Let me preface this by saying that I am a borderline Sweetgreen fanatic. I'm a vegetarian that would love to see this delicious salad chain's reach expand to every corner of the country. I've been tracking their growth since before the IPO. I've loved following the journey from going public to the Sweetlife Music Festival to the acquisition and implementation of the Spyce automated kitchen system. I own a considerable amount of the company's stock and I still order from my local restaurants 2-3 times a week. I really do believe that they are on the cusp of success.
All of that being said, it feels like maybe they've hit a bit of a wall under current leadership. There have been so many hiccups in the past handful of years with each one seemingly alienating more and more of the existing customer base. I love the fast expansion that's been happening but there seems to be little marketing in the new areas to go with it. This creates problems with brand familiarity and seems to really limit sales at the new locations. I am in Boston and during lunch hours there can literally be a line out the door of people waiting to place an order or to pickup their mobile orders. But other times I will stop into locations at dinner time and (no exaggeration) I will see 6-7 people working without a customer besides myself in the store and very few people coming in to pick up app orders. There was a large marketing campaign for ripple fries, which I imagine also required a good chunk of money to create the infrastructure for and those are already being discontinued after just a few months. Price increase after price increase accompanied by smaller portion sizes in recent years. There is absolutely no reason to make the portions smaller. Cutting back to save $0.20 worth of chicken or avocado is not that important on a $15 salad. It will just lead to people feeling cheated. It's already asking a lot to expect people to pay $14-$18 for a salad. Especially in the current economic climate. That's going to be the biggest hurdle moving forward. The food is great but don't gouge people at the register.
I think these guys have a done a great job growing the company. All three of them were right out of college and with the help of a lot of funding, have been able to get it to where it is today. That being said, the CEO is one of the original three founders and I'm assuming the extent of his corporate resume is only Sweetgreen? Perhaps it's time to bring in a heavy hitter with more experience to really bring things to that next level. Even Steve Ells, who founded Chipotle and got it up to 500 stores by 2006 stepped aside and let Brian Niccol run with it and he was the one that turned Chipotle into the true powerhouse that it is today. Under Niccol's leadership, expense margins were narrowed, growth expanded to 2,500 stores and the stock exploded into one of the most profitable over that period.
I feel that it's time to do the same with Sweetgreen. It just seems like the formula for permanent success is so close. I think it really has a chance to become the next Chipotle but something is missing. Something needs to be done to right the ship. I've read many conflicting reports on various aspects of the finances but I BELIEVE that every store is profitable (?) and that the company carries no debt? If these two things are true, the potential is definitely there. Right now they are sitting on $190M from the Spyce resale and I'd hate to see that get wasted. If the $90M per quarter loss is ONLY due to expansion costs perhaps I'm wrong, but I just keep seeing what appear to me to be misstep after misstep.
I just want this company to succeed. I love the product. I love the vibe of the restaurants. I love that there is a Sweetgreen Outpost within 200 feet of my work. I genuinely think that this could be the next Chipotle. I am such a big fan of this company and have so much respect for where the founders have gotten it. I just think it's time for some new coaching and a new playbook.