Sweetgreen's strides towards implementing its Infinite Kitchen automation technology present a promising long-term growth forecast, as highlighted by UBS Securities in their latest analysis. The highly regarded salad restaurant chain is on track to unveil seven new establishments equipped with Infinite Kitchen, while also upgrading two to three of its current locations with this innovative technology in the current fiscal year.
Chief Executive Officer Jonathan Neman elaborated on these advancements during a recent conference call where the company reviewed its second-quarter performance, referencing insights from a Capital IQ transcript. In an encouraging update, Sweetgreen has successfully completed its inaugural retrofit of the Infinite Kitchen at Penn Plaza in New York City.
According to Neman, this facility has showcased remarkable performance metrics, churning out nearly 200 bowls within just 30 minutes on its second operational day. The Chief Financial Officer, Mitch Reback, shared that the restaurant has the potential to upscale production significantly, positing a target of 500 bowls per hour.
He affirmed that the Infinite Kitchens are consistently delivering outstanding results across financial, operational, and customer service dimensions. UBS analysts, including Dennis Geiger, noted in their correspondence with clients that the ongoing Infinite Kitchen automation is a substantial driver for long-term growth within the firm.
They emphasized the technology's heightened potential in densely populated urban settings, which tend to experience an uptick in demand. In terms of financial performance, Sweetgreen reported a net loss of $0.13 per share for the second quarter. This marks an improvement from the $0.24 loss recorded in the same quarter last year.
Revenue saw an impressive surge of 21%, landing at $184.6 million. A survey of analysts by Capital IQ had predicted a loss of $0.12 per share against revenue of $180.8 million. Noteworthy is the fact that same-store sales climbed by 9%, significantly exceeding the 5.9% growth projected by three analysts. The company recorded positive comparable sales across all markets, particularly noting substantial growth in emerging markets, as highlighted by UBS.
The analysts expressed particular optimism regarding the upward trend in customer traffic, which has shown continuous improvement each month throughout the second quarter, driven by strategic menu innovations and effective marketing operations. Given these favorable conditions, Sweetgreen has revised its full-year revenue guidance upwards, now estimating totals between $670 million and $680 million, an increase from a previously anticipated range of $660 million to $675 million.
Similarly, expectations for comparable sales growth have been adjusted to between 5% and 7%, up from an earlier range of 4% to 6%. Despite these positive forecasts, Reback cautioned about potential challenges ahead, citing an uncertain economic landscape in the U.S. as a point of concern for the latter half of the year. Reflecting its confidence in Sweetgreen's innovative strategies and operational efficacy, UBS has elevated its price target for Sweetgreen's stock from $31 to $37, maintaining a buy rating.
Following this optimistic outlook, Sweetgreen's shares closed on a high note, rising 33% on Friday. UBS analysts expressed their belief that the ongoing expansion in kitchen automation, coupled with innovative menu offerings and customer loyalty initiatives, is likely to bolster same-store sales along with earnings before interest, taxes, depreciation, and amortization (EBITDA).
This combination should pave the way for further upside potential for Sweetgreen's market share in the forthcoming years. As of the latest pricing data, Sweetgreen shares were at $34.07, signifying a notable change of +7.82 and an impressive percent change of +29.79..