CULVER CITY, Calif. — On a Wednesday morning last fall, several executives at Sweetgreen, the fast-casual salad chain, gathered around a conference table at their headquarters here. They were discussing a new store format, called Sweetgreen 3.0, that had recently been introduced in New York City after two years of planning.
At Sweetgreen’s other 102 locations, customers brave queues that, at peak lunch, can make T.S.A. lines look tame. Up front, employees assemble Harvest Bowls, Kale Caesars and infinite customized variants from a spread of freshly prepared ingredients, in a ritual that has become a hallmark of the modern midday meal.
At 3.0, to increase efficiency, the action had been moved offstage, to a kitchen in the rear. Customers give orders to a tablet-wielding “ambassador,” if they haven’t done so ahead of time with their smartphones, retrieving their salads from alphabetized shelves. While they wait they can mull adding one of the Sweetgreen baseball caps or $37 bottles of olive oil on display to the tab.
Many of the changes being tested at 3.0 seem crucial to realizing the ambitious plans of Sweetgreen’s co-founder and chief executive, Jonathan Neman. With its prescient mobile technology strategy, the company hopes to become something bigger — much, much bigger — than a boutique urban chain serving arugula to health nuts and yoga moms.
Two weeks into the experiment, sales had beaten projections, and according to Timothy Noonan, Sweetgreen’s vice president of research and development, there were “a lot of positives about how customers are able to engage with the brand.” Visitors seemed to love the store’s “analog” (printed) menus, added for a touch of class — the covers were already showing wear — and the soft lighting and cushy banquettes in an upstairs seating area encouraged them to linger at dinnertime.
With the theater of salad assembly removed, a section of the restaurant had been dedicated to free tastings, and a line graph illustrating how this had boosted sales of some of the brand’s less popular bowls was greeted with murmurs of delight. “Have you seen the movie ‘High Fidelity’?” Nathaniel Ru, the company’s soft-spoken 34-year-old co-founder and chief brand officer, asked the room. “When John Cusack puts the record on, and he’s like, ‘Watch me sell this record?’ It’s kind of like that.”
Still, the format was hardly a conclusive success. Behind the scenes, the kitchen was having trouble assembling orders accurately, and there was a higher-than-normal volume of complaints. “The biggest pain point right now is the pickup experience,” Mr. Noonan said. “It’s a bit of a bottleneck.” A digital leader board, meant to indicate when orders were ready, had put up some customer names too early or too late. (The experience “channels about as much tech-centric mindfulness and simplicity as Penn Station after a power outage,” wrote Ryan Sutton, the chief New York food critic for Eater.)
Touch-screen ordering kiosks had been delayed, and perhaps that was for the best. “We were so excited about this grand vision of this new store that we brought in like 10 new things at once,” Mr. Neman had said earlier that day. “If we were to redo it, we would have still done all 10 things, but one at a time.”
In a little over a year, the company has raised $350 million in private capital, bringing its valuation to $1.6 billion. It is the only restaurant unicorn. “There’s an enthusiastic investor class that’s more interested in them as a business than just any restaurant chain selling salads,” said David Henkes, a senior principal at Technomic, a food service consultancy. “Salad as a differentiator is just not that exciting. The exciting part is the technology they offer. They’re on the digital frontier.”
With a mountain of cash on hand and extensive investments in technology, marketing, and infrastructure underway, spreading the Sweetgreen Gospel across America is no longer a distant aspiration, but a mandate. “We can’t stop now, because this doesn’t work at 100 restaurants,” Mr. Neman said. “The next stop is 1,000.”
Field of Greens
The first Sweetgreen opened in 2007, in the Georgetown neighborhood of Washington. Mr. Neman, a recent Georgetown University undergraduate, had studied abroad in Sydney, Australia, and was inspired by its food culture. “It was cool to live an active, healthy lifestyle,” he said. “The trendy spot was the healthy cafe.” Back home, he enlisted two entrepreneurial classmates, Nicolas Jammet and Nathaniel Ru, and the three spent their senior year refining the idea in their dorm rooms and raising seed money from friends and family. Sweetgreen’s first location opened a few months after graduation, in an abandoned hamburger joint on M Street.
In the fast-food sector, salads haven’t traditionally been doorbusters — ever go to Chick-fil-A for the Cobb? — but Sweetgreen was using now-modish locally sourced ingredients at a moment when “wellness” was becoming a buzzword. Chipotle had pioneered assembly line ordering, scratch cooking and animal welfare standards in fast food. Sweetgreen took things a step further, eschewing soft drinks and red meat and forming relationships directly with its suppliers, like a farm-to-table restaurant made fast.
None of Sweetgreen’s founders had professional cooking experience, but Mr. Jammet, now the company’s chief concept officer, grew up watching his parents run La Caravelle, one of New York City’s most esteemed French restaurants until it closed in 2004. (He had loved the pike quenelles as a child.)
At 22, set on giving vegetables mass appeal, Mr. Jammet came up with a roster of meal-like salads that shared what the founders came to describe as “the wink”: an element evoking something beloved and unsalad-ish. Guacamole Greens, the brand’s longest-running menu offering, is essentially chips and dip rendered healthful, for example.
Sweetgreen also carefully cultivated a highbrow brand position. For its first New York store, which opened in 2013, the company hired Leong Leong, an architecture firm whose other clients included art galleries and fashion brands like 3.1 Phillip Lim, which gave Sweetgreen a minimalist aesthetic to let ingredients shine. The salads are packaged in distinctive hexagonal bowls (in theory, at least, compostable), developed with input from the industrial designer Yves Béhar, whose work hangs in the Museum of Modern Art’s permanent collection. Online, Sweetgreen eschews goofy social media memes and giveaways in favor of soulful tales of soil and sunshine.
Twelve years after it was founded, Sweetgreen operates in nine cities and has a status comparable to SoulCycle, Glossier and Warby Parker. The salad company says that its 2019 revenue topped $300 million, over $3 million per store, and its operating margins are reputed to be among the best in the business. Mr. Neman said an initial public offering should happen “eventually, probably, at some point.” America could go from a chicken in every pot to a Chicken Pesto Parm in every compostable bowl.
Sneaking in Snacks
Sweetgreen’s headquarters sit above an outdoor mall that Mr. Neman described as “a little Millennial Disneyland”: an oasis of studio spinning, nontoxic manicures, pour-over coffee and natural-fiber garments, linked by paths lined with elegant clusters of succulent plants. There is a Sweetgreen location here, of course, and at its rear sits “The Lab” — a space the size of a walk-in closet where two chefs tinker with new additions to the menu.
At 1 p.m. Mr. Neman and Mr. Jammet wandered down for a weekly progress report. The team was finalizing a summer 2020 bowl with blackened chicken, corn, strawberries and green goddess dressing, designed to taste like a backyard barbecue. It was a new take on one of 2019’s biggest hits, which had used watermelon instead of strawberries.
“This is the one I get the most texts and emails about,” Mr. Jammet said, munching approvingly. “Jon, including from your wife.”
“She’s passionate about it,” Mr. Neman said, scooping up a berry. “I think a lot of people are.”
Sweetgreen used to just periodically churn out new salads and “warm bowls” like this one, with three seasonal selections arriving five times a year and the basic 10 updated about every 18 months.
Recently, though, the company has been thinking further afield, wanting to combat the “menu fatigue” that afflicts its devotees, and attract new customers with items that are not only un-saladish, but are actually … not salads. (The 60-odd ingredients on a “make line” can currently be customized in almost endless permutations — yet all taste unmistakably like a Sweetgreen salad.) In the next two years, the company intends to add snacks that may include a virtuous version of Rice Krispie treats, made on site; organic chocolate bars and — perhaps to the horror of Sweetgreen’s many gluten-free followers — sandwiches.
Mr. Jammet and Mr. Neman tasted a trio of proposed sides: an orb of burrata with fresh tomatoes and crusty bread, hummus, delicata squash rings with smoked goat cheese dip. Each would mostly repurpose ingredients already on the menu and involve minimal extra prep. “There’s a physical limit to the number of items we can have on that line,” Mr. Jammet said. “Every item has to earn its keep.”
There was a new category, “greenless bowls”: a grain bowl that features wild rice, steelhead trout, pickled red onion and a jammy egg; a veggie fajita bowl including adobo-roasted vegetables, black beans and cauliflower rice; and one made with brown rice noodles, chicken and herbs in a citrus teriyaki dressing. Mr. Jammet was enthusiastic about the steelhead plate and the teriyaki noodles, but said the veggie option was missing something. “I guess the winks are the cauliflower rice and the adobo roasted veg — but that isn’t much of a wink, you know?” he said, suggesting the black beans be replaced by lentils.
Sweetgreen’s gutsier menu innovations are intended for the new 3.0 format or in delivery-only “ghost kitchens,” like the one the company will soon build in Manhattan. Last year the company acquired a meal delivery service called Galley Foods, based in Washington, to help with this new strategy. In Galley’s kitchen, Sweetgreen has quietly tested sandwiches — including a turkey and kale club — and is developing a “virtual hot bar” of dinner items that might be sold as single portions or as a full dinner spread to feed a family of four.
Mr. Jammet inspected a blackened bone-in chicken thigh, served with a creamy bok choy slaw and charred brussels sprouts. The team had been working to cut sodium, and was now searching for something else to add zing. “It would be nice to have some kind of acid on it,” he said. “I’d send it with a grilled lemon.”
The Delivery Problem
Years ago, Sweetgreen developed a personality archetype to describe its core customer: the “conscious achiever,” a person who aspires to a “maximalized life.” For the target demographic, the founders realized, it wasn’t enough for Sweetgreen’s food to be healthy and delicious; it also had to be exceptionally convenient. Customers dreaded the long lines, so in 2013, Sweetgreen was among the first fast-casual restaurant chains to create its own app and allow customers to order ahead on its website. The company also began designing stores for digital volume, with extra salad production lines in back, and a growing portion of the dining room devoted to pickup shelving. The lunch crowd was happier, and the restaurants could radically increase their output at the busiest times of day.
Today, Sweetgreen says its app has more than 1.5 million users, who account for 55 percent of order volume. (Chipotle, considered a leader in mobile ordering, recorded 18.3 percent of its sales in the United States digitally as of 2019.) Soon, Sweetgreen’s primary point of contact with its customers may no longer be the storefront but the smartphone — a notion that has provoked considerable interest from venture capitalists.
About a year ago, after raising $200 million in new capital from firms including Fidelity Investments and Evolution VC Ventures, Mr. Neman appeared on CNBC and talked about Sweetgreen’s evolving from a mere restaurant into something more thought provoking: a “food platform.” On Kara Swisher’s Recode podcast, he compared Sweetgreen’s kitchen technology to Uber’s turn-by-turn directions for its drivers, and discussed how blockchain and big data could evolve the menu into something like a Netflix queue.
Sweetgreen has hired an executive from Amazon to help juice up its app, allowing for the company to tailor marketing strategies toward individual users. In the future, the company might be able to tell a user when the steelhead trout in her Fish Taco Salad was pulled from the water, and match food recommendations to her microbiome.
Today, though, the biggest strategic advantage conferred by the app revolves around delivery. In recent years, restaurants have signed up in droves with food delivery platforms like GrubHub, DoorDash and Uber Eats, despite the high cost — commissions can run upward of 30 percent — and loss of quality control once the order leaves the premises. Sweetgreen has long avoided such partnerships, even as its customers clamor for them — why should it send its business to someone else’s app when it had a perfectly good one of its own?
“It’s kind of like being on Amazon,” Mr. Neman said. “I think they’re dangerous. They’re going to decimate restaurants.”
In 2018, Sweetgreen began a program called Outpost, erecting its signature blond-wood shelving units in office and apartment buildings, where the brand can drop dozens of orders at once. For the conscious achiever, this represents a frictionless nirvana, where healthy food simply materializes. There are no delivery fees and no awkward interactions with the assembly line. For Sweetgreen, it means orders that can be prepared in an off-site basement kitchen, cutting down on real estate expense and delivered efficiently by a single courier.
In just 18 months, Sweetgreen has built nearly 700 Outposts; as demand grows, the program could potentially turn office building lobbies into a million-dollar “restaurant.”
Last fall, after a yearlong negotiation, Sweetgreen finally struck a deal with Uber Eats. The restaurant now appears on the Uber Eats marketplace, but pays a fraction of the normal commission; in exchange, the delivery company provides its courier network for “native” orders, placed through Sweetgreen’s app. Mr. Neman said that in a perfect world, Sweetgreen would remain off delivery marketplaces altogether. “But in order to do that, they’d have charged us egregious fees” to use the couriers, he said. “So it’s a compromise. They’re using us for customer acquisition. We’re their ‘Game of Thrones.’”
Sweetgreen is now busy building infrastructure: traditional storefronts, off-site kitchens that can feed Outposts and delivery orders, kitchen automation tools, supply-chain tracking technology and its own fleet of delivery couriers to handle Outpost orders. But Mr. Neman knows that it’s only a matter of time before other brands find a way to make their experience seamless, too. “Things like Outpost are a wedge for us, an accelerator,” he said. “But eventually it goes right back to ‘What do you want to eat?’”
The Three Men of Romaine
In “the treehouse,” as Sweetgreen’s headquarters are nicknamed, Mr. Neman, Mr. Ru and Mr. Jammet share a single worktable in a single office. It’s an unusual arrangement among C-suite executives, but the three men, all sons of immigrants who themselves became successful entrepreneurs, are uncommonly close. Until a few months ago, when Mr. Ru and Mr. Neman moved with their wives to separate parts of Los Angeles, the three had lived within shouting distance of one another, if not in the very same apartment, for over a decade.
The trio present a synchronized set of values, habits, even conversational styles. They occasionally meditate together in the afternoons. None own a car, and of the three, only Mr. Jammet uses social media personally. When Mr. Neman showed me a photo of his new dog, a cocker spaniel, I remarked that she looked surprisingly similar to Mr. Ru’s dog. “They’re sisters,” Mr. Ru said.
Mr. Neman, a slender 35-year-old with a kinetic presence, likes to take walking meetings. One afternoon, we left Millennial Disneyland to weave around the surrounding residential streets. We talked about growth. Along with testing 3.0, launching native delivery and scaling Outpost at a furious clip, Sweetgreen recently opened its first store in Houston and plans to be in Denver, Miami, Atlanta and Austin, Texas, by the end of 2020.
Mr. Neman said he was acutely aware that Sweetgreen is not a tech company. It is very much a restaurant company, beholden to the laws of gravity that define food service expansion: its employees chop every vegetable, roast every chicken thigh and make hummus and prepare nearly 60 other ingredients from scratch every day, at each and every restaurant. The company is in the business of atoms, not bits. Delivery-only kitchens still require leases, construction and, most important, staff, in the midst of a historically tight labor market. “Sometimes I complain that it’s so hard, for all those operational reasons,” Mr. Neman said. “Then I remind myself that maybe that’s good, because it’s hard for everyone else, too.”
Mr. Neman went on that Sweetgreen plans to double in size to 200 stores in the next three years, growing at 35 to 40 percent each year, which he thinks is the upper limit of what’s possible. “If next year we wanted to open 500 restaurants, maybe we could find the real estate, maybe we could design and build them, but could we staff and train them, with all brand-new people? No,” he said. “We need a certain number of people promoted from within to teach the next generation.”
The company’s sourcing narrative, the root of its brand identity, only adds to the business’s complexity. Sweetgreen is part of a small cohort of fast-casual restaurants, like Dig, Tender Greens and Mendocino Farms, for which supporting sustainable agriculture, and buying from small, local producers, is a core tenet. (It is by far the largest of this group, with the most funding.) To enter a new market, Sweetgreen sends a team almost a year in advance to build a roster of local farmers and artisans. That supply chain will not enjoy the same efficiencies as most any other fast food player. “If you’re McDonald’s, it’s easy to achieve economies of scale,” said Youngme Moon, a professor at Harvard Business School and a member of Sweetgreen’s board of directors. “When you’re trying to do something with local farmers, real food, fresh food, it’s a really different proposition. Is there a way to construct a business that’s able to grow and serve lots and lots of people, but is still able to hang on to the food-related values that made them start the business to begin with? That’s what they’re trying to unlock right now.”
And then there’s the question of demand. Tofu, trout and chicken hardly hold the same mass appeal as beef and pork, and Sweetgreen’s salads today cost around double the price of a Big Mac. That’s a winning formula in affluent urban locales, but how large, exactly, is the market for high-priced health food? Mr. Neman says that in the long term, automation might help lower prices to the level of Chipotle, which is about 10 percent cheaper, but he knows he’ll never be able to compete with McDonald’s on price. Developing items that are less costly to produce, which the company calls “menu engineering,” could also help Sweetgreen capture a different demographic. “How do we create a food that’s our Tesla Model 3?” he wondered.
Mr. Neman also believes that younger people will apportion more money to their health and, by association, healthy food. The rise of the $60 billion fast-casual sector, offering a fresher, healthier alternative to fast food for a premium price, suggests that such a shift is already well underway. Recently, he said, his research team turned up the insight that 50 percent of Sweetgreen’s customers had been to a McDonald’s in the previous 10 days. “It gets me excited about how big the opportunity is, and it reminds me how important convenience is,” he said.
Mr. Neman said he was inspired by Patagonia, the clothing company that promotes recycling and other environmental precepts. He’s also a great admirer of Disney, its vast library of content to suit all stages and ages, now piped straight to consumers with Disney Plus. I asked whether he admired any food brands.
Only Starbucks, Mr. Neman said, for expanding to more than 24,000 locations while staying quintessentially itself and continuing to evolve. Customer frequency, he observed, is the key to its business, and will be the key to Sweetgreen, too.
I noted that Starbucks had the benefit of selling an addictive stimulant.
“We like to believe feeling good is also addictive,” Mr. Neman said. “But it’s not quite as addictive as the coffee.”
