The Economics of a Sweetgreen Salad
sherwood.news
sherwood.news
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...
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.
[1] https://d18rn0p25nwr6d.cloudfront.net/CIK-0001477815/6442e95...
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.
Based on the article, they still haven't manage to pivot to any profitability.
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.
If you are going to put a frowning, seemingly annoyed, human at the front then maybe just go with self-checkout.
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.
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.
$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.
But, man, this is more like Uber for lettuce.
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.
With 23% of revenue going to administrative overhead? They will not be.
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 first five words are "shares in salad seller Sweetgreen."