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Sweetgreen claimed it was profitable. According to its IPO filings, it is not

October 28, 2021, 6:20 PM UTC

It was a simple question Recode editor Kara Swisher posed to Sweetgreen cofounder and CEO Jonathan Neman at the end of 2018.

“All right, last question,” she said. “Are you profitable?”

“We are,” Neman responded.

As it turns out, Sweetgreen wasn’t.

Despite repeated statements from the company to reporters that Sweetgreen had become profitable, initial public offering disclosures filed by the company this week point to ongoing annual losses dating back to 2014. The inconsistencies were first reported in the Axios Pro Rata newsletter Oct. 28. 

Prior to the pandemic, the Los Angeles–based salad chain unicorn was a rapidly growing fast-casual success story. The company’s net revenue had grown from $42 million to $274 million in the five years ending in 2019. It had managed to open more than 140 stores on the premise that Americans will, indeed, eat salad. Sweetgreen has attracted a slew of investors and nearly half-a-billion dollars in funding—from the likes of venture capital firms Revolution (whose cofounder is now chief of staff for the Biden administration) and D1 Capital as well as Fidelity and T. Rowe Price mutual funds. It’s unclear whether Sweetgreen communicated it was profitable to these investors. Representatives from six of its largest backers declined or didn’t respond to a request for comment from Fortune. Sweetgreen representatives didn’t respond to requests for comment.

Meanwhile, its CEO, Neman, was telling publications that the salad company was also posting a profit. Articles in Inc. Magazine, Forbes, and Vox’s Recode all pointed to a company with a bottom line in the black. This week, figures within its income statement from its first IPO filing on Oct. 25 show that the company hasn’t ever been profitable, or at least, not since 2014. Most recently, in the 12 months ending Dec. 27, 2020, the company reported a net loss of more than $141 million, after a net loss of $68 million in 2019.

It’s not uncommon for venture firms to allude to being more profitable than they are, according to David Trainer, CEO of New Constructs, an investment research company that analyzes IPO and stock valuations. “It’s called pro forma,” Trainer says. “Let’s make up whatever number we want, then we can exclude all sorts of expenses in order to generate a positive Ebitda.” 

The salad chain, like many restaurant companies, has run into choppy waters during the pandemic. Its revenue fell to $221 million in 2020, down from $274 million in 2019. Earlier this month, the company revealed in a memo to staff members also published online that it was restructuring the organization and would cut 20% of its corporate staff. Neman also recently took heat over a now-deleted LinkedIn post that suggested obesity was the underlying problem of the COVID pandemic.

Sweetgreen hopes to further scale its brand in the U.S. and, eventually, in other countries, according to its IPO filing. It also plans to introduce locations that offer only drive-thru and pick-up services. The company has yet to disclose the funding it hopes to raise via its public offering.

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