It looks likes Sweetgreen's food costs (28% of sticker and 24% of costs) are on the low end of the restaurant industry's average [1] and middle of the road for fast food [2].
The 35% corporate overhead seems like the exception. McDonald's, for example, charges a 4 to 5% royalty [3].
This is kind of a weak article, isn't it? For one thing: it's not the economics of a salad, but rather the economics of a rapidly expanding brick-and-mortar business. But mostly, it's like just a couple paragraphs, ending with (pp) "maybe steak salads will be a game changer".
It's a bit all over the place. It looks like Sweetgreen's operations are cash-flow positive [1], which makes the claim that their unit economics are broken turn on their equipment's lifecycle costs.
I went on a Sweetgreen phase earlier this year, and I'm so surprised that they can't seem to make any money. Most of their business appears to be delivery via apps, so they have minimal front-end staff. Their food wasn't uniquely great, just fresh and overpriced. There was always a line. They have low amounts of seating, so lower real estate costs than somewhere like Chipotle.
> Their food wasn't uniquely great, just fresh and overpriced.
Sweetgreen originally was chef designed salads. They had fresh unique salads, a little pricey, but still accessible to the masses. Their popularity was because their salads tasted great. Unfortunately they pivoted to a business model of maximum profitability, which meant removing a lot of salads that took longer to prep for and streamlined the ingredients. In the process, they kept the mediocre stuff that tasted okay and removed unique and tastier stuff. You get the sweet greens version of cobb and Caesar, meanwhile their Mediterranean and Mexican salads were gone. They pivoted so hard that they no longer meet their original selling point.
Unfortunately, there are many sweetgreen rip offs in my city that offer the original sweetgreen experience at the same price point. Which makes me think, either sweetgreen isn't managed well or the other places are also losing money (which doesn't make much business sense).
Hard to say what the apples to apples comparison is.
The biggest difference most likely with those copy cat clones is the food supply chain. Not sure how much it has changed but one of sweetgreen's challenges has been working closer to the farm which can be more costly and harder to scale across geographies. The clones may just be getting everything from sysco.
I don't follow sweetgreen very well and it could very well be mismanaged but I suspect those clones you see are apple to oranges in comparison.
Maybe. I would like them to do a market research on what % of their customers would pay $17 for a Caesar salad for their lettuce to come from a local farm and what % would prefer to pay $17 for a tasty salad curated by a chef, but with not all ingredients sourced locally. And once they have that info, I'd like them to decide which one of the two they are from a mission perspective. Nothing wrong with being either, as long as the expectations are set.
I think they already decided? Maybe it does not work out for them but I thought this was always there pitch and along with it higher labor and food costs. Labor because they were having to do more of the prep work in-house instead of via the food distributor.
I suspect the issue is that the number of customers is dropping--thus the excessive marketing costs.
$10 is a weak tipping point and then $20 is a strong tipping point.
If you cross $10, I'm going to ask if there is something I can substitute. For sweetgreen, the answer is likely that I can go hit the local grocery store and grab a prepackaged salad. If I'm just looking for non-junk calories for lunch, that's way more than sufficient. This is dangerous as the mindspace starts decreasing.
If you cross $20, you had better be an actively good food experience. Otherwise, I'm looking for another place to eat or pre-preparing something myself. $20 buys a nice steak at the grocery store. Once you get me comparing your restaurant to a pound slab of ribeye, you've got a deep, deep problem.
I tried Sweetgreen a couple of times. The food was okay but overpriced, probably would go back but for the staff. The staff was just not nice at all, for no reason, twice. If you don't appreciate your customers then you won't stay in business, a simple smile isn't a lot to ask, just be nice that's it.
If you are going to put a frowning, seemingly annoyed, human at the front then maybe just go with self-checkout.
Their normal "customer" is an annoyed, impatient Doordash driver. I glanced at their delivery kitchen and it had 3x the staff of the front. I wouldn't be surprised if their front of house was really the back of house employees who don't want to be talking to in-person customers.
Low level employees have no reason to be appreciative of the customers. Don’t take it personally.
If you want them to be appreciative of customers, you need to give them an incentive structure that makes them treat customers as something other than a hurdle to overcome.
And just saying “if there were no customers, you wouldn’t have a business to work at” will only works if you give them enough individual autonomy that their actions actually affect the business. And that just isn’t going to happen for low level jobs.
Premium priced lunch food should not involve dealing with rude employees.
My experience at Sweetgreen has also been sour/rude employees.
Pay them more, figure out how to cut costs somewhere else since when you look at the breakdown in the article they are spending the money elsewhere and not on wages.
The interesting thing IMO is rude employees are not that common in these high priced fast food places.
Insufferable because I smiled, said hello, spent money with you, and expected a smile in return? When a kiosk is more friendly than your employee maybe the customer is not the problem.
I don't understand how it costs $4.35 in hourly labor to make a salad. I know you've got prep cooks, servers/cashiers, dishwashers, and managers. I assume some of these roles overlap in practice. If everyone makes $18 an hour on average, and there's five people on the clock, that's $90 an hour in labor. So, if they average 7 x $15 salads an hour, which seems rather low, shouldn't that cover labor costs at the franchise? This is oversimplified and makes many assumptions, that's obvious. I'm wondering what the missing piece is.
Labor burden is always more than the amount the worker is getting for gross pay. That $18 is more like $25 when you add unemployment insurance, benefits, etc. I agree the labor math here is really off, but there must be other factors.
So basically, they're profitable except for their marketing costs, like most unprofitable growth companies?
Those overhead figures really need more resolution to make sense of.
Half of my office Doordashes these salads for lunch. I was really thinking this was the next Chipotle (before the turmoil and general suckitude settled in).
I don't understand how this company somehow manages to convince people they are particularly innovative or that they deserve some kind of "tech company" reputation or valuation.
It's just another faddish restaurant going through it's lifecycle. Who knows if they will be around in the long run. As soon as they are suddenly not cool people will move onto whatever else is new and cool.
I have one very close to my office, the food is fine, the prices are high, the service and experience kind of stinks for the price. Salad is also super easy and cheap to make yourself. If their customers discover how easy it is to make a salad themselves that is not going to help.
I wonder how much of the administrative overhead is excessive compensation. Pretend you are a tech unicorn and your founders/execs probably demand compensation that is out of line for the restaurant industry where profits don't look anything like FAANG.
They don't deserve some kind of "tech co" valuation, they deserve a Chipotle ($87 billion market cap) level valuation eventually.
Contrary to most comments here, and the demand for Sweetgreens shows, Sweetgreens is actually nailing the holy trifecta of 1) healthy 2) tasty 3) fast, while not being too expensive for most people, just like Chipotle.
They also do have a leg up technology-wise, as they have good devs and tech stack (for a non tech co) and acquired some smart MIT students working on fully automated food bowls that is showing a lot of promise.
I expect to see a lot more of them all over the US and approach current Chipotle status in valuation and size in the next 7 years.
The article is a bit disingenuous; when their offerings are expanding to include in-office daily lunches: https://outpost.sweetgreen.com/ then they're not exactly the same business model as a McDonald's and it's tougher to make the argument that you can simply scale company-wide finances on a per-unit level.
my comment got flagged for saying "our society needs to shame anybody who will pay for a $20 salad", probably got downvoted by all the folks who pay $20 for a salad lol
It's not about me. The largest student protest since Vietnam is currently happening. The majority of young Americans[0] are pro-Palestine and those numbers have only been growing
I just think it's interesting that a company who's branding is so strongly tied to that demographic is cool with being seen so loudly on the wrong side of this by young people and the left
> majority of young Americans[0] are pro-Palestine...there's stats
A majority of 18 to 29-year old Americans have a favourable view of the Palestinian people, a historic high. That's favourability, not one side or the other, and the phrasing in respect of the people is important.
33% sympathise more with Palestine than Israel and 27% reject Israel's reasons for fighting Hamas (34% believe Hamas' fight is valid).
These numbers are historic enough to not have to twist them.
> To achieve our mission, we are committed to embracing diverse voices and providing equal opportunities because a business can only be as healthy as the community it serves.
It would be great (but unlikely and possibly illegal) to see a company put a list of the voices they don't want to represent on a page like this so we can see if the omission of some initiatives/voices/whatever is intentional or accidental.
You don't need to like Hamas to dislike what's happening to the Palestinian people. Heck, you don't even need to like the Palestinian people themselves to dislike what is being done to them.
I'm just talking about demographics here. The youth support Palestine and stand against genocide. The largest student protests since Vietnam are happening RIGHT NOW.
All I'm saying is you would think a company who's branding is so strongly linked to that younger demographic would care more
Sweetgreen's customers are middle- and high-income white-collar workers. I'm not seeing the overlap with the protesters outside age.
> largest student protests since Vietnam are happening RIGHT NOW
To be clear, you're comparing a protest movement across thousands of campuses and millions of students to one spanning tens and thousands, respectively. (South Africa might be a better example.)
> To be clear, you're comparing a protest movement across thousands of campuses and millions of students to one spanning tens and thousands, respectively.
Duke is walking out. UCLA got attacked by counter protestors. UT Austin's in the news for police brutality against students. There are active encampments in Stanford, ALL of the UCs, Cal Poly, all of the ivy league schools. As of May 11 there was an estimated 2,900 arrests across 57 campuses.
Go to your nearest university and you're sure pressed to at least find stickers or artwork if not an active encampment. Sorry to say, but you're out of touch
Where are you seeing thousands? It's hundreds globally per your source. The Vietnam War protests were thousands in the country, and that's not by counting stickers but mass protests and campus-wide shutdowns.
> As of May 11 there was an estimated 2,900 arrests across 57 campuses
Yes, thousands and tens. That's a big deal. But it's not on the scale of the Vietnam War protests. Which makes sense--we're not drafting our kids to go die in Gaza! (And the economy is doing well.)
In any case, the argument that this is relevant to Sweetgreen's business requires a little more to stand on. Certainly their Q1 results seem to dispute the hypothesis; the problem isn't growth, it's costs.
Only around 2 thousand students were arrested for the Vietnam protests in 1970.
It's important to remember that student protests are always unpopular. Only about 11% of Americans thought the Guard was too rough on student protestors at Kent state when police shot at crowds and killed 4 students. 58% of Americans thought the National Guard should've been more rough
> Only around 2 thousand students were arrested for the Vietnam protests in 1970
12,000 were arrested over a matter of days in 1971 [1].
Again, these protests don't need to be comparable in size to Vietnam's to be legitimate. Focussing on that narrative is a dead end. When it comes to Sweetgreen's business, I've gone from thinking the CEO should stay out of politics to suspecting he may be resonating better with Sweetgreen's actual customers than I initially gave him credit for.
Do a lot of students buy $20 salads in the US? Most of the people I know going to this sort of places are white collar 30+ who are vegan or into the fitness & dietary supplements trend. The rest just go to normal places (which means Mediterranean food here in Spain).
> I'm just talking about demographics here. The youth support Palestine and stand against genocide.
Meh.
The youth of every generation (my own included) supports/supported lots of things with little to no understanding of the things they support/supported.[1]
The only real conclusion you can draw from the youth is that they self-organise into activist groups. The actual cause is often not relevant - they just want to be in-group, not out-group, and to be in-group you have to visibly agree with the group's stance.
Displaying a lack of thought and nuance is a condition of group membership. A lack of thought and nuance, non-coincidentally, is also a large characteristic of youth.
> All I'm saying is you would think a company who's branding is so strongly linked to that younger demographic would care more
I'm not familiar with the company in question, and don't know (nor care) what their publicised political leanings are. I was only commenting on your linking of "liberal" with a far-right demographic.
[1] As in this case, where the "progressive" group is championing the rights of the conservative group. In their minds, they have not yet seen the dissonance between what they say they are (liberal, progressive, left) and who they are championing for (conservative, regressive, right).
The 35% corporate overhead seems like the exception. McDonald's, for example, charges a 4 to 5% royalty [3].
[1] https://www.7shifts.com/blog/restaurant-costs/ 25 to 40%
[2] https://restaurant.lunchbox.io/what-are-food-costs-for-a-fas... 25%
[3] https://www.franchisedirect.com/foodfranchises/mcdonalds-fra...