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Photograph by Adam Glanzman/Bloomberg
The Covid-19 crisis was a quadruple-whammy for trendy salad chain Sweetgreen, CEO Jonathan Neman said Wednesday—but the salad chain is poised to come out of the crisis stronger thanks in part to its investment in technology, he added.
“Like most restaurants, as you’ve heard, our sales right around March 13 pretty much go off a cliff,” Neman told a virtual audience of Barron’s subscribers during the Barron’s Investing in Tech conference on June 24. The conference takes place every Wednesday through July 15.
That’s due to a few factors, he said. “The penetration and density of our stores is very highly urban. They’re in the larger cities around the country and the ones that were hardest hit by Covid.”
Since much of Sweetgreen’s business was driven by lunch orders, sales slowed as the pandemic emptied office buildings. Employees working from home opted to order less food, Neman said—and an early consumer fear of uncooked foods, like salad, spreading Covid-19 didn’t help.
“I think a lot of people in our world, when this hit, kind of went and looked at their strategies and their plans and thought about how they were going to pivot and invest in technology,” Neman said. “For us it was: let’s just keep doing exactly what we’ve been doing, maybe just do it a little bit faster and invest more.”
The pandemic helped along a greater shift to digitization, Neman said. “If Covid has done anything, it’s even created more of a sense of need for immediacy,” he said. “You expect it to be at your fingertips, from a personal perspective, know your taste, nutrition preferences and show up immediately, whether it’s via delivery or pick up.”
That pivot benefited from structures that were already in place at Sweetgreen, Neman said. While around 50% of people used the digital ordering system pre-Covid-19, almost all of its orders are now made online, the CEO said. “What drives consumers is not the experience itself,” Neman said. “It’s technology married to a product that they really want.”
The chain’s move toward a more efficient digital ordering system began in 2012, when the restaurant installed so-called ghost kitchens, or additional preparation space dedicated to digital orders, and built pickup areas in Sweetgreen restaurants. Taking a nod from Domino’s (ticker: DPZ), the chain embraced technology for “setting the expectation around when your order is ready,” Neman said, which helped reduce large queues inside the restaurant.
“My philosophy across the whole thing was: how do we go from defense to offense as quickly as possible, and try to see the opportunity throughout this experience?” Neman said. “We moved to digital-only operations, which meant pickup and delivery only across our fleet.”
The chain also accelerated a plan for hot dinner plates that was originally set to launch in mid-2021. “We accelerated that pipeline by 14 months, and in 30 days stood up a whole new dinner category,” Neman said.
Three months into the crisis, “we’re seeing some awesome trends and a huge acceleration of our customers to digital,” Neman said, citing huge growth in the chain’s delivery and pickup channels. “We believe once the in-store traffic comes back—it may not come back to where it was—we will actually be in a better position coming out of this than we were coming in.”
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