What Is Sweetgreen’s Secret Ingredient Of Success
In the 90s, Seinfeld sitcom caught the popular mood in the iconic "salad" scene. "Salad," as a word, as an image, as a category of food, was a synonym for boredom. Lettuce and chopped tomatoes. Healthy eating. Healthy, soulless, joyless eating.
A decade later, in 2007, Sweetgreen was born to rock the bowl. It was a tiny fast-casual restaurant in M Street, Washington, DC, specializing in nothing but salad. The restaurant had a commitment which a few years later solidified into the mission of inspiring healthier communities by connecting people to real food.
Another decade comes by to bump Sweetgreen to a valuation of over $1 billion. In 2018, Sweetgreen’s new funding made it the first-ever salad start-up unicorn. Now it's a chain with well over a hundred locations across the US.
If you've ever walked by a Sweetgreen during lunch hour, you've probably seen it fully packed. Visitors are willing to wait half an hour in a line to get their bowl of kale.
It is no exaggeration to say that Sweetgreen has turned into a cult brand. How did this happen?
Market conditions and competitive dynamics
You may think about favorable market conditions and irrelevant competition that boosted fast progress, but that's hardly a reason. The business of feeding people has always been hyper-competitive.
Sweetgreen's market sector is tiny, even though it's now booming and has a runway for further growth. Fast-casual chains claim just 8 percent of total restaurant visits, according to the NPD Group. Traditional fast-food chains, like McDonald's and Burger King, scoop up 75 percent of restaurant traffic, while quick-service retail takes 17 percent.
In Sweetgreen's narrow niche of expensive salads, the competition is just heating up. Burger wars for a market share between McDonald's and Burger King will soon look pale compared to the battle of bowls.
The first fast-casual salad brand was Chopt, which started in 2001. Next, in 2005, came Salata. Just Salad and Tender Greens appeared in 2006, Fresh & Co joined the party in 2010. But if you ask salad-obsessed folks what's the best salad bar, the blue ribbon will go to Sweetgreen.
First steps and first failures
Well, maybe the key to success was in the hands of experienced managers. Actually, no. Sweetgreen was founded by three 22-year-old guys three months after they graduated from Georgetown University.
Success stories usually omit to recall how many things went wrong, but in the case of Sweetgreen, we have a couple of episodes showing that their way to success was a bumpy journey.
The day before the first Sweetgreen storefront was supposed to open in 2007, someone stole a laptop with salad recipes, operation manuals, and architect renderings. Nothing was backed up in the cloud. Founders have spent a sleepless night restoring all the documents. The good news is that renewed recipes became even better.
When the second store was open, the foot traffic was so slow, that the restaurant started playing music on the sidewalk to attract people trying the food. A few years later, this music initiative evolved into the annual music festival, called Sweet Life and collaborations with artists like Kendrick Lamar and Calvin Harris.
Sustainable approach and expensive salads
Sweetgreen originated as food for Georgetown students, so maybe it should have offered affordable prices to get customers. However, low prices have never been its priority. Instead, Sweetgreen’s DNA was sustainability, from store design and waste management to the food they serve.
The sustainable-first approach is reflected in everything they do:
Sweetgreen uses ingredients from local farmers, mostly grown organically. That means cooperation with hundreds of regional growers, producers, and distributors and creating supply chains from scratch for new locations.
The packaging is minimal and eco-friendly, salad bowls are compostable. Recycling motto of the company says that nothing from inside Sweetgreen goes to the landfill. Sometimes it’s hard to meet high ideals, especially when it comes to garbage, but Sweetgren’s trying.
Starting from the very first location that remained almost unchanged, except for a re-painted roof, Sweetgreen seeks to keep the natural structure of a building when opening a new space.
The chain runs major social activity. Sweetgreen has granted $1 million in funding to learn school kids eating 3x more fruits and veggies. From every seasonal bowl sold, $1 goes to reimagining the future of school lunch.
The Sustainable-first approach doesn’t come easy and must have an impact on prices. Salads cost between $10 and $13. It seems that Sweetgreen likes to do things the hard way. $13 for a salad! For this money, you can buy pizza, two wok boxes, three burritos, or five burgers. But there’s still a ton of people choosing a $13 salad. How Sweetgreen convinced diners to pay more for their desk lunches? People must be getting something besides lettuce and chopped tomatoes.
Not just greens in a bowl, but a lifestyle brand
Let's take another look at the wording of Sweetgreen's mission statement — "inspiring healthier communities by connecting people to real food." "Food" is the last word here. The first is "inspiring."
We all need to be part of something larger than ourselves, and Sweetgreen provides such an opportunity. Like Red Bull, which is now known as an extreme sports sponsor that also makes an energy drink, Sweetgreen sells more than just bowls of vegetables. It sells a passionate and inspirational, instagrammable, sweetlife lifestyle.
Not everyone wants to be a part of Sweetgreen's social impact ideology, and the company doesn't try to please everyone and win more clients. Quite the opposite. While other things can change, like restaurants, and ways they serve food, the mission has never changed. This central axis creates the brand that may not be liked by all the audience but will definitely be loved by a significant fraction of it.
It's something that the typical salad chain can't copy, and something that brings customers back for more, even if it does mean waiting in 30-minute lines for a bowl of lettuce and chopped tomatoes.
Natural for digital
Inspiration is all good, but you can’t be a successful salad bar without delivering tasty salads. Sweetgreen somehow turns bland greens into the perfect marriage of tastes and flavors. You may even try to recreate it at home, but it just doesn’t work the same. The secret of tasty salads is unexpectedly hidden in tech.
From the very beginning, Sweetgreen invested in the tech team as in a supply chain team. They were the first to start using blockchain technology for food to track and trace the origins of the ingredients. And they developed one of the first mobile apps in their niche.
Today, over 50% of Sweetgreen’s business happens digitally. By comparison, fellow fast-casual star Chipotle Mexican Grill Inc.’s digital sales make up only 8.5 percent of average sales, according to Skift Table.
The app became the primary way Sweetgreen understands the popularity of ingredients and receipts, capture feedback, and get smarter with the seasonal products they offer. For instance, test-driving a more classic, non-salad chicken parm, they found out that guests have more of a bowl-food mentality, and a real chicken parm makes them feel guilty.
In the right place at the right time
Last but not least, Sweetgreen popped up just in time to ride the wave of new trends of the restaurant industry and healthy sustainable consumption.
Full-service restaurants need expensive staff and a lot of space to accommodate guests. Fast-food chains are cheap to operate but have a bad reputation for unhealthy food. Offering real food, requiring half the square-footage, and feeling fancier to the youth, the fast-casual concept is booming in the restaurant industry.
We’re experiencing a critical shift to social responsibility in response to Greta Thunberg, koalas suffering from wildfires and turtles suffering from plastic straws. People want to be sure that straw from their lemonade won’t hurt any turtle. Here comes the Sweetgreen’s radical transparency principle that lets you know where the food came from, how it was cooked, and where the garbage goes.
Fresh is the most bankable word in foodservice. A few years ago people spent money on appearance, that was sort of a badge. Today food is a badge. People are seeking newer, more convenient solutions to get fresh and healthy meals. Sweetgreen makes those meals delicious and desirable, reducing the friction in which you can access healthy food.
What are Sweetgreen's secret ingredients?
There was a time when merely serving food—like burgers, tacos, and pizzas — was the only function of a food chain. But today it’s just a small part. The industry is already crowded with thousands of offers. To stand out, the restaurant shouldn’t just present a smorgasbord of eating options. Instead, it should speak to the audience and share its values.
Sweetgreen’s recipe of success takes 11 years of hard work, includes a mission-first way of thinking, being more a tech company than a food company, the ability to seize the moment, and a bit of luck.