related to impairment of long-lived assets and $ 5.8 million and $ 0.4 million related to impairment of our operating lease asset and closure costs, respectively, associated with the sweetgreen Support Center, $ 0.6 million of severance and related benefits from workforce reductions affecting approximately 5 % of employees at the sweetgreen Support Center, $ 0.6 million of costs related to abandoning certain potential future restaurant sites in an effort to streamline the Company’s future new restaurant openings, and $ 0.2 million of other related expenses.

This included a $ 13.0 million non-cash restructuring expense, due to a reduction of the Company’s real estate footprint by vacating the premises of the Company’s existing Sweetgreen Support Center and moving to a smaller office space adjacent to the existing location, of which $ 6.8 million related to impairment of long-lived assets and $ 5.8 million and $ 0.4 million related to impairment of the Company’s operating lease asset and closure costs, respectively, associated with the Sweetgreen Support Center, $ 0.6 million of severance and related benefits from workforce reductions affecting approximately 5 % of employees at the Sweetgreen Support Center, $ 0.6 million of costs related to abandoning certain potential future restaurant sites in an effort to streamline the Company’s future new restaurant openings, and $ 0.2 million of other related expenses.

For fiscal year 2023 , stemming from the 2022 reorganization, the Company recorded restructuring charges of $ 7.4 million primarily related to operating lease asset impairment costs from the Company’s vacated former

Tab le o f Contents

Sweetgreen Support Center as well as the amortization of the underlying operating lease asset and related real estate and common area maintenance fees (“CAM”) charges.

Business Combinations —The Company utilizes the acquisition method of accounting in any acquisitions or business combinations.

5 unchanged sentences

The use of different valuation techniques and assumptions could change the amounts and useful lives assigned to the assets and liabilities acquired and related amortization expense.

Total research and development excluding any related cost associated with the Spyce acquisition was $ 2.0 million for the fiscal year ended December 25, 2022 and recorded within general and administrative cost in the Company’s accompanying condensed consolidated statement of operations.

Total research and development excluding any related cost associated with the Spyce acquisition was $ 1.2 million and $ 2.0 million for the fiscal years ended December 31, 2023 and December 25, 2022, respectively.

These costs are recorded within general and administrative cost in the Company’s accompanying consolidated statement of operations.

Contingent Consideration —Due to certain conversion features, the contingent consideration issued as part of the Spyce acquisition (see Note 6 for further details) is considered a liability in accordance with ASC 480.

2 unchanged sentences

The fair value of the liability as of December 31, 2023 and December 25, 2022 was $ 8.4 million and $ 21.3 million, respectively.

During fiscal year ended December 31, 2023, the Company paid $ 10.4 million of the contingent consideration.

Changes in fair value of the contingent consideration is recognized within other expense in the accompanying consolidated statement of operations.

Other Current Liabilities —The other current liabilities is solely comprised of the short-term portion of the contingent consideration liability which was determined based on known stock price values in January 2024.

Goodwill —Goodwill, which represents the excess of the cost of an acquired entity over the fair value of the acquired net assets, has an indefinite life and, accordingly, is not amortized.

8 unchanged sentences

Fair value estimates are subject to change as a result of many factors, including changes in business plans, economic conditions, and the competitive environment, among others.

Should actual cash flows and the Company’s future estimates vary adversely from previous estimates, the Company may be required to recognize goodwill impairment charges in future years.

Intangible Assets, net — External costs and certain internal costs, including payroll and payroll-related costs for employees, directly associated with developing computer software applications for internal use are capitalized subsequent to the preliminary stage of development.

Should actual cash flows and the Company’s future estimates vary adversely from current estimates, the Company may be required to recognize goodwill impairment charges in future years.

Tab le o f Contents

capitalized subsequent to the preliminary stage of development.

Internal-use software costs are amortized using the straight-line method over a three-year estimated useful life of the software when the project is substantially complete and ready for its intended use.

1 unchanged sentence

Key money is the amount of funds paid to a landlord or tenant to acquire the rights of tenancy under a commercial property lease.

These costs were amortized over the respective lease terms that range from 10 to 15 years and are presented net of accumulated

amortization.

Total lease acquisition costs, net of accumulated amortization, as of December 26, 2021 was $ 4.9 million.

Amortization expense for the fiscal years ended December 26, 2021 and December 27, 2020 was, $ 0.4 million, and $ 0.3 million, respectively, of which all but an insignificant amount was included in occupancy and related expenses and the remainder was included in general and administrative expenses in the accompanying consolidated statement of operations.

Upon adoption of ASC 842, lease acquisition costs associated with legal fees are expensed as incurred and no longer capitalized.

These costs were amortized over the respective lease terms that range from 10 to 15 years and are presented net of accumulated amortization.

Amortization expense for the fiscal year ended December 26, 2021 was $ 0.4 million, of which all but an insignificant amount was included in occupancy and related expenses and the remainder was included in general and administrative expenses in the accompanying consolidated statement of operations.

Upon adoption of ASC 842, lease acquisition costs associated with legal and broker fees are expensed as incurred and no longer capitalized.

As such, lease acquisition costs only include key money.

Total lease acquisition costs, net of accumulated amortization, as of December 25, 2022 was $ 0.6 million.

Amortization expense for the fiscal year ended December 25, 2022 was $ 0.1 million, which was recorded within occupancy and related expenses in the accompanying statement of operations.

Total lease acquisition costs, net of accumulated amortization, as of December 31, 2023 and December 25, 2022 were $ 0.5 million and $ 0.6 million, respectively.

Amortization expense for both the fiscal years ended December 31, 2023 and December 25, 2022 was $ 0.1 million, which was recorded within occupancy and related expenses in the accompanying statement of operations.

Further, the Company recorded $ 1.7 million of legal fee expenses associated with obtaining a lease for the fiscal year ended December 25, 2022 which was recorded to general and administrative expenses within the consolidated statement of operations.

2 unchanged sentences

Owned Digital Channels, In Store-Channel (Non-Digital component), and Marketplace Channel.

Owned Digital Channels encompasses the Company’s Pick-Up Channel, Native Delivery Channel, Outpost Channel, and purchases made in its In-Store Channel via digital scan-to-pay.

Owned Digital Channels encompasses the Company’s Pick-Up Channel, Native Delivery Channel, Outpost and Catering Channel, and purchases made in its In-Store Channel via digital scan-to-pay, prior to the elimination of digital scan-to-pay during the fiscal quarter ended September 24, 2023.

Pick-Up Channel refers to sales to customers made for pick-up at one of the Company’s restaurants through the Sweetgreen website or mobile app.

Native Delivery Channel refers to sales to customers for delivery made through the Sweetgreen website or mobile app.

Outpost Channel refers to sales to customers for delivery made through the sweetgreen website or mobile app to Outposts, which are the Company’s trademark offsite drop-off points at offices, residential buildings and hospitals.

In-Store Channel (Non-Digital component) refers to sales to customers who make in-store purchases in the Company’s restaurants, whether they pay by cash or credit card.

Marketplace Channel refers to sales to customers for delivery or pick-up made through third-party delivery marketplaces, including Caviar, DoorDash, Grubhub, Postmates, and Uber Eats.

Outpost and Catering Channel refers to sales to customers for delivery made through the Sweetgreen website or mobile app to Outposts, which are the Company’s offsite drop-off points at offices, residential buildings and hospitals.

In addition, the Company’s Outpost and Catering Channel includes the Company’s catering offerings, which refer to sales to customers made through the Company’s catering website for pickup at one of the Company’s restaurants or delivery to a customer-specified address.

In-Store Channel (Non-Digital component) refers to sales to customers who make in-store purchases in the Company’s restaurants, whether they pay by cash or credit card, or digital scan-to-pay.

Digital scan-to-pay was eliminated during the fiscal quarter ended September 24, 2023.

Purchases made in the Company’s In-Store Channel via cash or credit card are referred to as “Non-Digital” transactions, and purchases made in the Company’s In-Store Channel via digital scan-to-pay, prior to its elimination, were included as part of the Company’s Owned Digital Channels.

Marketplace Channel refers to sales to customers for delivery or pick-up made through third-party delivery marketplaces, including DoorDash, Grubhub, Uber Eats, ezCater, Sharebite and others.

Provisions for discounts are provided for in the same period the related sales are recorded.

2 unchanged sentences

Upon sale, gift cards are recorded as unearned revenue and included within gift card liability in the accompanying consolidated balance sheets.

The revenues from gift cards are recognized when redeemed by customers.

Because the Company does not track addresses of gift card purchasers, the relevant jurisdiction related to the requirement for escheatment, the legal obligation to remit unclaimed assets to the state, is the Company’s state of incorporation, which is Delaware.

The revenue from gift cards is recognized when redeemed by customers.

Because the Company does not track addresses of gift card purchasers, the relevant jurisdiction related to the requirement for escheatment,

Tab le o f Contents

the legal obligation to remit unclaimed assets to the state, is the Company’s state of incorporation, which is Delaware.

The state of Delaware requires escheatment after 5 years from issuance.

The Company does not recognize breakage income because of its requirements to escheat unredeemed gift card balances.

Delivery —All of the Company’s locations offer a delivery option.

Delivery —The majority of the Company’s restaurant locations offer a delivery option.

Delivery services are fulfilled by third-party service providers whether delivery is ordered through the Company’s Native Delivery Channel or Marketplace Channel.

With respect to Native Delivery sales, the Company controls the delivery services and recognizes revenue, including delivery revenue, when the delivery partner transfers food to the customer.

With respect to Native Delivery sales, the Company controls the delivery services and recognizes revenue, including delivery revenue, when the delivery partner transfers food or beverage to the customer.

For these sales, the Company receives payment directly from the customer at the time of sale.

With respect to Marketplace Channel sales, the Company recognizes revenue, excluding delivery fees collected by the delivery partner as the Company does not control the delivery service, when control of the food is delivered to the end customer.

The Company receives payment from the delivery partner subsequent to the transfer of food and the

payment terms are short-term in nature.

For all delivery sales, the Company is considered the principal and recognizes the revenue on a gross basis.

The Company receives payment from the delivery partner subsequent to the transfer of food and the payment terms are short-term in nature.

For all delivery sales, the Company is considered the principal and recognize the revenue on a gross basis.

Income Taxes —The Company is subject to federal and state income taxes.

1 unchanged sentence

Under this method, the Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the respective carrying amounts and tax basis of assets and liabilities.

All deferred tax assets and liabilities are classified as noncurrent in the accompanying consolidated balance sheet.

All deferred tax assets and liabilities are classified as non-current in the accompanying consolidated balance sheet.

Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled.

11 unchanged sentences

This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The carrying amount of accounts receivable, tenant improvement allowance receivable, other current assets, accounts payable, accrued payroll and accrued expenses approximates fair value due to the short-term maturity of these financial instruments.

The fair value of loans to related parties is not readily determinable by virtue of the nature of the related parties’ relationship with the Company.

The carrying amount of accounts receivable, other current assets, accounts payable, accrued payroll and accrued expenses approximates fair value due to the short-term maturity of these financial instruments.

The Company’s contingent consideration liability is carried at fair value determined using Level 3 inputs in the fair value.

1 unchanged sentence

In other words, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment).

Impairment and Closure Costs — Impairment includes impairment charges related to our long-lived assets, which include property and equipment and internally developed software, and subsequent to the adoption of ASC 842, operating lease assets.

Tab le o f Contents

ASC 842, operating lease assets.

Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows (“asset group”).

1 unchanged sentence

The carrying amount of a store asset group includes stores’ property and equipment, primarily leasehold improvements, and operating lease assets, net of operating lease liability.

The carrying amount of a corporate-level asset group includes support center property and equipment, operating lease assets and internally developed software.

The carrying amount of a corporate-level asset group includes support center property and equipment, operating lease assets, internally developed software and internally developed technology.

Long-lived assets are reviewed by management for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be fully recoverable.

1 unchanged sentence

If projected future undiscounted cash flows are less than the carrying value of an asset group, then such assets are written down to their fair values.

The Company uses a discounted cash

flow model to measure the fair value of an asset group.

The Company uses a discounted cash flow model to measure the fair value of an asset group.

An impairment charge will be recognized in the amount by which the carrying amount of the store asset group exceeds its fair value.

3 unchanged sentences

The fair value of an operating lease asset is measured using a discounted cash flow valuation technique by discounting the estimated current and future market rental values using a property-specific discount rate.

A number of significant assumptions and estimates are involved in the application of the model to forecast operating cash flows, which are largely unobservable inputs and, accordingly, are classified as Level 3 inputs within the fair value hierarchy.

A number of significant assumptions and estimates are involved in the application of the model to forecast operating cash flows, which are largely unobservable inputs, including future revenue projections.

Accordingly, such significant assumptions are classified as Level 3 inputs within the fair value hierarchy.

Assumptions used in these forecasts are consistent with internal planning, and include sales growth rates, gross margins, and operating expense in relation to the current economic environment and the Company’s future expectations, competitive factors in its various markets, inflation, sales trends and other relevant economic factors that may impact the store under evaluation.

4 unchanged sentences

No indicators of impairment were found for the Company’s intangible assets for the fiscal years ended December 31, 2023, December 25, 2022, and December 26, 2021.

Based on the results of this analysis, management’s intent to close certain of its locations, and the long-lived assets associated with the vacating of its sweetgreen Support Center, the Company recorded non-cash impairment charges of $ 15.0 million during the fiscal year ended December 25, 2022, of which $ 8.8 million was related to property and equipment and $ 6.2 million was related to operating lease assets.

Of the $ 8.8 million of property and equipment impairment, $ 6.8 million was associated with our vacated sweetgreen Support Center and was recorded in restructuring charges within the consolidated statement of operations, and $ 2.0 million was associated with certain store locations and was recorded in impairment and closure costs within the consolidated statement of operations.

Of the $ 6.2 million of operating lease impairment, $ 5.8 million was associated with our vacated sweetgreen Support Center and was recorded in restructuring charges within the consolidated statement of operations, and $ 0.4 million was associated with certain store locations and was recorded in impairment and closure costs within the consolidated statement of operations.

Of the $ 15.0 million total non-cash impairment expense, $ 12.6 million was included within restructuring charges and $ 2.4 million was included within impairment and closure costs within the consolidated statement of operations.

Based on the results of this analysis, the Company recorded non-cash impairment charges of $ 4.3 million during the fiscal year ended December 31, 2023, related to the operating lease asset for the Company’s former Sweetgreen Support Center vacated previously during fiscal year 2022, which was recorded under restructuring charges within the consolidated statement of operations.

During the fiscal year ended December 25, 2022 the Company recorded non-cash impairment charge of $ 15.0 million, of which $ 8.8 million was related to property and equipment and $ 6.2 million was related to operating lease assets.

Of the $ 8.8 million of property and equipment impairment, $ 6.8 million was associated with the Company’s vacated former Sweetgreen Support Center and was recorded in restructuring charges within the consolidated statement of operations, and $ 2.0 million was associated with certain store locations and was recorded in impairment and closure costs within the consolidated statement of operations.

Of the $ 6.2 million of operating lease impairment, $ 5.8 million was associated with the Company’s vacated Sweetgreen Support Center and was recorded in restructuring charges within the consolidated statement of operations, and $ 0.4 million was associated with certain store locations and was recorded in impairment and closure costs within the consolidated statement of operations.

Tab le o f Contents

During the fiscal year ended December 26, 2021, the Company recorded non-cash impairment charges of $ 4.4 million, related to certain of the Company’s stores, as well as the two stores operated by Spyce Food Co.

During the fiscal year ended December 27, 2020, the Company recorded non-cash impairment charges of $ 1.5 million related to certain of the Company’s stores.

Prior to the adoption of ASC 842, closure costs included non-cash restaurant charges such as up-front expensing the net present value of unpaid rent remaining on the life of a lease offset by assumed sublease income.

Subsequent to the adoption of ASC 842, closure costs include lease and related costs associated with closed restaurants and the vacated support center, including the amortization of the operating lease asset, and expenses associated with common area maintenance fees (“CAM”) and real estate taxes.

During the fiscal year ended December 25, 2022, the Company incurred closure costs of $ 0.5 million related to one store previously

operated by Spyce Food Co.

(“Spyce”) and the vacated sweetgreen Support Center.

Of the $ 0.5 million of closure costs, $ 0.4 million was included within restructuring charges and $ 0.1 million was included within impairment and closure costs within the consolidated statement of operations.

During the fiscal year ended fiscal year December 26, 2021, we closed one store operated by Spyce, which was fully impaired in a prior period.

Subsequent to the adoption of ASC 842, closure costs include lease and related costs associated with closed restaurants including the amortization of the operating lease asset, and expenses associated with common area maintenance fees and real estate taxes for previously impaired stores.

During the fiscal year ended December 31, 2023, the Company recognized closure costs of $ 0.6 million related to the amortization of the operating lease asset and expenses associated with CAM and real estate taxes for previously closed stores, including three previously impaired stores that were closed during the fiscal year ended December 31, 2023.

During the fiscal year ended fiscal year December 25, 2022, the Company closed one store operated by Spyce, which was fully impaired in a prior period.

This closure resulted in closure costs of $ 0.5 million.

During fiscal year ended December 26, 2021, the Company closed one store operated by Spyce, which was fully impaired in prior periods.

This closure resulted in closure costs of $ 0.5 million.

Leases — The Company leases restaurants and corporate office space under various non-cancelable lease agreements that expire on various dates through 2033.

12 unchanged sentences

The Company applied ASC 842 using the effective date method, which allowed the Company to apply the standard as of the adoption date, and to recognize the cumulative effect of initially applying ASC 842 as an adjustment to accumulated deficit at December 27, 2021.

Therefore, the comparative information for the fiscal years ended December 26, 2021 and December 27, 2020 have not been adjusted and continues to be reported under ASC 840.

Therefore, the comparative information for the fiscal year ended December 26, 2021 has not been adjusted and continues to be reported under ASC 840.

Certain leases contain provisions for contingent rent that require additional rental payments based upon restaurant sales volume.

1 unchanged sentence

The Company receives tenant improvement allowances, generally in the form of cash, from some of the landlords of its leased properties.

The tenant improvement allowances that are expected to be received are included in the measurement of the initial operating lease liability, which are also reflected as a reduction to the initial measurement of the right-of-use asset and amortized over the applicable lease terms.

The tenant improvement allowances that are expected to be received are

Tab le o f Contents

included in the measurement of the initial operating lease liability, which are also reflected as a reduction to the initial measurement of the right-of-use asset and amortized over the applicable lease terms.

For periods prior to the adoption of ASC 842, leases are accounted for under ASC 840.

6 unchanged sentences

The difference between the cash paid to the property owner and the amount recognized as rent expense on the straight-line basis is included as deferred rent liability in the accompanying consolidated balance sheet.

Tenant improvement

allowances received and earned are recorded as deferred rent liability in the accompanying consolidated balance sheet and amortized on a straight-line basis as a reduction to rent expense over the applicable lease terms.

Tenant improvement allowances received and earned are recorded as deferred rent liability in the accompanying consolidated balance sheet and amortized on a straight-line basis as a reduction to rent expense over the applicable lease terms.

Contingencies —The Company is subject to various claims, lawsuits, governmental investigations, and administrative proceedings that arise in the ordinary course of business.

4 unchanged sentences

Marketing expense for the fiscal years ended December 31, 2023, December 25, 2022, and December 26, 2021 was $ 14.3 million, $ 14.5 million and $ 9.9 million, respectively, of which $ 10.7 million, $ 10.9 million and $ 7.9 million, respectively, is included in general and administrative expense, $ 3.1 million, $ 2.7 million and $ 1.8 million, respectively, is included in other restaurant operating costs and $ 0.5 million, $ 1.0 million, and $ 0.2 million is included in preopening costs in the accompanying consolidated statements of operations.

Restaurant Operating Costs— Restaurant operating costs primarily consist of food, beverage, packaging costs for to-go orders, salaries, benefits, and other expenses related to the Company’s in-store employees, maintenance and utilities at the Company’s restaurants, and leasing costs for the Company’s restaurants.

Operating Expenses— Operating expenses primarily consist of operations, finance, legal, human resources, administrative personnel, stock-based compensation, depreciation and amortization of assets, and pre-opening costs.

10 unchanged sentences

The Company utilized a dividend yield of zero , as it had no history or plan of declaring dividends on its common stock.

Tab le o f Contents

The grant date fair value of restricted stock units (“RSUs”) is estimated based on the fair value of the Company’s common stock on the date of grant.

7 unchanged sentences

If the stock price goals are met sooner than the derived service period, any unrecognized compensation expenses related to the founder PSUs will be expensed during the period the stock price targets are achieved.

Provided that each founder continues to be employed by the Company, stock-based compensation expense is recognized over the derived service period, regardless of whether the stock price goals are achieved.

Provided that each founder continues to be employed by the Company through the derived service period, stock-based compensation expense is recognized over the derived service period, regardless of whether the stock price goals are achieved.

Prior to the Company’s IPO, the Company determined that the Option Pricing Method (“OPM”) was the most appropriate method for determining the fair value of its common stock.

12 unchanged sentences

The Company reported net loss available to common shareholders for the fiscal years ended December 31, 2023, December 25, 2022, and December 26, 2021.

Upon completion of the Company's IPO, all of the Company’s outstanding shares of redeemable convertible preferred stock were automatically converted into 69,231,197 shares of common stock (which was then reclassified into Class A common stock) and their carrying amount reclassified into stockholders' (deficit) equity.

Tab le o f Contents

reclassified into Class A common stock) and their carrying amount reclassified into stockholders' (deficit) equity.

As of December 31, 2023, there were no shares of redeemable convertible preferred stock issued and outstanding.

5 unchanged sentences

The Company matches 50 % of an eligible employee’s contribution up to 3 % of wages.

An employee becomes eligible once the individual has worked at

the Company for 6 months, has worked 500 or more hours, and is 21 years or older.

An employee becomes eligible once the individual has worked at the Company for 6 months, has worked 500 or more hours, and is 21 years or older.

The Company has temporarily paused this matching contribution, effective in the fourth fiscal quarter of 2022.

For the fiscal years ended December 25, 2022, December 26, 2021, and December 27, 2020 the matching contribution was $ 1.0 million, $ 1.2 million, and $ 1.1 million, respectively.

For the fiscal years ended December 25, 2022, and December 26, 2021 the matching contribution was $ 1.0 million, and $ 1.2 million, respectively.

Recently Adopted Accounting Pronouncements

15 unchanged sentences

leases with terms of 12 months or less) and an accounting policy to account for lease and non-lease components as a single component for all leases.

In June 2016, the FASB issued ASU No.

2016-13, Financial Instruments-Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

The amendments in ASU 2016-13 provide amended guidance for estimating credit losses on certain types of financial instruments based on expected losses and the timing of the recognition of such losses.

Expanded disclosures related to the methods used to estimate the losses are also required.

The standard is effective for fiscal years beginning after December 15, 2022.

The Company adopted the ASU 2016-13 as of December 25, 2022 and the guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.

In March 2020, the FASB issued ASU No.

2020-04, “ Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting ” (“ASU 2020-04”), which provides temporary optional expedients and exceptions to the GAAP guidance on contract modifications and hedge accounting to ease the financial reporting burdens related to the expected market transition from the London Interbank Offered Rate (“LIBOR”) and other interbank offered rates to alternative reference rates.

This ASU is effective for all entities beginning as of its date of effectiveness, March 12, 2020.

The guidance is temporary and can be applied through December 31, 2022.

The Company adopted the ASU 2020-04 as of December 29, 2020 and the guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures.

Recently Issued Accounting Pronouncements Not Yet Adopted

The Company reviewed all recently issued accounting pronouncements and concluded that they were not applicable or not expected to have a significant impact on our audited consolidated financial statements.

In December 2023, the FASB issued ASU No.

2023-09, “Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.” The ASU includes amendments requiring enhanced income tax disclosures, primarily related to standardization and disaggregation of rate reconciliation categories and income taxes paid by jurisdiction.

The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted, and should be applied either prospectively or retrospectively.

The Company is currently evaluating the impact of adopting this ASU on our disclosures.

The Company reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the consolidated financial statements.

Tab le o f Contents

REVENUE RECOGNITION

15 unchanged sentences

$ 584,041 $ 470,105 $ 339,874

Gift card liability included in gift card and loyalty liability within the accompanying consolidated balance sheet was as follows:

Gift card liability included in gift card within the accompanying consolidated balance sheet was as follows:

(dollar amounts in thousands) December 31,

7 unchanged sentences

$ 480 $ 378 $ 244

sweetgreen Rewards

Changes in sweetgreen Rewards liability included in gift card and loyalty liability within the accompanying consolidated balance sheet was as follows:

(dollar amounts in thousands) December 26,

sweetgreen Rewards liability, beginning balance

Revenue deferred

Revenue recognized

sweetgreen Rewards liability, ending balance

All the loyalty liability outstanding at the beginning of each year presented was recognized during each respective year.

The Company’s loyalty program was terminated during fiscal year 2021, and all rewards revenue related to performance obligations were satisfied as of December 26, 2021.

During the second quarter of fiscal 2023, the Company launched its Sweetpass and Sweetpass + loyalty program nationwide.

Prior to the introduction of Sweetpass, t he Company had a loyalty program called Sweetgreen Rewards, which was terminated during fiscal year 2021 and all revenue related to performance obligations for Sweetgreen Rewards was satisfied as of December 26, 2021.

Sweetpass is the Company’s loyalty program where customers can earn rewards, birthday treats, menu exclusives and more.

All customers that create a digital account will automatically be enrolled in this free program.

For additional perks like a daily $ 3 off, customers can upgrade to Sweetpass+ for $ 10 per month.

In both the Sweetpass and Sweetpass + program, customers can earn rewards for completing challenges which are generally earned by customers when they purchase certain goods within established time periods of one to two weeks.

The Rewards generally provide customers with future discounts or free goods, and typically expire within one week to two weeks after they are issued.

The Company defers revenue associated with the estimated standalone selling price of the Rewards, which is based on the value of the product to which the reward is related to and incorporates the estimate of the likelihood that the Rewards will be redeemed.

The Rewards are recognized as revenue when the customer redeems the Rewards or it expires.

Due to the insignificant nature of outstanding Rewards as of December 31, 2023, no revenue was deferred for the fiscal year ended December 31, 2023 related to the Rewards.

The costs associated with Rewards redeemed are primarily included within food, beverage and packaging costs.

The contract terms for Sweetpass + are generally one month and customers have the right to terminate the monthly contract at any point in time.

The Company determined that the customer receives daily benefits evenly during the one month contract period and all benefits associated with Sweetpass + expire at the end of the

Tab le o f Contents

The $ 10 monthly subscription revenue related to Sweetpass + is recognized over the contract period, which is typically one month .

Additionally, the daily discounts offered under Sweetpass + is recognized as a reduction of revenue when customers redeem such discount.

Due to the insignificant nature of unrecognized revenue related to Sweetpass + as of December 31, 2023, no revenue was deferred for the fiscal year ended December 31, 2023 related to the monthly subscription fees paid by customers for Sweetpass + .

The following tables present information about the Company’s financial liabilities measured at fair value on a recurring basis:

4 unchanged sentences

Contingent consideration $ 8,350 — — 8,350 $ 21,296 — — 21,296

Total $ 21,296 $ — $ — $ 21,296 $ 20,477 $ — $ — $ 20,477

The fair value of the contingent consideration was determined based on significant inputs not observable in the market.

Contingent Consideration

In connection with the acquisition of Spyce, the former equityholders of Spyce may receive up to 714,285 additional shares of Class A common stock, calculated based on the initial offering price of the Company’s Class A common stock of $ 28.00 per share sold in the Company’s IPO (the “Reference Price”), contingent on the achievement of certain performance milestones between the closing date of the acquisition and June 30, 2026.

Additionally, the former equityholders of Spyce may receive true-up payments in cash as follows:

if (i) as of the second anniversary of the closing date of the acquisition, the 30-Day Volume-Weighted Average Price of the Company’s Class A common stock (“VWAP Price”) is less than the Reference Price, then the Company shall pay to each former equityholder of Spyce the delta between the Reference Price and the VWAP Price for the upfront portion of the purchase price and (ii) as of the date of the achievement of any of the three milestones, the VWAP Price as of such milestone achievement date is less than the Reference Price, then the Company shall pay to each former equityholder of Spyce the delta between the Reference Price and the VWAP Price for the contingent consideration associated with such milestone.

The contingent consideration was valued using the Monte Carlo method.

The analysis considered, among other items, the equity value, the contractual terms of the Spyce merger agreement, potential liquidity event scenarios (prior to the IPO), the Company’s credit adjusted discount rate, equity volatility, risk-free rate and the probability of milestone targets required for issuance of shares under the contingent consideration will be achieved.

In connection with the Company’s acquisition of Spyce on September 7, 2021, the former equity holders of Spyce may receive up to 714,285 additional shares of Class A common stock, calculated based on the initial offering price of the Company’s Class A common stock of $ 28.00 per share sold in the Company’s initial public offering (“IPO”) (the “Reference Price”), contingent on the achievement of certain performance milestones between the closing date of the acquisition and June 30, 2026 .

Add itionally, the former equity holders of Spyce may receive true-up payments in cash, as described here.

If as of the second anniversary of the closing date of the acquisition, the 30-Day Volume-Weighted Average Price of the Company’s Class A common stock (“VWAP Price”) is less than the Reference Price, then the Company shall pay to each former equity holder of Spyce that has continually held their respective portion of the 1,316,763 total shares of the Company’s Class A common stock issued in connection with the acquisition during such period, the delta between the Reference Price and the VWAP Price for the upfront portion of the purchase price (“true-up payment”).

As of the second anniversary of the closing date of the acquisition, the Company calculated the delta between the Reference Price and the VWAP Price for the upfront portion of the purchase price as $ 13.62 .

This resulted in a true-up payment of $ 10.4 million, due to 570,249 shares that did not meet the continuous holding requirement.

The $ 10.4 million true-up payment is included within financing in the Consolidated Statements of Cash Flows as the payment is less than the original fair value of contingent consideration.

Additionally, if as of the date of the achievement of any of the three milestones, the VWAP Price as of such milestone achievement date is less than the Reference Price, then the Company shall pay to each former equity holder of Spyce that is eligible to receive a milestone payment the delta between the Reference Price and the VWAP Price for the contingent consideration associated with such milestone.

The contingent consideration, excluding the true-up payment, which was calculated as noted above, was valued using the Monte Carlo method.

The analysis considered, among other items, the equity value, the contractual terms of the Spyce merger agreement, potential liquidity event scenarios (prior to the IPO), the Company’s credit-adjusted discount rate, equity volatility, risk-free rate, and the probability that milestone targets required for issuance of shares under the contingent consideration will be achieved.

During the fourth quarter of fiscal 2023, the first milestone was achieved, which resulted in former equity holders of Spyce being eligible to receive $ 6.0 million, which was issued and paid subsequent to December 31, 2023 .

Of this $ 6.0 million, $ 2.1 million was issued in Class A common stock and $ 3.9 million was issued in cash, based on a VWAP Price of $ 10.20 .

As the stock was issued and payment was made within one year from December 31, 2023, it was included in other current liabilities within the Consolidated Balance Sheets.

Tab le o f Contents

The following table provides a roll forward of the aggregate fair values of the Company’s contingent consideration, for which fair value is determined using Level 3 inputs.

3 unchanged sentences

Balance—December 25, 2022

True-up payment ( 10,421 )

Current portion of contingent consideration included in other current liabilities ( 6,000 )

Change in fair value 3,475

Balance—December 31, 2023

The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the fiscal years ended December 31, 2023, December 25, 2022, and December 26, 2021 reflecting certain property and equipment and operating leases for which an impairment loss was recognized during the corresponding periods within impairment and closure costs and restructuring charges within the consolidated statement of operations.

The Company recorded non-cash impairment charges of $ 15.0 million during the fiscal year ended December 25, 2022, of which $ 8.8 million was related to property and equipment and $ 6.2 million was related to operating lease assets.

consolidated statement of operations.

Fair Value Measurements

4 unchanged sentences

(dollar amounts in thousands)

Certain property and equipment, net

$ — $ — $ — $ — $ 8,821

Operating lease assets $ 5,719 $ — $ — $ 5,719 $ 4,291

7 unchanged sentences

$ — $ — $ — $ — $ 8,821

Operating lease assets $ 10,744 $ — $ — $ 10,744 $ 6,228

Fair Value Measurements

8 unchanged sentences

Unobservable inputs include the discount rate, projected restaurant revenues and expenses, and sublease income if we are closing the restaurant.

For the operating lease assets fair value estimate as of December 25, 2022, the Company estimated the sublease income through early fiscal 2032 and discounted such cash flows using a property specific discount rate of approximately nine percent.

For the operating lease assets’ fair value estimate as of December 31, 2023 and December 25, 2022, the Company estimated the sublease income through early fiscal 2032 and discounted such cash flows using a property specific discount rate of approximately nine percent.

Tab le o f Contents

PROPERTY AND EQUIPMENT

5 unchanged sentences

2023 December 25,

Furniture and fixtures

Kitchen equipment

$ 89,814 $ 71,304

1 unchanged sentence

37,984 30,543

Kitchen equipment

Furniture and fixtures

36,692 27,262

11 unchanged sentences

Loss on asset disposals for the fiscal years ended December 31, 2023, December 25, 2022, and December 26, 2021, was $ 0.7 million, $ 0.3 million, and $ 0.1 million, respectively.

As of December 25, 2022, the Company had twenty facilities under construction due to open during 2023.

As of December 31, 2023, the Company had seven facilities under construction due to open during 2024.

Depreciation commences after a store opens and the related assets are placed in service.

Based on the Company’s review of its property and equipment for impairment, the Company recorded non-cash impairment charges of $ 8.8 million for the fiscal year ended December 25, 2022, of which $ 2.0 million was recorded within impairment and closure costs and $ 6.8 million was recorded within restructuring charges within the consolidated statement of operations.

For the fiscal years ended December 26, 2021 and December 27, 2020, the Company recorded non-cash impairment charges of $ 4.4 million and $ 1.5 million, respectively, within impairment and closure costs in the consolidated statement of operations.

GOODWILL AND INTANGIBLE ASSETS, NET

The following table presents the changes in the Company’s Goodwill balance:

(dollar amounts in thousands)

Balance—December 27, 2020 $ 6,275

Additions to goodwill in 2020

Balance—December 26, 2021 35,970

Additions to goodwill in 2022

Balance—December 25, 2022 $ 35,970

The change in the goodwill balance from December 27, 2020 is attributable to the Company’s acquisition of Spyce.

As of December 25, 2022, the Company had twenty facilities under construction, all of which were opened during fiscal year 2023.

Depreciation commences after a store opens and the related assets are placed in service.

Based on the Company’s review of its property and equipment for impairment, for the fiscal year ended December 31, 2023 the Company did not record a non-cash impairment charge.

For the fiscal year ended December 25, 2022, the Company recorded non-cash impairment charges of $ 8.8 million, of which $ 2.0 million was recorded within impairment and closure costs and $ 6.8 million was recorded within restructuring charges within the consolidated statement of operations.

For the fiscal year ended December 26, 2021, the Company recorded non-cash impairment charges of $ 4.4 million, respectively, within impairment and closure costs in the consolidated statement of operations.

INTANGIBLE ASSETS, NET

The following table presents the Company’s intangible assets, net balances:

6 unchanged sentences

Total $ 27,407 $ 30,562

Developed technology was recognized in conjunction with the Company’s acquisition of Spyce on September 7, 2021.

The estimated useful lives of developed technology is 5 years.

As of December 25, 2022, developed technology has not been placed into service.

Developed technology intangible assets were recognized in conjunction with the Company’s acquisition of Spyce on September 7, 2021.

The estimated useful lives of developed technology is five years and the assets were placed into service during the second fiscal quarter of 2023.

Amortization expense for internal software was $ 10.0 million, $ 7.7 million, and $ 6.4 million for the fiscal years ended 2023, 2022 and 2021, respectively.

Estimated amortization of internal software for each of the next five years is as follows:

Tab le o f Contents

(dollar amounts in thousands)

6 unchanged sentences

Additionally, the Company paid off approximately $ 3.5 million of certain indebtedness and transaction expenses of Spyce.

Furthermore, the former equityholders of Spyce may receive up to an aggregate of 714,285 additional shares of Class A common stock contingent on the achievement of certain performance milestones between the closing date and June 30, 2026.

Furthermore, the former equity holders of Spyce may receive up to an aggregate of 714,285 additional shares of Class A common stock contingent on the achievement of certain performance milestones between the closing date and June 30, 2026.

The acquisition of Spyce was not significant pursuant to Rule 3-05 of Regulation S-X.

The following allocation of the purchase price and the transaction costs is as follows (in thousands):

The allocation of the purchase price and the transaction costs is as follows (in thousands):

Fair value of assets acquired

17 unchanged sentences

Determining the fair value of the intangible assets acquired requires significant judgment, including the amount and timing of expected future cash flows, long-term growth rates and discount rates.

The fair value of the intangibles assets was determined using a cost approach, which were based on the Company’s best estimate of recreating the developed technology acquired as part of the transaction.

The fair value of the

Tab le o f Contents

intangibles assets was determined using a cost approach, which were based on the Company’s best estimate of recreating the developed technology acquired as part of the transaction.

This includes estimates related to opportunity costs, developers profit, weighted average weight of return, and projected overhead.

Use of different estimates and judgments could yield materially different results.

The Company’s consolidated financial statements for the fiscal year ended December 25, 2022 reflect results of operations of the newly acquired business.

The Company’s consolidated financial statements for the fiscal years ended December 31, 2023 and December 25, 2022 reflect results of operations of the acquired business.

The Company accounted for this acquisition under the acquisition method in accordance with ASC Topic 805, Business Combinations.

The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing

restaurants and the workforce of Spyce.

The goodwill is attributable to the synergies the Company expects to achieve through leveraging the acquired technology to its existing restaurants and the workforce of Spyce.

For tax purposes the acquisition was treated as a stock purchase, and as such any goodwill or other intangible assets recorded as a result of this transaction are not deductible for tax purposes .

4 unchanged sentences

December 26, 2021

Fiscal Year Ended

December 27, 2020

$ 340,807 $ 220,651

Net loss attributable to Sweetgreen, Inc.

7 unchanged sentences

2023 December 25,

Rent deferrals

$ 1,728 $ 2,547

Fixed asset accrual $ 3,577 $ 5,963

Accrued general and sales tax

Rent deferrals

Accrued delivery fee

Accrued settlements and legal fees

Fixed asset accrual 5,963 2,091

Other accrued expenses

2 unchanged sentences

Credit Facility —On December 14, 2020, the Company entered into a First Amended and Restated Revolving Credit, Delayed Draw Term Loan and Security Agreement (as subsequently amended, as discussed below, the “2020 Credit Facility”) with EagleBank.

The 2020 Credit Facility superseded the Company’s 2017 revolving credit facility with EagleBank and allows the Company to borrow (i) up to $ 35.0 million (subsequently increased to $ 45.0 million) in the aggregate principal amount under the refinanced revolving facility and (ii) up to $ 10.0 million in the aggregate principal amount under a delayed draw term loan facility, which expired on December 14, 2021, and which was never drawn on.

Tab le o f Contents

14, 2021, and which was never drawn on.

The refinanced revolving facility originally matured on December 14, 2022 (and has since been extended to December 13, 2024).

7 unchanged sentences

As of December 31, 2023 and December 25, 2022, the Company had no outstanding balance under the 2020 Credit Facility.

On April 26, 2023, the Company and Eagle Bank further amended the 2020 Credit Facility to allow for an increase to the issuance of Letters of Credit of up to $ 3.5 million.

In connection therewith, the Company increased its irrevocable standby Letter of Credit with Eagle Bank to $ 1.95 million, with The Travelers Indemnity Company as the beneficiary in connection with the Company’s workers’ compensation insurance policy.

This replaced the previous amendment dated May 9, 2022.

Under the 2020 Credit Facility, the Company is required to maintain certain levels of liquidity (defined as total cash and cash equivalents on hand plus the available amount under the revolving facility) which liquidity amount shall be no less than the trailing 90-day cash burn.

14 unchanged sentences

As a result, the Company recorded a $ 4.9 million cumulative-effect adjustment to accumulated deficit, of which $ 4.2 million was related to legal fees no longer capitalizable under ASC 842 and $ 0.7 million was related to operating lease asset impairment of stores determined to be impaired in a prior period.

Tab le o f Contents

In addition to the items mentioned above, the Company elected the following:

3 unchanged sentences

Prior period amounts were not revised and continue to be reported in accordance with ASC 840, the accounting standard then in effect.

Upon transition, on December 27, 2021, the Company recorded the following increases (decreases) to the respective line items on the consolidated balance sheet:

(dollar amounts in thousands) December 26,

2021 Increases/(Decreases) December 27,

Tenant improvement receivable 16,695 ( 16,695 ) —

Current portion of lease acquisition costs 525 ( 432 ) 93

Operating lease asset — 231,705 231,705

Prepaid expenses 13,763 ( 3,244 ) 10,519

Other current assets 155 1,495 1,650

Lease acquisition costs, net 4,391 ( 3,780 ) 611

Current portion of deferred rent liability 6,061 ( 6,061 ) —

Operating lease liabilities, current — 24,757 24,757

Deferred rent liability, net of current portion 38,402 ( 38,402 ) —

Non-current operating lease liability — 232,541 232,541

Other non-current liability 500 1,158 1,658

Accumulated deficit ( 476,216 ) ( 4,944 ) ( 481,160 )

The components of lease cost for the fiscal year ended December 25, 2022 were as follows:

The components of lease cost for the fiscal years ended December 31, 2023 and December 25, 2022 were as follows:

(dollar amounts in thousands) Classification December 31,

2023 December 25,

Operating lease cost Occupancy and related expense

7 unchanged sentences

Total lease cost $ 59,289 $ 51,114

During the fiscal year ended December 25, 2022, the Company recorded non-cash impairment charges related to operating lease assets of $ 6.2 million.

Of this amount, $ 5.8 million is recorded within restructuring charges and $ 0.4 million is recorded within impairment and closure costs in the consolidated statement of operations.

During the fiscal year ended December 31, 2023, the Company recorded non-cash impairment charges related to operating lease assets of $ 4.3 million, all of which is recorded within restructuring charges in the consolidated statement of operations.

During fiscal year December 25, 2022, the Company recorded non-cash impairment charges related to operating lease assets of $ 6.2 million, of which $ 5.8 million is recorded within restructuring charges and $ 0.4 million is recorded within impairment and closure costs in the consolidated financial statements.

As of December 31, 2023, future minimum lease payments for operating leases consisted of the following:

3 unchanged sentences

As of December 31, 2023 the Company had additional operating lease commitments of $ 25.9 million for non-cancelable leases without a possession date, which the Company anticipates will commence in fiscal year 2024.

These nature of such lease commitments is consistent with the nature of the leases that the Company has executed thus far.

A summary of lease terms and discount rates for operating leases as of December 25, 2022 is as follows:

The nature of such lease commitments is consistent with the nature of the leases that the Company has executed thus far.

A summary of lease terms and discount rates for operating leases as of December 31, 2023 and December 25, 2022 is as follows:

Tab le o f Contents

2023 December 25,

3 unchanged sentences

Operating Leases 6.51 % 6.09 %

Supplemental cash flow information related to leases as of December 25, 2022 is as follows:

Supplemental cash flow information related to leases as of December 31, 2023 and December 25, 2022 is as follows:

2023 December 25,

3 unchanged sentences

Operating leases $ 24,416 $ 57,396

Prior to the adoption of ASC 842, the fiscal years ended December 26, 2021 and December 27, 2020 were in accordance with ASC 840.

As such, the following table below outlines the components of rent expense for the fiscal years ended December 26, 2021 and December 27, 2020:

Prior to the adoption of ASC 842, the fiscal years ended December 26, 2021 were in accordance with ASC 840.

As such, the following table below outlines the components of rent expense for the fiscal years ended December 26, 2021:

(dollar amounts in thousands) Fiscal Year Ended

December 26, 2021

Fiscal Year Ended

December 27, 2020

$ 31,901 $ 30,248

Contingent rent

1 unchanged sentence

sublease income

( 247 ) ( 493 )

$ 35,448 $ 31,951

Rent expense for the fiscal years ended December 26, 2021 and December 27, 2020 was $ 35.4 million and $ 32.0 million, respectively, of which $ 29.8 million and $ 27.7 million, respectively, is included in occupancy and related expenses, $ 2.5 million and $ 2.4 million, respectively, is included in general and administrative expenses and $ 3.1 million and $ 1.8 million, respectively, is included in pre-opening costs in the accompanying consolidated statements of operations.

Rent expense for the fiscal year ended December 26, 2021 was $ 35.4 million, of which $ 29.8 million, is included in occupancy and related expenses, $ 2.5 million, is included in general and administrative expenses and $ 3.1 million, is included in pre-opening costs in the accompanying consolidated statements of operations.

In April 2020, the FASB issued guidance allowing entities to make a policy election whether to account for lease concessions related to the COVID-19 pandemic as lease modifications.

3 unchanged sentences

The rent deferrals are recorded as part of accrued expenses and the rent abatements are accounted for as variable lease payments.

The recognition of rent abatements did not have a material impact on the Company’s consolidated financial statements as of December 26, 2021.

The Company recorded $ 1.3 million and $ 1.7 million of rent deferrals within accrued expenses as of December 31, 2023 and December 25, 2022, respectively, see Note 7.

Future minimum lease payments under ASC 840 required under existing lease obligations as of December 26, 2021 were as follows:

(dollar amounts in thousands)

2022 $ 42,513

Thereafter 162,818

Total $ 385,229

In November 2021 in connection with the IPO, the Company implemented a dual class common stock structure pursuant to which all the then-outstanding shares of its common stock were reclassified as Class A common stock and a new class of Class B common stock was authorized.

2 unchanged sentences

The Class A and Class B common stock have the same dividend and liquidation rights.

Any founder’s shares of Class B common stock will convert automatically into Class A common stock, on a one -to-one basis, upon either the (i) the sale or transfer of such share of Class B common stock (except for certain permitted transfers described in the Company’s amended and restated certificate of incorporation, including transfers for tax and estate planning purposes or to any other founder or any affiliate of any founder) or (ii) the one-year anniversary of the death or permanent disability of such founder.

Tab le o f Contents

certificate of incorporation, including transfers for tax and estate planning purposes or to any other founder or any affiliate of any founder) or (ii) the one-year anniversary of the death or permanent disability of such founder.

Additionally, all outstanding shares of the Company’s Class B common stock will convert automatically into shares of the Company’s Class A common stock on the final conversion date, defined as the earlier of (i) the nine-month anniversary of the death or permanent disability of the last of the founders;

15 unchanged sentences

RSUs and PSUs outstanding under the 2019 Equity Incentive Plan and 2021 Equity Incentive Plan 7,572,945 8,402,109

Shares available for future issuance under the 2019 Equity Incentive Plan and 2021 Equity Incentive Plan

Shares available for future issuance under the 2021 Equity Incentive Plan

10,572,899 10,655,568

5 unchanged sentences

The Series J Warrants were exercisable for a number of shares based on the fair market value of the Series J Preferred Stock at the time of exercise, up to a maximum of 2,000,715 shares of Series J Preferred Stock (as adjusted for any stock split, stock dividend, combination, or other recapitalization or reclassification) in the aggregate.

Additionally, in connection with entering into a prior credit facility with CNF Investments IV, LLC in December 2016, the Company issued a warrant to purchase 235,000 shares of Series F preferred stock (the “Series F Warrants”).

Tab le o f Contents

Both the Series J Warrants and Series F Warrants were determined to be classified as a liability on the consolidated balance sheet because the warrants are free standing financial instruments that may require the Company to transfer assets upon exercise.

8 unchanged sentences

The OPM framework involves making assumptions for the equity value, expected time to liquidity, volatility and risk-free rate.

The equity value was implied based on an independent third-party valuation such that the value for the weighted average value of most recent financing across the IPO

and Stay Private scenarios equals the amount paid.

The equity value was implied based on an independent third-party valuation such that the value for the weighted average value of most recent financing across the IPO and Stay Private scenarios equals the amount paid.

The equity value implied in the Stay Private scenario was further supported using the DCF and Market approaches.

3 unchanged sentences

Additionally, the Series J Warrants were automatically exercised upon the IPO for 1,557,686 shares of Class A common stock and the Series F Warrants were exercised during fiscal year 2021 and converted into 235,000 shares of Class A common stock in connection with the IPO.

The following table presents the Company’s authorized and outstanding preferred stock as of December 27, 2020:

(dollar amounts in thousands except per share

amounts) Preferred

Authorized Preferred Shares

Outstanding Issuance

Share Liquidation

Preference Carrying

5,340,351 5,340,351 $ 0.8500 $ 4,539 $ 4,539

3,831,756 3,831,756 $ 1.4314 $ 5,485 $ 5,481

3,875,935 3,875,935 $ 2.0094 $ 7,788 $ 7,513

8,345,723 8,345,723 $ 2.6900 $ 25,980 $ 22,187

4,729,065 4,729,065 $ 4.0700 $ 20,486 $ 19,105

4,798,223 4,563,223 $ 7.6700 $ 35,000 $ 34,842

7,766,650 7,766,650 $ 9.0000 $ 69,900 $ 69,577

15,337,423 15,337,423 $ 13.0400 $ 200,000 $ 193,488

8,771,925 8,771,925 $ 17.1000 $ 150,000 $ 148,906

STOCK-BASED COMPENSATION

2021 Equity Incentive Plan

In connection with the Company’s IPO, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”), which allows for issuance of stock options (including incentive stock options and non-qualified stock options), RSUs, including performance-based awards, and other types of awards.

In connection with the Company’s IPO, the Company adopted the 2021 Equity Incentive Plan (the “2021 Plan”), which allows for issuance of stock options (including incentive stock options and non-qualified stock options), restricted stock units (“RSUs”), including performance-based awards, and other types of awards.

The maximum number of shares of common stock that may be issued under the 2021 Plan is 35,166,753 , which is the sum of (i) 11,500,000 new shares, plus (ii) an additional number of shares consisting of (a) shares that were available for the issuance of awards under any prior equity incentive plans in place (which shall include the Prior Stock Plans (as defined below) and the Spyce Plan (as defined below)) prior to the time the Company’s 2021 Plan became effective and (b) any shares of the Company’s common stock subject to outstanding stock options or other stock awards granted under the Prior Stock Plans that on or after the Company’s 2021 Plan became effective, terminate or expire prior to the exercise or settlement;

7 unchanged sentences

Options granted to members of the Company’s board of directors generally vest immediately.

Tab le o f Contents

2009 Stock Plan and 2019 Equity Incentive Plan

6 unchanged sentences

In conjunction with the Spyce acquisition, the Company issued shares of Class S stock which converted to the Class A common stock upon the Company’s IPO.

Shares of Class S stock that were issued to certain Spyce employees, and the corresponding shares of Class A common stock received by such employees in connection with the Company’s IPO, are subject to time-based service requirements and will vest on September 7, 2023, subject to vesting acceleration in full upon the occurrence of certain events.

Shares of Class S stock that were issued to certain Spyce employees, and the corresponding shares of Class A common stock received by such employees in connection with the Company’s IPO, are subject to time-based service requirements and vested on September 7, 2023, as these requirements were met.

As the value is fixed, the grant date fair value of these shares represents the fair value of the shares on the acquisition date.

5 unchanged sentences

and (ii) 4,300,000 shares, except before the date of any such increase, the Company’s board of directors may determine that such increase will be less than the amount set forth in clauses (i) and (ii).

On January 1, 2023, the number of shares of the Company’s common stock reserved for issuance automatically increased by 1,111,331 shares.

On January 1, 2023, the ESPP authorized shares increased by 1,111,331 shares to 4,111,331 in accordance with the above.

As of December 31, 2023, there had been no offering period or purchase period under the ESPP, and no such period will begin unless and until determined by the administrator.

1 unchanged sentence

Prior to the Company’s IPO, the Company granted stock options to its employees, as well as nonemployees (including directors and others who provide subst antial services to the Company) under the Prior Stock Plans, and subsequent to its IPO, under the 2021 Plan .

In addition, as part of the acquisition of Spyce, see Note 6 for further details, the Company assumed certain options to purchase shares of common stock issued pursuant to the Spyce Food Co.

In addition, as part of the Spyce acquisition, see Note 6 for further details, the Company assumed certain options to purchase shares of common stock issued pursuant to the Spyce Food Co.

2016 Stock Option and Grant Plan (the “Spyce Plan”), which, following such assumption, are exercisable for 96,151 shares of the Company’s Class A common stock with a weighted average exercise price of $ 8.95 .

The portion of the assumed options under the Spyce plan related to vesting prior to the closing date of the acquisition is included in the fair value of the equity consideration transferred in the acquisition when measuring goodwill.

The portion of the assumed options under the Spyce plan that vest

after the closing date of the acquisition will be recognized as compensation expense as the assumed options vest.

Tab le o f Contents

measuring goodwill.

The portion of the assumed options under the Spyce plan that vest after the closing date of the acquisition will be recognized as compensation expense as the assumed options vest.

The following table summarizes the Company’s stock option activity for the fiscal years ended December 31, 2023 and December 25, 2022 , including options assumed pursuant to the Spyce Plan, as described above:

(dollar amounts in thousands except per share amounts) Number of

(dollar amounts in thousands except share and per share amounts)

Shares Weighted-

4 unchanged sentences

13,773,414 $ 6.87 7.42 $ 337,269

Options assumed 85,757 8.95

Options granted

22 unchanged sentences

13,219,388 7.77 5.97 $ 53,758

The weighted-average fair value of options granted in fiscal year 2022 was $ 8.02 for stock options issued, all of which were granted to employees.

The weighted-average fair value of options granted in fiscal year 2021 was $ 7.84 and $ 4.47 for stock options issued to employees and non-employees, respectively.

The weighted-average fair value of options granted in fiscal years 2023 and 2022 was $ 9.07 and $ 8.02 , respectively, all of which were granted to employees.

The weighted average fair value of options granted in fiscal year 2021 was $ 7.84 and $ 4.47 for stock options issued to employees and non-employees, respectively.

The fair value of each option granted has been estimated as of the date of the grant using the Black-Scholes option-pricing model with the assumptions during the fiscal years ended December 25, 2022 and December 26, 2021, included in the table below.

The fair value of each option granted has been estimated as of the date of the grant using the Black-Scholes option-pricing model with the assumptions during the fiscal years ended December 31, 2023, December 25, 2022 and December 26, 2021 included in the table below.

The Company has elected to account for forfeitures as they occur.

3 unchanged sentences

December 25, 2022

Fiscal Year Ended December 27,

Fiscal Year Ended

December 26, 2021

Risk-free interest rate

15 unchanged sentences

The Company calculated the expected term using the simplified method for “plain vanilla” stock option awards.

Tab le o f Contents

Expected Volatility —There is no substantive share price history to calculate volatility and, as such, the Company has elected to use an approximation based on the volatility of other comparable public companies, which compete directly with the Company, over the expected term of the options.

10 unchanged sentences

Stock-based compensation expense for RSUs that had not met the service-based vesting condition as of December 31, 2023 will be recorded over the remaining requisite service period.

During the fiscal years ended December 25, 2022 and December 26, 2021 , the Company issued 724,077 and 388,668 RSUs, respectively, to certain employees, which vest upon the satisfaction of certain service periods.

During the fiscal years ended December 31, 2023 and December 25, 2022 , the Company issue d 428,428 a nd 724,077 RSUs, respectively, to certain employees, which vest upon the satisfaction of certain service periods.

The fair value of these RSUs was determined based on the Company’s closing stock price the business day immediately preceding the date of grant.

The service period of these RSUs is satisfied over a range of 18 months to 4 years.

The service period of these RSUs is satisfied over a range of 0 to 4 years .

The RSUs are excluded from common stock issued and outstanding until the satisfaction of these vesting conditions and are not considered a participating security for purposes of calculating net loss per share attributable to common stockholders.

Tab le o f Contents

The following table summarizes the Company’s RSU activity for fiscal years ended December 31, 2023 and December 25, 2022 :

3 unchanged sentences

Balance—December.

Granted 2,418,793 24.20

( 15,000 ) 23.00

Forfeited, cancelled, or expired

( 11,367 ) 29.51

Balance—December.

26, 2021 2,392,426 $ 24.18

Granted 724,077 19.45

11 unchanged sentences

As of December 31, 2023, unrecognized compensation expense related to RSUs was $ 8.2 million and is expected to be recognized over a weighted average period of 1.17 years .

The fair value of shares earned as of the vesting date during the fiscal years ended December 25, 2022 and December 26, 2021 was $ 15.3 million and $ 0.4 million, respectively.

The fair value of shares earned as of the vesting date during the fiscal years ended December 31, 2023, December 25, 2022 and December 26, 2021 was $ 6.3 million, $ 15.3 million and $ 0.4 million respectively.

Performance stock units

12 unchanged sentences

7 $ 75.00 900,000

The Company estimated the grant date fair value of the founder PSUs based on multiple stock price paths developed through the use of a Monte Carlo simulation model within a hybrid framework with two possible scenarios (IPO and Change of Control).

Tab le o f Contents

scenarios (IPO and Change of Control).

A Monte Carlo simulation model also calculates a derived service period for each of the seven vesting tranches, which is the measure of the expected time to achieve each Company stock price target, as described above.

A Monte Carlo simulation model requires the use of various assumptions, including the underlying stock price, volatility, expiration term, and the risk-free interest rate as of the valuation date, corresponding to the length of time remaining in the performance period, and expected dividend yield.

The derived service period calculation also requires the cost of equity assumption to be used in

the Monte Carlo simulation model.

The derived service period calculation also requires the cost of equity assumption to be used in the Monte Carlo simulation model.

Term and volatility are typically the primary drivers of this valuation.

4 unchanged sentences

The Company will recognize total stock-based compensation expense of $ 103.0 million over the derived service period of each tranche, which is between 1.7 to 4.4 years, using the accelerated attribution method as long as the founders satisfy the service-based vesting condition.

As of December 31, 2023 unrecognized compensation expense related to PSUs was $ 28.5 million and is expected to be recognized over a weighted average period of 1.24 years .

Subsequent to the Company’s IPO, the Company issued 321,428 PSUs to the Spyce founders (“Spyce PSUs”) based on three separate performance-based milestone targets.

The Company will recognize stock compensation expense related to each performance-based milestone target as it becomes probable of occurring, based on the stock price on the date of grant.

During the fiscal years ended December 25, 2022 and December 26, 2021 , the Company has not recorded any stock-based compensation expense related to the Spyce PSUs.

During the fiscal years ended December 31, 2023 and December 25, 2022 , the Company h as not recorded any stock-based compensation expense related to the Spyce PSUs.

Unrecognized compensation expense related to the Spyce PSUs is $ 9.8 million, which will be expensed if the performance-based milestone targets become probable of being met.

During the fiscal year ended December 25, 2022 the Company did no t issue any PSUs.

The following table summarizes the Company’s PSU activity for fiscal year ended December 26, 2021 :

(dollar amounts in thousands except per

share amounts) Number of

Shares Weighted-

Grant Date Fair Value

Balance—December.

27, 2020 — $ —

Granted 6,621,428 15.56

Forfeited, cancelled, or expired

Balance—December.

26, 2021 6,621,428 $ 15.56

As of December 25, 2022 unrecognized compensation expense related to PSUs was $ 96.7 million and is expected to recognized over a weighted average period of 2.98 years.

During the fiscal years ended December 31, 2023 and December 25, 2022 the Company did not issue any PSUs.

As described above, the Company granted a total of 6,621,248 PSUs during the fiscal year ended December 26, 2021 with a weighted average grant date fair value of $ 15.56 .

There were no grants, releases, forfeitures, cancellations, or expirations since the grant date.

A summary of stock-based compensation expense recognized fiscal years ended December 31, 2023, December 25, 2022 and December 26, 2021 is as follows:

16 unchanged sentences

The Company’s entire pretax loss for the fiscal years ended December 31, 2023, December 25, 2022, and December 26, 2021 was from its U.S domestic operations.

For the fiscal years ended December 25, 2022

December 26, 2021 and December 27, 2020, the Company recorded an income tax expense of $ 1.3 million, $ 0.1 million, and $ 0 respectively.

For the fiscal years ended December 31, 2023, December 25, 2022 and December 26, 2021, the Company recorded an income tax expense of $ 0.4 million, $ 1.3 million, and $ 0.1 million respectively.

The components of the provision for income taxes for the fiscal year ended December 31, 2023 and December 25, 2022 are as follows (in thousands):

Tab le o f Contents

(dollar amounts in thousands) Fiscal Year Ended

13 unchanged sentences

( 0.8 %) ( 0.8 %) ( 3.6 %)

Nondeductible executive compensation ( 7.8 %) ( 2.8 %) — %

Change in valuation allowance

( 18.5 %) ( 7.8 %) ( 2.8 %)

Nondeductible executive compensation ( 8.2 %) ( 19.4 %) ( 22.9 %)

( 0.5 %) ( 0.8 %) 1.3 %

8 unchanged sentences

Deferred rent

21,045 16,127

Stock-based compensation expense

17 unchanged sentences

As of December 31, 2023 and December 25, 2022, Company management assessed the realizability of deferred tax assets, in order to determine the need for a valuation allowance.

As of the fiscal years ended December 25, 2022 and December 26, 2021, the Company is in a net deferred tax asset position of $ 163.8 million and $ 126.8 million, respectively.

As of the fiscal years ended December 31, 2023 and December 25, 2022, the Company is in a net deferred tax asset position of $ 184.9

Tab le o f Contents

million and $ 163.8 million, respectively.

The deferred tax assets consist principally of net operating loss carryforwards.

13 unchanged sentences

Currently, the limitations imposed by Section 382 are not expected to impair the Company’s ability to fully realize its net operating losses.

Future changes in the Company’s stock ownership, some of which

are outside of the Company’s control, could result in an additional ownership change under Section 382 of the Code;

Future changes in the Company’s stock ownership, some of which are outside of the Company’s control, could result in an additional ownership change under Section 382 of the Code;

if that occurs, the Company’s ability to utilize net operating losses could be further limited.

10 unchanged sentences

The Company recognizes accrued interest and penalties, if any, related to uncertain tax positions in income tax provision in its financial statements, if applicable.

The Company did not have any accrued interest of penalties associated with any uncertain tax positions, and no interest expense was recognized during the fiscal years ended December 25, 2022 and December 26, 2021.

The Company did not have any accrued interest of penalties associated with any uncertain tax positions, and no interest expense was recognized during the fiscal years ended December 31, 2023 and

Tab le o f Contents

December 25, 2022.

The following table summarizes the activity related to the Company’s gross uncertain tax positions for the fiscal years ended December 31, 2023 and December 25, 2022:

6 unchanged sentences

(Decreases) related to prior year tax positions

Increases related to current year tax positions

(Decreases) increases related to current year tax positions

( 1,125 ) 223

(Decreases) related to lapsing of statute of limitations

End of year balance

On March 27, 2020, President Trump signed into law the CARES Act (as defined below).

Intended to provide economic relief to those impacted by the COVID-19 pandemic, the CARES Act includes provisions, among others, to enhance business’ liquidity and provide for refundable employee retention tax credits, which could be used to offset payroll tax liabilities.

On March 11, 2021, President Biden signed the American Rescue Plan Act (“ARPA”).

1 unchanged sentence

The ARPA did not have a material impact on the Company’s consolidated financial statements.

The Inflation Reduction Act of 2022 (the “IRA”), which incorporates a Corporate Alternative Minimum Tax (“CAMT”), was passed on August 16, 2022.

The changes will affect the tax years beginning after December 31, 2022.

The IRA will require companies to compute two separate calculations for federal income tax purposes and pay the greater of the new CAMT or their regular tax liability.

The Company will be monitoring the impacts of the IRA to determine if it will have a material impact for the Company for tax years beginning after December 31, 2022.

As of fiscal year 2022 end, it is not expected to have a material impact on the Company.

As there is no authoritative guidance under U.S.

GAAP on accounting for government assistance to for-profit business entities, the Company accounts for the Employee Retention Credit “ERC” by analogy to International Accounting Standard ("IAS”) 20, Accounting for Government Grants and Disclosure of Government Assistance.

In accordance with IAS 20, management determined it has reasonable assurance for receipt of the ERC and recorded the ERC benefit of $ 1.8 million within Labor and other related expenses and $ 5.1 million, within general and administrative expenses in the Consolidated Statement of Operations for the fiscal year ended December 31, 2023 as an offset to Social Security tax expense.

As of December 31, 2023 the Company received $ 3.4 million cash payment reducing the ERC receivable within other current assets on the Consolidated Balance Sheet to $ 3.6 million.

On August 16, 2022, President Biden signed the Inflation Reduction Act of 2022 (the “IRA”) into law.

The IRA contains several revisions to the Internal Revenue Code, including 15% corporate minimum income tax for entities with adjusted financial statement income of over $1.0 billion and a 1% excise tax on corporate stock repurchases in tax years beginning after December 31, 2022.

These tax law changes did not have a material effect on the Company’s results of operations.

NET LOSS PER SHARE

During the fiscal years ended December 25, 2022, December 26, 2021, and December 27, 2020, the rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock were

identical, except with respect to voting.

During the fiscal years ended December 31, 2023, December 25, 2022, and December 26, 2021, the rights, including the liquidation and dividend rights, of the holders of Class A and Class B common stock were identical, except with respect to voting.

As the liquidation and dividend rights were identical, the undistributed earnings were allocated on a proportionate basis and the resulting net loss per share attributable to common stockholders were, therefore, the same for both Class A and Class B common stock on an individual or combined basis.

2 unchanged sentences

These shares were included in the Company’s issued and outstanding common stock starting on that date.

Additionally, 1,843,493 shares of outstanding Class S stock issued in connection with the Company’s acquisition of Spyce in September 2021 were converted into 1,316,763 shares of Class A common stock, the Series J Warrants were automatically exercised upon the IPO for 1,557,686 shares of Class A common stock and the Series F Warrants were exercised during fiscal year 2021 and converted into 235,000 shares of Class A common stock in connection with the IPO.

Tab le o f Contents

exercised during fiscal year 2021 and converted into 235,000 shares of Class A common stock in connection with the IPO.

The following table sets forth the computation of net loss per common share:

29 unchanged sentences

COMMITMENTS AND CONTINGENCIES

Lease Commitments

The Company is obligated under various operating leases related to its office facilities, restaurant locations, and certain equipment under non-cancelable operating leases that expire on various dates.

Under certain of these leases, the Company is liable for contingent rent based on a percentage of sales in excess of specified thresholds and typically responsible for its proportionate share of real estate taxes, CAMs and other occupancy costs.

Refer to Note 9, Leases, for additional information.

Purchase Obligations

1 unchanged sentence

The majority of the Company’s purchase obligations relate to amounts owed for supplies within its restaurants.

Tab le o f Contents

The Company is subject to various claims, lawsuits, governmental investigations and administrative proceedings that arise in the ordinary course of business.

1 unchanged sentence

However, an increase in the number of these claims, or one or more successful claims under which the Company incurs greater liabilities than the Company currently anticipates, could materially and adversely affect the Company’s business, financial position, results of operations, and cash flows.

QUARTERLY CONSOLIDATED STATEMENTS OF OPERATIONS

On December 25, 2022 the Company lost its emerging growth company status.

As a result, the Company was required to adopt ASC 842, effective beginning on December 27, 2021 and presented within this filing.

See Note 9 to the consolidated financial statements.

Additionally, the Company has elected to reclassify prior period costs related to utilities and repairs and maintenance costs to conform with the current presentation of occupancy and other related cost within the consolidated statement of operations.

See Note 1 to the consolidated financial statements.

The below represent the updated balances to the respective line items within previously filed quarterly statements’ condensed consolidated statement of operations.

For the reasons described herein, the quarterly information presented below does not mirror the financial information included in the 2022 Forms 10-Q for the current year.

Thirteen Weeks Ended

March 27, 2022 June 26, 2022 September 25, 2022 December 25, 2022

$ 102,591 $ 124,918 $ 124,026 $ 118,570

Restaurant operating costs (exclusive of depreciation and amortization presented separately below):

Food, beverage, and packaging

27,106 33,897 34,474 34,659

Labor and related expenses

34,302 37,013 38,006 38,153

Occupancy and related expenses (1)(2)

10,517 11,150 11,504 12,067

Other restaurant operating costs (1)

17,275 19,715 20,113 20,868

Total restaurant operating costs

89,200 101,775 104,097 105,747

Operating expenses:

General and administrative (2)

50,199 51,798 41,903 43,467

Depreciation and amortization

10,677 11,305 11,887 12,602

Pre-opening costs

2,512 2,520 3,061 3,430

Impairment and closure costs (3)

17 182 1,722 621

Loss on disposal of property and equipment

Restructuring charges (4)

— — 14,266 176

Total operating expenses

63,413 65,816 72,860 60,534

Loss from operations

$ (50,022) $ (42,673) $ (52,931) $ (47,711)

Interest income

(168) (593) (1,644) (2,738)

Interest expense

Other expense

(245) (1,618) (303) 2,985

Net loss before income taxes

(49,632) (40,484) (51,007) (47,973)

Income tax expense

20 20 20 1,285

$ (49,652) $ (40,504) $ (51,027) $ (49,258)

Earnings per share:

Net loss per share, basic and diluted

$ (0.45) $ (0.37) $ (0.46) $ (0.44)

Weighted average shares used in computing net loss per share, basic and diluted

109,472,050 109,679,467 110,375,126 110,934,445

(1) Certain prior period financial information has been reclassified, specifically related to repairs and maintenance and utilities, to conform with the current presentation of other restaurant operating costs within the consolidated statement of operations.

As a result of the change, the Company recorded a reclassification from other occupancy and related expenses to other restaurant operating costs for all fiscal quarters.

See Note 1 of the consolidated financial statements.

(2) Upon adoption of ASC 842, the Company was required to re-evaluate historical lease classifications and determine if previously classified initial direct costs would qualify for capitalization under ASC 842.

As a result, the Company adjusted Occupancy and related expenses and General administrative expenses to expense legal fees no longer capitalizable under ASC 842.

See Note 9 to the consolidated financial statements.

(3) Impairment and closure costs have been adjusted for operating lease asset impairment and related costs for stores determined to be impaired in a prior period.

See Note 1 to the consolidated financial statements.

(4) Restructuring charges have been adjusted for operating lease asset impairment and closure costs related to the vacated sweetgreen Support Center.

See Note 1 to the consolidated financial statements.

Subsequent Events

In January 2024, the Company made an aggregate cash payment of $ 3.9 million and issued 208,042 shares of its Class A common stock to former equity holders of Spyce in connection with the achievement of a performance milestone.

See Notes 3 and 6.

Tab le o f Contents

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURES

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data