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Sweetgreen (SG) has been making some "sweet green" for investors lately. The stock traded to a new 52-week high yesterday and has been in a general uptrend since early March. With it being a fairly slow news day, we wanted to provide some color ahead of its Q3 earnings report in a few weeks.

• Shares for this fast food restaurant operator with a focus on salads and bowls have gapped higher following earnings each of its past three quarterly reports. Sweetgreen is expected to report Q3 results in early November.
• In terms of the most recent quarterly result in early August, Sweetgreen actually posted a larger than expected loss in Q2. However, investors focused more on the huge jump in adjusted EBITDA to $12.4 mln vs $3.3 mln a year ago. Adjusted EBITDA margin also increased to 7% vs 2% in the prior year period. Also, it boosted the low end of FY24 adjusted EBITDA guidance pretty substantially to $16-19 mln from $10-19 mln. It also beat on revenue and raised FY24 guidance for sales.
• While other fast food chains have been struggling and have been resorting to rolling out value meals to drive traffic, we give credit to Sweetgreen for serving up some impressive results despite being at a higher price point. A metric that really stood out was its impressive Q2 comps at +9%, comprised of a +5% benefit from menu price and +4% positive traffic and mix. Also, SG raised its FY24 comp guidance to +5-7% from +4-6% prior guidance.
• For one thing, SG said that Caramelized Garlic Steak, which launched in May, has been a hit with customers. Also, Sweetgreen has made a concerted effort to expand beyond lunch to compete more in the dinner daypart. And they have been successful. Dinner now represents 40% of sales, excluding the 2-4PM mid-day daypart. The new steak option and protein plates have been particularly successful at driving comps at dinner and on weekends.
• New store expansion is another important part of SG's growth story. It opened four new restaurants in Q2, including one in New Hampshire, a new market for Sweetgreen. More recently, Sweetgreen just opened its first restaurant in the Carolinas with a location in Charlotte. Sweetgreen expects additional expansion across the Carolinas.

In an era when fast food chains are scrambling to keep customers, we tip our cap to a couple of restaurant chains that keep churning out enviable results: Sweetgreen and CAVA Group (CAVA), a Mediterranean fast-casual restaurant brand. Search the archive for recent write-ups on CAVA, but the takeaway that strikes us is that both brands are generally higher quality and compete at higher price points. Lower income customers are feeling the inflation pinch more acutely and that is hurting the burger chains. However, Sweetgreen and CAVA seem to be navigating the industry downturn better.