Sweetgreen, Inc. (SG) Earnings Call Transcript & Summary

Hi, everybody. Good afternoon. My name is Katherine Griffin, I'm an equity analyst here at BofA. I'm on the restaurants team. I'm very pleased to be joined by Mitch Reback, CFO of Sweetgreen. By way of background for those who might not be familiar, Sweetgreen is a fast casual chain, best known for its plant-forward seasonal menu and more recently, a pretty exciting and innovative approach to restaurant operations with the integration of the Infinite Kitchen, a robotic makeline. So with that, I'll say thanks very much, Mitch, for joining us here in Miami.

Thank you for having us.

Okay. Great. So first, I was hoping we can get into sort of the demand environment that you're seeing right now. Traffic mix was positive in the fourth quarter. There was some noise in January with bad weather. We've seen recovery as it's gotten better. So how would you characterize underlying demand trends quarter-to-date?

Well, what I would say is the quarter started off slow. January had a lot of weather disruptions in it. We had a week of disruptions in February. And in the first quarter, certainly in our guide, there are 2 additional holidays. We have a New Year's Day and Easter. When you strip that away, what we've seen is the momentum, we saw in the fourth quarter, continues to build and that the traffic remains pretty strong. Let's say that in the past few weeks, the company has seen same-store sales growth really in low double digits, which is the highest it's been in quite a while. So we're really encouraged by the traffic once we get behind the weather.

Okay. That's certainly very encouraging. So thank you for that. I guess maybe on the back of that, maybe it would be helpful to get into the full year guidance, let's say that 3% to 5% same-store sales growth. Can you talk about how we should think about the components embedded in that guidance as it relates to traffic and mix?

Yes. What I'd say is, we took a 3% price increase February 21, and we have 1 point of price rolling over from 2023. So there's approximately 4 points of price in 2024. The guide is 3% to 5%, so you can best think of that as plus or minus 1 point in traffic and mix throughout the year.

Great. Maybe, I guess, on that as well, just pricing topical. How do you -- how do Sweetgreen approach pricing decisions? What are the factors that are important to consider when taking price?

Well, like a lot of people in the restaurant business, we certainly look at our cost structure and look at the inflation pressures we see in cost of goods and labor. We also look at the competitive set. And what we find in the competitive set of our competitors took substantially more price than us in the past few years, largely result of being exposed to beef and more protein-centric diets than we are. We think that, that gives us a lot of headroom in terms of price. And we saw the price gap between Sweetgreen and our competitors narrow considerably. We're happy about that. And we try to really price our product in a way that continues to make it accessible and yet reflect the quality of food that we try to serve every day.

Do you have a sense from whether it's like customer data of how your customers perceive value, just since you're talking about the relative pricing versus some of your fast casual peers?

The data we have basically says that the customer appreciates that it's a higher-quality product than many other fast casuals, particularly in the categories that we play in and seems to be willing to pay for that.

Okay. Thank you. One thing I think that's important to talk about today is throughput, just since I think that's maybe one of the most important gating factors as we think about maybe the low or higher end of your same-store sales growth guidance. So I think just on that topic, maybe we can talk about the recent addition to the team with the hiring of Rossann Williams. Rossann brings extensive experience from Starbucks, leading international retail businesses and leading operations. So I think can we -- can we talk about some of her priorities in the COO role? And then you can elaborate specifically on some of the opportunities in the restaurants to improve throughput?

Yes. We're really, really happy to have Rossann joined us. She came to us with many, many years at Starbucks, where she had great success in helping grow Starbucks and run Starbucks Canada for a long period of time. I'm really happy to have Rossann with us. At Sweetgreen, in the past, our supply chain development and store ops each reported to different people. We've always seen great advantages of being able to concentrate those functions under one individual and part of what we wanted to do was find somebody who had the breadth of experience to run all of those verticals. So we're very happy to have Rossann with us, she's going to directly oversee those 3 areas. Primary kind of objectives for Rossann is really in 3 big areas: one, continuing our work in expanding margins; two, driving transactional comp through the stores; and three, really accelerating in a significant way our pipeline over the midterm.

Okay. I guess maybe if we could go a little deeper then into the transaction growth opportunities? Are there things -- are there parallels to the work that she did at Starbucks that could bring to bear at Sweetgreen or?

When we look at our transactional growth, we really run 2 lines in every Sweetgreen. We run a back line and a front line. And really, what it comes down to is the degree of labor scheduling and labor deployment. And what we are doing is tightening up the scheduling and deploying our people during our peak hours much more on the front line and opening up the throttle on our back line and having more labor deployed. And what we will see is that this is going to drive much higher throughput. In addition to which we're looking at menu simplification Protein Plates have approximately 50% fewer ingredients than a traditional Sweetgreen bowl, which manifests itself in much faster throughput. We believe the higher throughput will translate into higher revenue. That's particularly true in our urban stores where believe we have a high walkaway factor at lunch.

Right. Can you remind me how do you think about transactions per store at peak periods and how that translates into same-store sales growth?

Well, we don't actually quantify the number of transactions that equal a comp growth rate. I know a few people have. We do believe, though, that we do have a high walkaway factor, particularly in these stores, and that capturing greater throughput at lunch will translate into higher revenue or margin.

Understood. Maybe going back to some of the investments that Sweetgreen has made, particularly on the labor deployment line you mentioned better scheduling. But can you -- obviously, I know there's also tipping that's been important in terms of managing turnover. So yes, if you could just maybe walk through some of the progress that you've made just on that labor?

I would say 2 of the big changes that we made in 2023 that are really having significant benefit in the company. One was putting the head coach to schedule some front line time. It's something that a number of people do. And what we find it's not only saves labor time because the head coach is on the front line, but it puts him closer to the customer and much closer to the team member to understand some of the pressures of operating the store. So we're very happy with that, and the head coach actually prefers that. And that's been very successful for us. The other piece is tipping. We disclosed that we went with tipping late in the third -- late in 2023, and tipping has added approximately $2 an hour to the average wage, which is a pretty significant move. As tipping has been deployed our turnover has come steadily down and longer tenured team members make for a much more efficient store. So we're very, very happy with the results we're seeing.

Absolutely. Something to I'd like to touch on is loyalty. It's been about a year since the launch of Sweetpass. So can you talk about how the adoption has been maybe relative to expectations? And if there's anything notable about market level or customer level behavior in response to loyalty?

So we rolled out the loyalty program, but not mistaken, I would say the second quarter last year digitally. And then we made it applicable on the front line around September of 2023. What we find is that the loyalty program has not been a significant driver of our growth rate and our comp growth at this point in time. We think that we have all the makings of a winning program because I think the 3 most important attributes are: one, a high digital connection with our customer; two, we have a customer who has a very high frequency who's in our app all the time; and three, we have a lot of customer love. So we feel like we have all the makings of a really winning program and yet the program really is not completely met our expectations so far. We think that's a function of the fact that the program is relatively complicated and hard to explain. And we think what we're doing this year is we're spending more time trying to simplify the program, make it easier and faster for the customer get rewards, and we're confident that we'll see some benefit from it. We think it will be a pretty tailwind on the business in 2025.

Okay. So fair to say that you don't expect that to continue to be a headwind?

No. I would say we probably see just more neutral in 2024 at this point.

Okay. Thank you. Let's get into weekday sales mix. So I think, yes, many of us are sort of past the new like new normal with hybrid work. I'm certainly -- Mondays are an in-office day for me now, maybe more so than they were a couple of years ago. So are Fridays still a challenge for Sweetgreen. And if so, how have you addressed recovering traffic share at that time of the week?

Well, what we find is in the urban stores, not so much in the suburban, but in the urban stores, Friday remains light. Monday through Thursday has really recovered. And what I would say on the positive is that the AUVs in the company are back to pre-pandemic levels the restaurant level margins exceed the pre-pandemic levels. So we're pretty happy with it. We're happy where we're at. We do see return to office and any trends accelerating that, whether it's Monday through Thursday or on a Friday has been accretive to the business. And we like to believe the level we're at now is kind of the floor.

Great. Yes. So neutral to positive, I guess, is yes, how we can think about that, that's great. I want to make sure also that we touch on Infinite Kitchen. But before I get into that, I think it would be helpful to just remind anyone in the room or on the line who's not familiar with the Infinite Kitchen. Can you give us just a quick rundown of the machine and how it's been beneficial to Sweetgreen?

The Infinite Kitchen was put together by a company called Spyce and we acquired Spyce about a little over 2 years ago. Spyce was founded by 4 brilliant people out of MIT, who followed to automate assembly of bowls. And it's a completely automated line that essentially you order from the kiosk or our app on the phone and the assembly portion is virtually all automated. What it does for Sweetgreen is our labor split about 50-50 between prep and assembly and the Spyce technology automates about 70% of the assembly portion. Has a lot of other benefits besides -- we currently have 2 restaurants running with the Infinite Kitchen, one in Naperville, outside of Chicago and one in Huntington Beach just outside of Los Angeles.

Yes, yes. And I can say that I'm lucky to seen the Infinite Kitchen in Naperville and it's very, very exciting. It seems like certainly transformational opportunity. One thing though that you've mentioned about the Infinite Kitchen locations is seeing about a 10% higher average ticket at the location. So can you talk about where that is coming from? Do you think customers at those stores are more likely to attach or to trade up to premium options? And then also, I'm curious if merchandise is playing a role there. I know that that's featured a little bit more prominently in the IK stores.

Right. What we are seeing in the 2 Infinite Kitchen stores is they do run about a 10% higher ticket. And we are seeing much higher attach rate in it. We believe that's coming from the kiosk ordering, and we think that's coming from kind of the lack of line pressure, people feeling the heat with people standing behind them so that they can take more time to order. The merch is really there to kind of occupy your time as you wait a couple of minutes to get your bowl and has not really been a significant driver of the 10%.

Okay. Understood. Yes, I know that's helpful context, I think, to understand sort of like the consumer behavior aspect of feeling that pressure because I -- we heard similar orders of magnitude in terms of the benefits from kiosks, but yes, it's helpful to understand how you think about it. One thing I think that will be useful to touch on is G&A for Sweetgreen, still relatively high as a percentage of sales, definitely relative to your peers. How should we be thinking about G&A leverage going forward? And opportunities near term to optimize that line item?

Yes. I would say, the G&A of the company has been flat to down for the past several years, and that's probably a trend that you'll see continuing. The only increases in functional areas that we see are those that are related directly to store count. For example, development, store operations, a little bit of people and looking to accelerate a little bit of the marketing, where we've had really nice success without taking up our ad spend recently. So you'll see a little bit of that. In general, though, I would think of the G&A of the company as a percent of revenue is continuing to come down. It's a key, key ingredient in the company's pathway towards improving and accelerating our profitability.

Right. No, that's a helpful way to frame it. On that, so yes, plans to increase advertising in 2024. How does advertising play a role in Sweetgreen's marketing strategy? And how do you think about quantifying maybe the return on the advertising dollars?

Well, historically, we've been a pretty low spender of advertising and most of it's been digital, which means, to a large extent, we're talking to customers who customers to drive more frequency. What we're beginning to do is move to out-of-home advertising. An example of that would have been our recent ad campaign and it began in the fourth quarter of 2023, which is tag lined, "you don't need to be a salad person to be a Sweetgreen person" and that was done to bring in new customers and to help drive new customers, which eventually get our flywheel spinning much faster around comp growth. You'll continue to see much more of that in 2024.

Yes. Yes, the Protein Plates too, I'm glad you said that because one thing I wanted to go back to is I want to underscore this because I think it's underappreciated in terms of how much less the protein bowls are -- excuse me, Protein Plates to assemble than the salads in the bowls. They don't need to be mixed. They have fewer ingredients. So I guess in terms of how we think about them as a benefit to Sweetgreen, is it -- is it more about the ability to broaden appeal and increase heartiness? Or should we also be thinking about them as a meaningful driver to improving throughput?

I think the first way I would think about it is if you roll back a few years, you think Sweetgreen as a pretty niche company, largely urban stores, people largely thought about it as a younger demographic and largely identified as a salad place. And what we're doing with Sweetgreen is we're broadening our footprint and broadening into new markets. We certainly have left urban centers in a large way and have grown much more in the suburban markets. And have broadened our demographics a lot. And what you're seeing the Protein Plates is broadening our food. Best way to think about it is a little less maybe precious or a little bit more accessible for a broader group of customers. So a broadening of the footprint to broadening of marketing and a broadening of our culinary plates. And I'm very, very happy with what we're seeing. You are correct that the Protein Plates are substantially less complicated, 50% fewer ingredients, faster throughput and a much easier product to kind of get through a store.

Great. Thank you. Do you have -- can you give us context on some of the maybe like change you're seeing in demographic SKUs just as Sweetgreen has expanded into new markets? Are you seeing more balanced by like gender or income cohort versus the traditional urban footprint?

We're seeing it migrate towards a better balance. I think it was always better balanced by gender than we were given credit for. I think there was kind of a mythology around Sweetgreen, but a better gender balance, starting to see better daypart mix, certainly, the move to suburbs was better weekend to weekday mix. So just a higher constant level of utilization, which has been really helpful to the business.

Anything notable on Fridays with Protein Plates? Can those be helpful to Friday as part of the weekend?

Well, I would say the Fridays at a Sweetgreen in the suburbs is pretty level. The urban side, I don't think it's a plate issue, I think it's an office issue.

Okay. Thank you. So Sweetgreen, you recently opened your first restaurant in Seattle, and that's impressively been performing in line with some of your top urban restaurants. Can you help us or help me understand what is driving that performance? And then maybe a secondary question would be what the expectations are as you make additional expansion into new markets like Charlotte and Columbus.

Yes. Thanks. We're very, very happy with the opening at Totem Lake in Seattle. I would say a few things that have happened there is, one, we're opening stores with our more traditional marketing playbooks, that was interrupted coming through COVID, we do a lot more marketing outreach before store opens, particularly in a new market. Second factor that in Seattle is we have outstanding real estate. And the third is just to have -- just assembled a great, great team. You put together great real estate, a great team, great marketing and particularly in a market where Sweetgreen is now. We've had a lot of people around coming out of the pandemic in a number of these markets, you had a lot of people move, particularly from places like New York. And what we find is we open up in those markets, we open up extremely strong. Another example that we've talked about would have been the opening in Austin, where it opened just very, very strong right out of the gates.

And so the expectation would be you can replicate or the marketing playbook in new markets like Charlotte and Columbus, you should see a similar type of reception.

Definitely replicating the same playbook in those markets around marketing we believe, around real estate and certainly around kind of the hiring and training of our team members. So looking to see those stores open strong as well. Very, very happy with the 2024 pipeline.

Great. Yes. Is there -- are there any other like things that common though, between maybe those 3 markets, whether it's population tailwinds that you would also expect to see a benefit from?

I think what I would say is probably the most important thing is the amount of marketing that we do before we open up in a new market. When we open up in a market where we're known, think about a densification strategy in New York or Chicago most recently, undergone a few openings in Denver. When the brand unlocked, it's very easy just to open up. But when you go into a new market with your first and second store, it takes some effort to kind of communicate that the store is there to reach customers, even if the customer knows Sweetgreen to let them know that we're now open in that market.

I see. So yes, awareness is important. In terms of a couple of questions on unit growth. So how should I be thinking about the mix of unit growth in new versus existing markets? And I guess we can think about that in the context of the long term guidance on unit growth?

Yes. We think the kind of you started off and said, what's the long-term algorithm around our unit growth, it'd probably be somewhere in the neighborhood of 15% to 20%. We look to open up about 3 to 4 markets a year. And after we open up a new market, generally, we go back in and densify that market, which gives us a lot of runway around the new units. You'd seen a market like Seattle, we opened up the one in Totem Lake, we'll end this year with a few stores and then kind of have an open runway for the next several years in that market.

What gives you confidence that you can continue to densify existing markets? What do you look for?

Well, probably tell you the first thing for densification as we look at stores that are doing very, very high AUVs where we have a high walkaway factor and that we have a high built-in demand. Once have somebody asked me, when we open at 56 in Broadway in New York, how long it took for that store to turn profitable. And I think I commented about the second customer. It's like instant. So I think we know these urban markets in particular, where the densification needs are. So clearly, in Chicago we saw, saw in Boston and New York, seeing some of that right now Denver and frankly seeing some of that down here in Florida today. We also find some of these new markets that -- really one of the more important aspects of densification is it does raise awareness. Stores are still the best method to acquire new customers. So more stores in more markets densifies the market that builds brand awareness in a big way.

Right. Yes. And yes, some of what you're saying just on AUVs demand doesn't seem to be an issue. So you can see where the case for the Infinite Kitchen in some of those markets is valid.

Very much.

Right. Yes. I guess on that -- so Sweetgreen has, I would say, deliberately slowed unit growth this year to incorporate the Infinite Kitchen with plans to reaccelerate unit growth to 15% in 2025 and beyond. So first, can you talk about, again, what gives you confidence in making that reacceleration on the unit growth target? And then maybe a couple of questions on how IK fits into that?

Okay. You're correct. We did slow down the unit growth this year, somewhere mid-20s. And we will have about 40% of the back pipeline. Back-end pipeline will have IKs in them. So looking deploy the Infinite Kitchen starting in the back half of 2024. [indiscernible] talk a little bit later about some retro -- renovations of existing stores for the IK. We look out on the algorithm of 15% to 20%. If you think about 15% on something like 300 units gets you to a new store of 45 stores a year. Company historically is done in the high 30s. So we don't think it's a particularly big challenge to move that up to 45 to 55 stores near term.

Right. Yes. And then I guess, what are the goals with rolling out the Infinite Kitchen in order to reaccelerate the pipeline for growth? I guess what are like sort of the checkpoints that you're looking for with the IK that would lead you to want to continue to roll that out?

Yes. Well, we're very happy with what we've seen with the IK. It's certainly meeting if not exceeding all of our expectations. The Infinite Kitchen has about 7 points of labor improvement versus a classic store, and that falls through to the restaurant level margin the second-order benefits that we're currently quantifying is we hire fewer people, we train fewer people, and therefore, we have lower turnover. Turnover is a huge expense in the restaurant industry. We also have much, let's just say, greater accuracy in our bowls through the IK versus kind of people. And as a result of that, we have lower CX expense and much greater customer satisfaction. But we are really hoping to learn this year, particularly in our urban stores, we do some retros is what is the higher throughput capability of the IK and how does that translate into higher revenue in these stores. We believe, we have a high walkaway factor at lunchtime, and we're wanting to see how much of that we capture with an Infinite Kitchen. We'll deploy the IK honestly as quickly as we can manufacture the IKs and put them in. We think that the return on capital for our investors is quite high in the IK. And as we look out over the labor environment over the next decade or so, which is what our new store lease would be, we continue to see the labor environment increasingly more challenged. So having a piece of equipment that kind of mitigates the effects of those labor challenges, we think is a substantial improvement in a real competitive advantage in the business.

Right. And yes, I guess that's also maybe a helpful way for me to think about where we can expect to see IKs or to see retrofits. Yes, I guess what markets should we keep in mind as we think about where we can expect to see IK be integrated?

Well, you'll see the IK in about 40% of the new stores in the back half of 2024. We will be doing about 2 to 3 retros and that will be at large urban stores. We have not yet identified those stores, but you'll certainly know when we make them known and you'll visit them. What we're hoping to see is what -- how does that higher throughput translates into higher revenue. We think even a small uptick, say, 5% higher throughput would generate kind of a few margin points more in the stores would probably take a high AUV urban store to call it, but that has a high restaurant level margin. Probably improved the margin by about 10 points, call it, 7 in labor and a few points from higher throughput. If we see that and we can retrofit the stores fast and get production up in IK, you'll probably see us deploy it pretty quickly to the top quartile stores. We think it can have a very significant impact on the margin structure of the company. We know we have the stores. We know we have a lot of demand from our customer for the higher throughput. It's just a question of the value factoring of the IK and trying to fit it in and be sure we can do it in a way that's minimally disruptive to the store operations.

Yes, exactly. A couple of things, yes. So on training, I'm curious if there -- is there like additional training that's required to operate the IK for people that are in those stores?

There's different training, not additional. What I would say is running an IK store is substantially easier than running a classic store and working in the IK is substantially easier and the store is quieter and much cleaner and much easier to operate, a much higher automation. So the team members are actually love the store. We first kind of came out with the IK, we did a survey of our head coaches and asked him who would want us to kind of retrofit their stores, they all immediately said my store. Well, life gets a lot better with the degree of automation, so I think that there's no shortage of demand.

Okay. Yes. No, definitely. That's very interesting. And then I think the other -- one of the other like second-order benefits that we didn't touch on is -- just maybe on like benefits to COGS. I know that, yes, something that the IK is known for as perfect portioning. That's the good thing about machines versus humans. So yes, maybe you can walk us through some of the other, again, these second order benefits, aside from just the labor savings. We can talk about COGS or maybe anywhere else.

Yes. I would say the IK has a number of second order benefits. But the biggest one, of course, is going to be the hiring of fewer people, the lower turnover and therefore, less training. Second one is much happier customers, which means less -- lower consumer complaints and lower CX issues. The third one that you touched on is the IK has perfect portioning and the perfect portioning really allows for some COGS improvement. It's probably not a significant number, but it's a better product at the end, that's more exact.

Great. Right. And yes, and I think that's meaningful for -- as a traffic driver to -- for somebody to want to come back to the store if they've had a good experience and it's quick, it's easy, it's accurate. That's all very, very helpful. Maybe we can, with the last few minutes here, just talk about like a high-level question. How do you think about your relative competitive advantage with having IK? You can say versus some of the other fast casual companies that are leaning into automation a little bit with robotics and then maybe versus the industry more broadly?

Well, we think over time, the Infinite Kitchen gives us a number of competitive advantages. So we can just start with the obvious one. If you have a huge cost advantage over your competitors, it obviously, at some point, potentially translates into a pricing strategy that's different. I think you can't get away from that point. I think another competitive advantage is because you are hiring so many fewer people over time, it allows for the ability to expand the pipeline of real estate much faster. Because when the gate limiting factors on opening up new stores is just a sheer number of people you have to hire and train and recruit and just being able to with much fewer people allow us to move much, much quicker. I think another advantage of it is it may prove over time easier to kind of put it into a store since it's kind of one configuration dropping into a store as opposed to like designing classic front lines that are unique to every store. So we see a number of competitive advantages. And at the least which -- but probably maybe the most important one to our customer is what we hear all the time is I want to eat it Sweetgreen, but the line is too long, so we go next door. So we think that the higher throughput is what's going to ultimately prove to be a massive competitive advantage that you're simply able to get Sweetgreen faster and more reliably.

Right, definitely. And yes, I think that's the exciting thing, definitely quantified very clearly the 7 points to margin, but I think the throughput opportunity is definitely where there's room to -- yes, to perhaps see as additional benefits there. I guess, yes, maybe to kind of boomerang back to your earlier comments just on the trends that you're seeing quarter-to-date. Can you help kind of unpack what you think is driving what you've seen maybe period-over-period in terms of improvement? Would you attribute it just to a consumer that's looking healthier than you expected? Or is that a combination of all the things Sweetgreen has done to improve throughput and other traffic-driving initiatives?

Yes. I think it's a combination of all of the above. I think what we're finding is certainly the work we've done around labor scheduling and deployment is picking up the throughput, which is really helping to drive volume. I think that the Protein Plates and attachments and the menu expansion is appealing to a broader customer, which is helping to drive volume. I think if you look back a year, we talked about some headwinds we had on some of our new markets and many of those new markets have turned around and have turned around pretty dramatically and quickly. And those new markets are now starting to drive margin and volume, which has been a big help to the business. So I think when we kind of look at it, we feel like we just have a lot of tailwind behind the business right now that's kind of pushing in. What we found is the first quarter kind of is advanced that there's tailwinds, if anything, have accelerated. So we're really happy with the trends that we're currently seeing in the business and the way the volume has been picking up and I think most importantly, it's the breadth of it that's happening really across the country. It's happening all of our markets and very, very happy with the trends.

Definitely. Yes. And then maybe if you can just speak directionally, no need to quantify, but sort of the benefits from Protein Plates that you're seeing maybe to comp versus things like dessert and the beverage platform and maybe like additional sizes. I guess where are you seeing most of the benefit?

So let me say, Sweetgreen, really, if you went back 1 year, 1.5 years, really didn't have much of an attachment strategy. We had a homemade drink program, which did really, really well. we had to stop coming through COVID and after that, we basically sold bottled water. What we've really set out to do about a year ago was to broaden and develop a comprehensive attachment strategy. So we first came out with our Crispy Rice Treat, which are very happy with. Potato Chips branded by Sweetgreen, which is doing very, very well. And we're looking to kind of broaden our drink program and do more work on that this summer. You will continue to see a more comprehensive attached strategy business in the years to come, and we're really pleased with the results we're seeing. The Protein Plates are exceeding our expectations generally in the country. What's interesting is they are doing even better in the newer markets. I think that's because in the existing markets, our product is very habitual, which is what gives rise to our high frequency of our customer, but in the new markets where we're attracting newer customers, there's a greater willingness to try the Protein Plates. So the Protein Plates have been a significant driver of the growth rate in the new markets, particularly in places like Texas, Atlanta and Florida and we're very, very happy with the response we're seeing there.

Absolutely. And then, yes, I know -- and then recently, you're testing with caramelized garlic steak. So I think a lot of exciting things on the horizon in terms of, yes, broadening what's been a quite successful launch of Protein Plates in terms of really broadening that platform on the menu.

Yes. I think you'll see the rate at the pace of the innovation at Sweetgreen continue to pick up around menu. It's great success with it. We're very, very happy with and look forward to kind of increasing the trend on.

Right, absolutely. And yes, I think also the success with loyalty, I think that also can help sort of inform some of that menu innovation. Right, yes. Very exciting. Very good stuff. Thank you, Mitch.

Thank you very much for having us.