Sweetgreen, Inc.SG
Sweetgreen, Inc. Fair Value Disclosure
FAIR VALUE
The fair value of these assets represents a Level 3 fair value measurement. Unobservable inputs include the discount rate, projected restaurant revenues and expenses, and sublease income if the Company is closing the restaurant. For the operating lease assets’ fair value estimate as of December 28, 2025, December 29, 2024, and December 31, 2023,the Company estimated the sublease income through lease expiration and discounted such cash flows using a property specific discount rate of approximately 7.5% to 9.5%.
The following tables present information about the Company’s financial liabilities measured at fair value on a recurring basis:
Fair Value Measurements as of December 28, 2025 | Fair Value Measurements as of December 29, 2024 | ||||||||||||||||||||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | ||||||||||||||||||||||||||||||||||||||||
| (dollar amounts in thousands) | |||||||||||||||||||||||||||||||||||||||||||||||
| Contingent consideration | $ | 7,000 | $ | — | $ | — | $ | 7,000 | $ | 14,974 | $ | — | $ | — | $ | 14,974 | |||||||||||||||||||||||||||||||
Contingent consideration as of December 28, 2025 was $7.0 million which is included in other current liabilities within the consolidated balance sheets. Contingent consideration as of December 29, 2024 was $15.0 million, of which $9.7 million is included in other current liabilities and $5.3 million is included in contingent consideration within the consolidated balance sheets. The fair value of the contingent consideration was determined based on significant inputs not observable in the market.
Contingent Consideration
On September 7, 2021, the Company closed its acquisition of Spyce, a Boston-based restaurant company powered by automation technology. In connection with the Company’s acquisition the former equity holders of Spyce may receive up to $20 million (in the form of up to 714,285 additional shares of Class A common stock, calculated based on the initial offering price of the Company’s Class A common stock of $28.00 per share sold in the IPO (the “Reference Price”)), contingent on the achievement of certain performance milestones between the closing date of the acquisition and June 30, 2026. Additionally, the former equity holders of Spyce may receive true-up payments in cash, as described here. If as of the second anniversary of the closing date of the acquisition, the 30-Day Volume-Weighted Average Price of the Company’s Class A common stock (“VWAP Price”) is less than the Reference Price, then the Company shall pay to each former equity holder of Spyce that has continually held their respective portion of the 1,316,763 total shares of the Company’s Class A common stock issued in connection with the acquisition during such period, the delta between the Reference Price and the VWAP Price for the upfront portion of the purchase price (“true-up payment”). As of the second anniversary of the closing date of the acquisition, the Company calculated the delta between the Reference Price and the VWAP Price for the upfront portion of the purchase price as $13.62. This resulted in a true-up payment of $10.4 million, due to 570,249 shares that did not meet the continuous holding requirement. The $10.4 million true-up payment is included within financing activities in the consolidated statements of cash flows as the payment is less than the original fair value of contingent consideration.
Additionally, as of the date of the achievement of any of the three milestones, if the VWAP Price as of such milestone achievement date is less than the Reference Price, then the Company shall pay to each former equity holder of Spyce that is eligible to receive a milestone payment the delta between the Reference Price and the VWAP Price for the contingent consideration associated with such milestone. The contingent consideration, excluding the true-up payment, which was calculated as noted above, was valued using the Monte Carlo method. The analysis considered, among other items, the equity value, the contractual terms of the Spyce merger agreement, potential liquidity event scenarios (prior to the IPO), the Company’s credit-adjusted discount rate, equity volatility, risk-free rate, and the probability that milestone targets required for issuance of shares under the contingent consideration will be achieved. During the fourth quarter of fiscal 2023, the first milestone
was achieved, which resulted in former equity holders of Spyce being eligible to receive $6.0 million, which was paid during the fiscal year ended December 29, 2024. Of this $6.0 million, based on a VWAP Price of $10.20, $2.1 million was issued in Class A common stock, and $3.9 million was issued in cash.
During the second quarter of fiscal 2025, the second milestone was achieved, resulting in the former equity holders of Spyce being eligible to receive $7.0 million, which was paid during the fiscal year ended December 28, 2025. Of this $7.0 million, based on a VWAP Price of $19.40, $4.7 million was issued in the form of Class A common stock, and $2.3 million was paid in cash to the former Spyce Equity holders.
The initial fair value of the contingent consideration at the acquisition date was $16.4 million. Since the acquisition date, the cumulative payments related to the contingent consideration were $23.4 million as of December 28, 2025, of which $6.8 million has been issued in the form of Class A common stock and $16.6 million has been issued in cash. Payments up to the initial fair value of the contingent consideration were included within financing activities within the consolidated statements of cash flows if made in cash, or within non-cash financing activities if made in shares. The second milestone payment, as detailed above, increased the cumulative payments related to the contingent consideration liability above the initial fair value; as such, the cash component of the second milestone payment was included within operating activities within the consolidated statement of cash flows during the fiscal year ended December 28, 2025. Any future cash payments would be recognized within operating activities in the consolidated statements of cash flows.
Subsequent to the fiscal year ended December 28, 2025, the Company completed the sale of Spyce to Wonder. As a result, the third milestone payment was accelerated, with the remaining $7.0 million paid out in early 2026. See Note 16 Assets Held For Sale and Subsequent Events for further details.
The following table provides a roll forward of the aggregate fair values of the Company’s contingent consideration, for which fair value is determined using Level 3 inputs.
| (dollar amounts in thousands) | Contingent consideration | ||||
Balance—December 25, 2022 | $ | 21,296 | |||
| True-up payment | (10,421) | ||||
| Current portion of contingent consideration included in other current liabilities | (6,000) | ||||
| Change in fair value | 3,475 | ||||
Balance—December 31, 2023 | $ | 8,350 | |||
| Change in fair value | 6,624 | ||||
Balance—December 29, 2024 | $ | 14,974 | |||
Milestone payment | (7,000) | ||||
| Change in fair value | (974) | ||||
Balance—December 28, 2025 | $ | 7,000 | |||
Fair Value Measurements on a Nonrecurring Basis
The following non-financial instruments were measured at fair value, on a nonrecurring basis, as of and for the fiscal years ended December 28, 2025, December 29, 2024, and December 31, 2023, reflecting certain property and equipment and operating leases for which an impairment loss was recognized during the
corresponding periods within within the consolidated statement of operations. Carrying value after impairment approximates fair value.
Carrying Value at December 28, 2025 | Fiscal Year Ended December 28, 2025 | ||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Impairment Losses | |||||||||||||||||||||||||
| (dollar amounts in thousands) | |||||||||||||||||||||||||||||
| $ | — | $ | — | $ | — | $ | — | $ | 9,677 | ||||||||||||||||||||
| Operating lease assets | $ | 2,437 | $ | — | $ | — | $ | 2,437 | $ | 1,594 | |||||||||||||||||||
Carrying Value at December 29, 2024 | Fiscal Year Ended December 29, 2024 | ||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Impairment Losses | |||||||||||||||||||||||||
| (dollar amounts in thousands) | |||||||||||||||||||||||||||||
Certain property and equipment, net | $ | — | $ | — | $ | — | $ | — | $ | 1,347 | |||||||||||||||||||
| Operating lease assets | $ | 6,001 | $ | — | $ | — | $ | 6,001 | $ | 389 | |||||||||||||||||||
Carrying Value at December 31, 2023 | Fiscal Year Ended December 31, 2023 | ||||||||||||||||||||||||||||
| Total | Level 1 | Level 2 | Level 3 | Impairment Losses | |||||||||||||||||||||||||
| (dollar amounts in thousands) | |||||||||||||||||||||||||||||
| Operating lease assets | $ | 5,719 | $ | — | $ | — | $ | 5,719 | $ | 4,291 | |||||||||||||||||||
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 27, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 23, 2023 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.