Sweetgreen is feeling the pain of the remote work revolution.
What’s happening: The hits came hard and often for the salad chain in 2022, with consistently missed earnings (and a particularly harsh $47.4M loss in Q3) leading to its stock dropping 70% as well as a 5% workforce reduction.
Unfortunately, multiple headwinds are still slowing down the pre-pandemic go-to for big-city office workers.
Tech layoffs, remote work, and high interest rates have led to a shortage of downtown white-collar workers and office dwellers (historically Sweetgreen’s money demographic), while those that remain are met with higher prices due to inflation.
The result is a smaller total addressable market, which is not typically a recipe for success.
Is all hope lost? Not entirely. Better days could be ahead.
Prioritizing online orders, 60% of Sweetgreen’s purchases are made digitally. Piloting an online subscription service, the company hopes it can thrive amid widespread remote work.
Sweetgreen is also making moves in the physical world. The Sweetlane drive-thru primes the salad chain for an expansion into the suburbs, while new salad-making robots could significantly lower operational costs.
The focus on digital orders, cost-cutting, and smart expansions mirror successful changes made by fast-casual competitors Honeygrow, Chipotle, and Jersey Mike’s, compelling analysts to remain bullish on Sweetgreen, despite its brutal year.
Looking ahead: Harsh tech layoffs and widespread remote work led to a forgettable 2022 for Sweetgreen. However, with a solid digital foundation, an expansion into the previously untapped suburbs, and new cost-cutting technology, a future turnaround is not out of the question.