The profitable salad chain Sweetgreen was on track to IPO. So why did its founders decide to pivot to tech?
When they were still undergrads at Georgetown University, Jonathan Neman, Nicolas Jammet, and Nathaniel Ru weren’t yet superfriends. They knew one another because Ru sat behind Neman in Accounting 101, and Jammet’s freshman dorm room was next to Neman’s. But after they graduated, in 2007, they decided to try opening a 560- square-foot salad and frozen yogurt shop: Sweetgreen. Their friendship grew with the business. By the time the company had 20 locations, from D.C. to Philadelphia, and they were raising money for a national expansion, the three had become so chummy that it made their potential investors nervous. Were this brothers-in-salad for real?
“It was unusual, and quite frankly, a concern,” recalls Steve Case, CEO of Revolution and a Sweetgreen board member. “They were co-CEOs who shared the same office and, when we invested, at least two of the three shared the same apartment.” (Ru and Neman lived in a townhouse in Georgetown. Jammet lived across the street.) “On one level, it’s like, isn’t that sweet? How Kumbaya. On the other hand, when push comes to shove, how are decisions going to get made here? How is that really going to scale?”
Jammet, Neman, and Ru call their philosophy the Sweetlife. It means projecting earnest bonhomie always and everywhere, treating their customers, employees, and vendors as they would treat close friends. Sweetgreen’s posted core values include “Add the Sweet Touch” (to “create meaningful connections every day”) and “Win win win” (for the company, the customer, and the community). Every dish on Sweetgreen’s menu is made from scratch, has fewer than 800 calories, and contains no added sugar (except maybe a little local maple syrup). They treat their local farmer-suppliers like stars, listing their harvests on chalkboards and crowing about the new season of vegetables like it’s a movie premiere, whether the debut vegetables are “visionary and flavorful” koginut squash, or humble sunchokes. And they skip normal ads in favor of offeat events, most famously the massive Sweetlife music festival, which they ran from 2011 until 2016, a 20,000-person dancing-and-lettuce bacchanal that spread buzz far beyond any 30-second TV spot.
So far, the founders’ sunny approach has yielded glittering results: Ten years after its founding, Sweetgreen operates from coast to coast, with 93 locations and 4,000 employees. The chain is profitable, with its stores’ operating margins approaching Chipotle’s at its peak (around 20 percent). Systemwide sales have grown over 40 percent three years in a row. More than a million people have downloaded the Sweetgreen app; social media is full of fans describing their love for Shroomami grain bowls in ways normally associated with milkshakes, cheeseburgers, or Beyoncé. There are 10,000-plus elite customers, known as Sweetgreen Gold and Black members, who spend more than $1,000 on the chain’s salads every year.
In the world of chain restaurants, fast-growing cult brands generally serve their investors one thing: an IPO. Until last November, most everyone expected Sweetgreen to go public and—like Starbucks in the ’90s, Chipotle in the aughts, and Shake Shack in 2015—become the food industry’s most coveted stock.
Instead Neman, Jammet, and Ru made an announcement so Sweetlife-y that even some of their own executives wondered if the three friends had finally gone too far. Sweetgreen could no longer be a mere salad chain, they declared—it had to be a tech company. This was the only way the company could not only serve customers, its community, and itself—to achieve the win, win, win—but also fix the entire restaurant industry and improve the health of the world.
“We see Sweetgreen as being more than just a restaurant … but evolving into a food platform,” Neman told CNBC in December 2018. Of course, Sweetgreen’s rank-and-file had heard this sort of talk from the founders before. “Thinking like a tech company” had become an internal mantra over the previous few years, as the chain developed its own mobile app, added digital ordering options like Uber Eats, and made many of its stores cashless. (And, as a result of those efforts, sales from digital channels already made up over half the chain’s revenue.)
But this latest tech push was far riskier and more dramatic. The founders had raised $200 million—five times any previous Sweetgreen funding round—an investment that vaulted the company’s valuation to well over a billion dollars. In media appearances, they sounded like men possessed by Silicon Valley ghosts: Sweetgreen was a “platform” and its food, “content.” They said the company was at work on an A.I.-powered mobile app and kitchens in the cloud, all in the name of “frictionless experiences.” They even planned to leverage the blockchain. Not everyone has been able to stomach the shift—already several nervous executives and a board member have left the company, at least partly because of their concerns.
By now, any follower of the startup world is familiar with the so-called “pivot to tech,” the notion that a company in a nontech industry is actually a disruptive innovation machine. Are the Sweetgreen founders visionary or just chasing the latest shiny object?
In 2016, the founders relocated from Washington, D.C., to a twee mall in Culver City, Los Angeles, unironically called Platform. It’s an artisanal Disneyland: A visitor can grab a Vegan Cherry Heartbeet cone at Van Leeuwen (an ice cream shop first made famous in Brooklyn), wait for a singleorigin pour-over coffee at Blue Bottle (originally of San Francisco), or step over to Aesop (of Melbourne) to pick up a bottle of parsley seed facial cleanser for $60. Then there’s the blond wood temple of lettuce, the Sweetgreen flagship store, where lunchtime adherents wait in a perpetual line, heads bowed to their iPhone screens, as a dozen employees in T-shirts reading “passion + purpose” tong salad and ancient grains into compostable bowls.
Upstairs you will find the Treehouse, a.k.a. Sweetgreen corporate, where 175 employees work at long white tables surrounded by motivational slogans (“BE PRESENT” reads one in giant block letters on the elevator doors). Neman, Jammet, and Ru share a glass-walled office close to the entrance. They sit together, their tabletops clean except for three laptops, three pale green Moleskine notebooks, and neatly squared piles of paper, mail, and books such as Derek Thompson’s Hit Makers, which someone recently gave Neman to inspire him to think about food the same way “music producers think about making viral content,” he says.
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