Sweetgreen (SG) risk factors, FY2024 10-K

Risks Related to Our Business, Our Brand, and Our Industry

1. 01We operate in a highly competitive industry. If we are not able to compete effectively, it could have an adverse effect on our business, financial condition, and results of operations
2. 02Changes in economic conditions and macroeconomic, geopolitical, and other major events, which may include pandemics and disease outbreaks, drive customer behavior trends, and could have an adverse effect on our business, financial condition, and results of operations
3. 03Our future growth depends significantly on our ability to open new restaurants and is subject to many unpredictable factors
4. 04Our long-term success is highly dependent on our ability to effectively identify and secure appropriate sites for new restaurants
5. 05Our expansion into new markets may present increased risks
6. 06Severe weather conditions or natural disasters may adversely affect our restaurant sales and results of operations, and climate change may further increase these adverse effects
7. 07New restaurants, once opened, may not be profitable, and new restaurants may negatively impact sales at our existing restaurants
8. 08Our success depends substantially on the value of our brand and failure to preserve its value or changes in customer recognition of our brand, including due to negative publicity, could have a negative impact on our business, financial condition, and results of operations
9. 09Food safety and foodborne illness concerns could have an adverse effect on our business
10. 10We have incurred significant losses since inception. We expect our operating expenses to increase significantly in the foreseeable future, as we grow our business, increase our new restaurant openings, and invest into new technology, and we may not achieve profitability
11. 11If we are not able to build, deploy, and maintain our proprietary kitchen automation technology, known as the Infinite Kitchen, in a timely and cost-effective manner, our growth plan, financial condition, and results of operations could be adversely affected
12. 12If we are not able to hire, train, reward, and retain a qualified workforce and/or if we are not able to appropriately optimize our workforce or effectively manage our growth in our restaurants, our growth plan and profitability could be adversely affected
13. 13Increases in labor costs, labor shortages, and any difficulties in attracting, motivating, and retaining well-qualified employees, as well as any unionization or attempt to unionize at any of our restaurants, could have an adverse effect on our business, financial condition, and results of operations
14. 14additional customers. Our efforts to develop new and upgraded products, menu items, services, channels, technology, and features could require us to incur significant costs
15. 15Changes in food and supply costs or failure to receive frequent deliveries of food ingredients and other supplies could have an adverse effect on our business, financial condition, and results of operations
16. 16Changes to U.S. trade policy, including the imposition of tariffs, may have an adverse effect on our business, financial condition, and results of operations
17. 17Our reliance on third parties could have an adverse effect on our business, financial condition, and results of operations
18. 18Failure to manage our growth effectively could harm our business and results of operations
19. 19We may not persuade customers of the benefits of paying our prices for higher-quality food
20. 20Changes in commodity and other operating costs, particularly due to climate change, could adversely affect our results of operations
21. 21We depend on our senior management team and other key employees, and the loss of one or more key personnel or an inability to attract, hire, integrate, and retain highly skilled personnel could have an adverse effect on our business, financial condition, and results of operations
22. 22involve significant time and expense and may significantly delay or prevent the achievement of our business objectives
23. 23Failure to maintain our corporate culture could have an adverse effect on our business, financial condition, and results of operations
24. 24Our marketing strategies and channels will evolve and our programs may or may not be successful
25. 25New information or attitudes regarding diet and health could result in changes in regulations and customer consumption habits, which could have an adverse effect on our business, financial condition, and results of operations
26. 26Our focus on environmental sustainability and social initiatives may increase our costs, and our inability to meet our sustainability goals and any related disclosures requirements could harm our reputation and adversely impact our financial results
27. 27We may require additional capital to support business growth, and this capital might not be available on reasonable terms or at all
28. 28We operate our restaurants and corporate headquarters in leased properties subject to long-term, non-cancelable leases. If we are unable to secure new leases on favorable terms, terminate unfavorable leases, or renew or extend favorable leases, our profitability may suffer
29. 29A significant portion of our restaurants are located in large urban areas, and if our operations in these geographies are negatively affected, our financial results and future prospects would be adversely affected
30. 30Acquisitions could be difficult to identify, pose integration challenges, divert the attention of management, disrupt our business, dilute stockholder value, and adversely affect our results of operations and expansion prospects

Risks Related to Legal and Governmental Regulation

1. 31Governmental regulation may adversely affect our business, financial condition, and results of operations
2. 32Changes in employment laws may increase our labor costs and impact our results of operations
3. 33We have been and will likely continue to be party to litigation that could distract management, increase our expenses, and subject us to monetary damages or other remedies
4. 34Failure to obtain and maintain required licenses and permits or to comply with food control regulations could lead to the loss of our food service licenses and, thereby, harm our business
5. 35Failure to comply with immigration laws, or changes thereto, may increase the operating costs of our business
6. 36Failure to comply with environmental laws, particularly regarding waste management, may negatively affect our business
7. 37In 2010, the PPACA, which required health care coverage for many uninsured individuals and expanded the coverage of those already insured, was signed into law in the United States
8. 38Our ability to use our net operating loss carryforwards and certain other tax attributes may be limited

Risks Related to Our Intellectual Property and Information Technology

1. 39marketing and advertising, which could have an adverse effect on our business, financial condition, or results of operations
2. 40We may not be able to adequately protect or enforce our rights in our intellectual property, which could harm the value of our brand and have an adverse effect on our business, financial condition, and results of operations
3. 41may lack the necessary trademark rights to stop this behavior, or may not be successful in enforcing such rights against such companies
4. 42We rely heavily on information technology, and we may not timely and effectively scale and adapt our existing technology and network infrastructure to ensure that our online and mobile platforms are accessible, which would harm our reputation, business, financial condition, and results of operations
5. 43Our digital and delivery business, and expansion thereof, is uncertain and subject to risk
6. 44If we are unable to adapt to changes in technology, our business could be harmed
7. 45Our online and mobile ordering platforms are highly technical, and if they contain undetected errors, our business could be adversely affected
8. 46The successful operation of our business depends upon the performance and reliability of Internet, mobile, and other infrastructure that is not under our control
9. 47Third parties have claimed, and may in the future claim, that we infringe their intellectual property rights, and this may create liability for us or otherwise have an adverse effect on our business, financial condition, and results of operations

Risks Related to Ownership of Our Class A Common Stock

1. 48Our stock price has been and will likely continue to be volatile, and the value of our Class A common stock may decline
2. 49The dual-class structure of our common stock has the effect of concentrating voting control with our founders, who have substantial control over us and will be able to influence corporate matters, including controlling the outcome of director elections
3. 50common stock will have the effect, over time, of increasing the relative voting power of those holders of Class B common stock who retain their shares in the long term
4. 51We rely on data from internal tools to calculate certain of our performance metrics. Real or perceived inaccuracies in such metrics may harm our reputation and negatively affect our business
5. 52Future sales of our Class A common stock in the public market could cause the market price of our common stock to decline
6. 53their shares or otherwise secure the unrecognized gains on those shares. We are unable to predict the timing of or the effect that such sales may have on the prevailing market price of our Class A common stock
7. 54We do not intend to pay dividends for the foreseeable future and, as a result, your ability to achieve a return on your investment will depend on appreciation in the price of our common stock
8. 55Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition of our company more difficult, limit attempts by our stockholders to replace or remove our current management, and limit the market price of our Class A common stock
9. 56Our founders have pledged a portion of their shares of our stock to secure certain personal loan obligations. If those pledged shares are sold in forced sales under the loan documents, such sales could cause the price of our Class A common stock to decline
10. 57Our quarterly financial results may fluctuate significantly, including due to factors that are not in our control
11. 58Our current insurance may not provide adequate levels of coverage against claims
12. 59and we may choose insurance policies that result in more risk for us. Any substantial inadequacy of, or inability to obtain, insurance coverage could have an adverse effect on our business, financial condition, and results of operations
13. 60The limitation of liability and indemnification provisions in our amended and restated certificate of incorporation and amended and restated bylaws may discourage stockholders from bringing a lawsuit against our directors for breach of their fiduciary duty
14. 61Our issuance of additional capital stock in connection with financings, acquisitions, investments, our equity incentive plans, or otherwise will dilute other stockholders
15. 62If securities or industry analysts do not publish research or publish unfavorable or inaccurate research about our business, the market price and trading volume of our Class A common stock could decline