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DESCRIPTION OF BUSINESS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)
 6 Months Ended
Jun. 25, 2023
Accounting Policies [Abstract]  
Principles of Consolidation Principles of Consolidation—The accompanying condensed consolidated financial statements include the accounts of the Company. All intercompany balances and transactions have been eliminated in consolidation.
Fiscal Year Fiscal Year—The Company’s fiscal year is a 52- or 53-week period that ends on the Sunday closest to the last day of December. Fiscal year 2023 is a 53-week period that ends December 31, 2023 and fiscal year 2022 was a 52-week period that ended December 25, 2022. In a 52-week fiscal year, each quarter includes 13 weeks of operations. In a 53-week fiscal year, the first, second and third quarters each include 13 weeks of operations, and the fourth quarter includes 14 weeks of operations.
Management’s Use of Estimates Management’s Use of Estimates—The condensed consolidated financial statements have been prepared by the Company in accordance with GAAP and the rules and regulations of the SEC. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant accounting estimates made by the Company include the income tax valuation allowance, impairment of long-lived assets and operating lease assets, legal liabilities, fair value of contingent consideration liability, lease accounting matters, valuation of intangible assets acquired in business combinations, goodwill and stock-based compensation. These estimates are based on information available as of the date of the condensed consolidated financial statements; therefore, actual results could differ from those estimates.
Reclassification Reclassification—The Company has elected to reclassify prior period costs related to utilities and repairs and maintenance costs to conform with the current presentation of occupancy and other related costs within the consolidated statement of operations.
Fair Value of Financial Instruments Fair Value of Financial Instruments—The fair value measurement accounting guidance creates a fair value hierarchy to prioritize the inputs used to measure fair value into three categories. A financial instrument’s level
within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement, where Level 1 is the highest category (observable inputs) and Level 3 is the lowest category (unobservable inputs). The three levels are defined as follows:

Level 1—Quoted prices for identical instruments in active markets.

Level 2—Quoted prices for similar instruments in active markets, quoted prices for identical or
similar instruments in markets that are not active and model-derived valuations in which significant value drivers are observable.

Level 3—Unobservable inputs for the asset or liability. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The carrying amount of accounts receivable, other current assets, accounts payable, accrued payroll and accrued expenses approximates fair value due to the short-term maturity of these financial instruments. The Company’s contingent consideration is carried at fair value determined using Level 3 inputs in the fair value. For further details see Note 3.

Certain assets and liabilities are measured at fair value on a nonrecurring basis. In other words, the instruments are not measured at fair value on an ongoing basis but are subject to fair value adjustments only in certain circumstances (for example, when there is evidence of impairment). For further details see Note 3.
Impairment and closure costs
Impairment and closure costs—Impairment includes impairment charges related to the Company’s long-lived assets, which include property and equipment and internally developed software, and operating lease assets. Long-lived assets are reviewed for recoverability at the lowest level in which there are identifiable cash flows (“asset group”).

The Company determined that triggering events, primarily related to the impact of changing customer behavior trends, including slower than expected return to office during and following the COVID-19 pandemic (including as a result of many workplaces adopting remote or hybrid models), an increase in office vacancies and as a result of broader macroeconomic conditions on the Company’s near-term restaurant level cash flow forecasts, certain restaurants and the Company’s vacated former Sweetgreen Support Center, during the thirteen and twenty-six weeks ended June 25, 2023 and June 26, 2022 required an impairment review of the Company’s long-lived assets. Based on the results of this analysis, the Company recorded $4.3 million non-cash impairment during the thirteen weeks ended June 25, 2023, related to the operating lease asset for the Company’s vacated former Sweetgreen Support Center, which was recorded under restructuring charges within the condensed consolidated statement of operations. The Company did not record any asset impairment related to the Company’s restaurant locations during the thirteen and twenty-six weeks ended June 25, 2023.
Closure costs include lease and related costs associated with closed restaurants, including the amortization of the operating lease asset, and expenses associated with common area maintenance (“CAM”) and real estate taxes for previously impaired stores.
Restructuring Charges Restructuring Charges— Restructuring charges are expenses that are paid in connection with the reorganization of the Company’s operations. These costs primarily include operating lease asset impairment costs related to the Company’s vacated former Sweetgreen Support Center, as well as the amortization of the operating lease asset and related real estate and CAM charges.
Contingent Consideration Contingent Consideration— Due to certain conversion features, the contingent consideration issued as part of the Company’s acquisition of Spyce Food Co. (“Spyce”) is considered a liability in accordance with ASC 480. The liability associated with the contingent consideration is initially recorded at fair value upon the issuance date and is subsequently re-measured to fair value at each reporting date. See Note 3. The initial fair value of the liability for the contingent consideration was $16.4 million and was included as part of the purchase price for the Spyce acquisition. The fair value of the liability as of June 25, 2023 was $21.3 million.

Changes in fair value of the contingent consideration is recognized within other (income) expense in the accompanying condensed consolidated statement of operations.
Cash and Cash Equivalents Cash and Cash Equivalents—The Company considers all highly liquid investments with a maturity of three months or less at the time of purchase to be cash equivalents. Amounts receivable from credit card processors are converted to cash shortly after the related sales transaction and are considered to be cash equivalents because they are both short-term and highly liquid in nature.
Restricted Cash Restricted Cash—The Company’s restricted cash balance relates to certificates of deposit that are collateral for letters of credit to lease agreements entered into by the Company.
Concentrations of Risk Concentrations of Risk—The Company maintains cash balances at several financial institutions located in the United States. The cash balances may, at times, exceed federally insured limits. Accounts are guaranteed by the Federal Deposit Insurance Corporation up to $250,000.
Deferred Costs Deferred Costs—Deferred costs primarily consist of capitalized implementation costs from cloud computing arrangements in relation to a new enterprise resource planning system (“ERP”). These costs, net of amortization, amounted to $4.6 million as of June 25, 2023 and are recorded within other current assets and other assets in the condensed consolidated balance sheets. The amortization of these costs are recognized within the Company’s condensed consolidated statement of operations under general and administrative expenses over a useful life of 7 years starting from the ERP project’s go live date.
Recently Issued Accounting Pronouncements Not Yet Adopted Recently Issued Accounting Pronouncements Not Yet Adopted— The Company has reviewed all recently issued accounting pronouncements and concluded that the pronouncements were either not applicable or will not have a significant impact to its consolidated financial statements.