In 2007, three Georgetown students had a problem: They couldn’t find fast, healthy food near campus.

Despite having no experience in the restaurant industry, the team scraped together funds, opened a tiny storefront, and worked with local farmers to source fresh food. They called it sweetgreen.

Flash forward, the salad chain is valued at more than $1.6B and recently filed to go public. Can this salad shop redefine fast food? Let’s dig in.

The Full-Stack Salad

The sweetgreen experience goes far beyond the bowl, the company leverages tech to bring customers along at every step.

Supply chain. sweetgreen prioritizes food that is local, organic, and sustainably sourced. The company invests heavily in tracking tools, including a venture into blockchain. Co-founder Jonathan Neman pointed out how transparency sets his company apart:

“Most restaurants have about 20 percent traceability into where their food comes from. We’re approaching 100 percent traceability into where all of our food comes from.”

This has a double benefit. Working with a roster of local farmers and artisans, sweetgreen can champion health and sustainability while bolstering its claims of serving fresher food.

Ordering. The heart of sweetgreen is its app, where users can order ahead to skip lines, save dietary restrictions, and even share nutritional info to their Apple Health app.

• Since launching mobile in 2013, sweetgreen’s overall sales have increased tenfold, with strong contributions from online ordering.
• A notable milestone, its 2016 app relaunch saw sales surge, with a monthly average growth rate of 79% YoY.

Delivery. A complement to digital, sweetgreen launched its native delivery service in January 2020. It has also invested heavily in its Outpost program, essentially an Amazon Locker for salads, sending batch orders to offices and apartment buildings.

While expensive up front, these moves serve as a moat, protecting the company as the delivery wars intensify.

Last year, COVID-19 more than doubled food delivery business for platforms like Uber Eats and DoorDash, eating into restaurants’ margins. According to Neman, it’s the industry’s defining battle:

“[It’s] reminiscent of… Nike versus Amazon, Disney versus Netflix, Four Seasons versus Expedia… a very similar story of whoever owns the customer extracts more value in that value chain.”

With an emphasis on owning the customer relationship and keeping delivery in-house, sweetgreen retains significant bargaining power—aided by its 2019 sweetheart deal with Uber Eats—and can stand its ground against delivery marketplaces.

Fulfillment. sweetgreen kitchens operate across five different channels: in-store, pickup, native delivery, third-party delivery, and Outpost. To help kitchens keep up, the company uses a few hacks:

Stores are modularly designed and catered towards digital fulfillment, with back-of-house production lines and sections of each shop dedicated to pickup shelves.

sweetgreen OS helps workers forecast demand, pace food prep, and assemble bowls — not unlike the turn-by-turn directions that Uber pilots for drivers.

The Sweetlife

sweetgreen has carved out a lane of its own, dwarfing other salad chains like Tender Greens or Mendocino Farms in annual revenue. At the intersection of food and tech, it’s in the same class as digitally focused food chains like Chipotle, Panera Bread, and Starbucks.

Execs refer to menu items as “content” and call their general managers “Head Coaches.” And it’s all part of the plan. sweetgreen has a grand vision to revolutionize the industry, says Jonathan Neman:

“We’d like to be the biggest food company in the world. We see us as the McDonald’s of our generation.”

While some view these goals as too lofty, it seems to be working — the company has raised $670M of VC funding to date, with reported operating profit margins of 20% to the average fast casual’s 6–9%.

Slow down to speed up. Laying the groundwork, the company invests for long-term returns and growth. As the company scales, so does its cost-savings and efficiency:

• Before entering new markets, sweetgreen spends up to a year setting up a local supply chain, ensuring relationships are stronger and last longer.
• sweetgreen’s investment in its kitchen OS helps it keep up with sky-high pre-COVID unit volumes of over $3M; in contrast, McDonald’s locations operate at roughly $2.6M sales per unit.
• sweetgreen’s Outpost program helps it fulfill dozens of orders from ghost kitchens, saving consumers money on delivery fees and reducing the company’s rent.

Intimacy at scale. Instead of restaurant-level metrics, sweetgreen emphasizes customer-level economics like LCV, number of active users, and order frequency.

With visions of becoming the “Spotify of Food,” the company’s app is seamless and customizable, capitalizing on macro-trends like personalized nutrition to drive users to its digital platform.

Today, the app has over 1.5M users who order four times a month, contributing to a whopping 68% of sales; for reference, Chipotle’s digital orders make up about 40%.

The avocado on top, once users are in the sweetgreen ecosystem, they buy more often and have higher retention rates — with some elite members spending over $1,000/year on salads.

Make vegetables sexy again. Elsewhere, sweetgreen leans into culture. Partnering with famous chefs and athletes, the company elevates its dishes beyond their healthy ingredients.

And, with a pulse on shifting consumer sentiment, it has positioned itself as the sustainable, health-conscious antithesis to the McDonald’s of the world. Earlier this year, it unveiled a new, purpose-driven brand identity to focus on social issues like climate change, pledging to be carbon neutral by 2027.

Looking Ahead

sweetgreen plans to double in size over the next few years, continuing to push the envelope with branded DTC offerings. And amidst the ongoing labor crunch, the company’s acquisition of robotic kitchen Spyce puts them in position to optimize throughput and mitigate risk.

But as many point out, sweetgreen isn’t profitable — in direct contrast to its founders’ claims. It does, however, appear to be chipping away at deficits. This year, it narrowed its YTD net losses to $87M, down from $100M during the same period last year.

As the chain rebounds from pandemic lulls, many are optimistic about its trajectory, citing the digital groundwork it has laid for hypergrowth. Others note its appeal to the modern consumer: The sweetgreen business model is “the natural evolution of the farm-to-table movement,” says Carter Seuthe, CEO of Credit Summit. “It makes people feel good about where and what they’re eating.”

Enabled by tech, aligned with consumers, and honing in on profits, sweetgreen is only scratching the surface of its potential, poised to gain on the exploding $28B fast casual market.