Locally Sourced, Publicly Traded: Sweetgreen Doubles Down on Tech Ahead of IPO

Image: Sweetgreen

The last time we covered sweetgreen, they were expanding into the suburbs. This time, they’re eyeing the public markets.

In 2019, the salad-slinging unicorn pulled in over $300M at an average of $3M+ per store. This summer, as revenue nears pre-pandemic levels, the $1.8B company filed for IPO and has since placed several tech-centric strategic bets.

Salad bots. Machines replacing restaurant workers may feel far off, but sweetgreen’s acquisition of kitchen automation startup Spyce could move the industry toward a robo-workforce.

At worst, it turns out to be an expensive boondoggle. At best, it expands fast-casual restaurant profit margins while mitigating human worker error and slashing customer wait times.

Either way, by positioning the salad chain as a high-growth tech company, the acquisition could be an attempt to woo would-be investors ahead of their IPO:

  • Restaurants typically trade at 25x trailing 12-months price-to-earnings (TTM P/E) ratio.
  • Tech-embracing restaurant chains like Starbucks (41x) and Chipotle (95x) trade at significantly higher TTM P/E ratios.

The real question: How quickly can sweetgreen test and successfully implement automation at scale?

Tech team. Dubbed the “Starbucks of salads,” it’s only fitting that sweetgreen recently hired Wouleta Ayele, Starbucks’ former SVP of technology services, as its new CTO.

With experience setting and executing global technology strategy across 70+ markets, Ayele’s ability to scale best-in-class technology operations will serve as a key leverage point for long-term growth. Last year, 77% of sweetgreen’s sales came from digital orders.

Charting new channels. As more and more companies return to the office, sweetgreen’s fast-growing corporate delivery channel, Outpost, will likely make a comeback. A step further, the founders see the potential for delivery to eventually comprise 50% of all sales, facilitated by their vertically integrated food system.

Next up, the founders are pursuing an IPO and hope to one day create a hyper-personalized Spotify-esque dining experience in their moonshot journey to becoming the McDonald’s of this generation.

Looking ahead: As the founders wax poetic about bettering the world through salad, it’s easy to get caught up in the hype. One thing is for certain: $15 salads are a bigger business than anyone thought… But, will the company’s returns prove to be as healthy and sustainable as their salads are? That’ll depend on its ability to execute its lofty ideas at scale.