Insider Briefing No. 4, SoulCycle Launches Concerts & Sweetgreen Does Delivery
Insider Briefings are designed for entrepreneurs, executives, and investors interested in boutique fitness, natural foods, fitness tech, and emerging wellness trends.
Here’s what you need to know today.
With 88 studios in 15 markets across the US and Canada, a cult-like following, and backing from Equinox Holdings, SoulCycle is sitting pretty in the fitness landscape. But, from Wall Street’s perspective, they still have a little soul searching to do in order to reach escape velocity.
After filing and then pumping the breaks on an IPO, SoulCycle set out to beef up their business. Initially, that meant expanding into new markets while maintaining the brand’s culture. Then, there was the introduction of SoulAnnex, the off-the-bike workout option with a focus on cardio, yoga, and HIIT. Earlier this year, the company announced the creation of a media division focused on music, video, and events to broaden the brand’s reach beyond the studio. And just this week, SoulCycle shared plans for in-class concerts and original audio — in the form of motivational speeches from instructors.
This news aligns with the broader shift in the fitness space: money is flowing from classes to content. Exercise is becoming commoditized by streaming, on-demand, and at-home options, putting brick-and-mortar studios on notice. For SoulCycle, the path to a truly scalable business—the kind rewarded by Wall Street—will be a combination of in-person classes and digital content. At a minimum, it’s their best hope for keeping pace with competitors like ClassPass, Peloton, and Aaptiv.
The fast-casual landscape is evolving and Sweetgreen is trying to stay ahead of the curve. As one of the salad-in-a-bowl OGs, Sweetgreen has nailed the sweet spot for today’s consumer: taste, convenience, affordability, and better-for-you options. Now, they’re taking the convenience component to another level with the introduction of Outpost — a delivery-catering hybrid that puts healthy meals at your fingertips.
In an effort to cut out third-party delivery services like DoorDash and Postmates while asserting more control over the customer experience, Sweetgreen has teamed up with 15 companies—including WeWork, Nike, and Headspace—to put Outpost drop-off stations in the office. Now, workers can order through an app and their meal will be delivered to the Outpost station in their office.
High-profile brand partnerships and exposure to a new audience could help Sweetgreen drive business as they roll out 100 Outposts this year and 3,000 in 2019. With 25% of restaurant sales over the next five years expected to come from online orders (some $200B of the $800B people spend annually at restaurants), other eateries could launch similar catering/delivery options that disrupt the food delivery space.
In the same way that every brand wants to be a wellness brand, everyone from Big Food to big-time VC funds want in on a healthier future.
Chicago-based startup Farmer’s Fridge recently closed a $30M Series C led by former Google CEO Eric Schmidt’s Innovation Endeavors. The company has created the healthy food version of Redbox by stocking their tech-enabled, refrigerated vending machine with fresh and good-for-you foods like salads, sandwiches, and granola. With 200 locations across Chicago and Milwaukee, the company plans to use this funding to grow the team and ramp up regional expansion.
The battle of the beverages wages on as Dr Pepper has announced it will acquire CORE Nutrition—makers of nutrient- and fruit-enhanced water—for $525 million. With soda sales slumping and consumers searching for healthier, lower-calorie options, companies are being forced to become more health-conscious by revamping their beverage and snack businesses. Dr Pepper is wading into the water market following the footsteps of PepsiCo, who acquired SodaStream ($3.2B), and Coca-Cola, who paid $200M+ for Topo Chico.
It has become abundantly clear that plant-based eating and convenient options are the future of food. Huel—a complete meal shake containing the recommended balance of protein, carbs, fiber, and fats, plus all 26 essential vitamins and minerals—is well-positioned for this reality. And now, after initially bootstrapping growth to 25 million meals across 80 countries, the company has raised $26M to expand its product line across Europe and into the USA. A more accessible version of Soylent, Huel aspires to be a sustainable solution for a food supply chain that will need to serve a global population projected to reach 9.7 billion by 2050.
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