The tech-savvy salad chain sweetgreen said on Monday that it has raised another $150 million.
That’s not terribly surprising—the Los Angeles-based chain has been raising serious sums of cash for years as it has expanded across the country. Yet this latest round has given the salad chain an eye-popping valuation of $1.6 billion, 60% higher than the $1 billion it was worth a year ago.
“We’re building a new type of food company and a sustainable supply chain to challenge how we think about real food, explore innovative new retail formats and elevate the consumer experience,” sweetgreen co-founder and CEO Jonathan Neman said in a statement on Monday. “This foundation will allow us to push boundaries and broaden our impact, doing even more with our suppliers, partners and technology so that together we can bring about industrywide change.”
The found was led by venture firms Lone Pine Capital and D1 Capital Partners, along with existing investors. JPMorgan was the sole placement agent for the offering.
The company said that the capital will allow it to make strategic investments in technology, data, supply chain and “social impact.” It plans to launch delivery on its own app and expand into Miami, Denver and Austin, Texas, next year. It also plans to support its FoodCorps work in school cafeterias.
To put that $1.6 billion valuation in perspective, it is roughly equivalent to the enterprise value of the family dining chain Denny’s.
Only 17 publicly-traded restaurant chains currently have market capitalizations that exceed the value private investors are giving to sweetgreen.
The company has raised $350 million in just the past year, though it has just 97 locations and leases its real estate.
The chain’s valuation has been likened to that of a tech company. In reality, it is receiving a valuation akin to a high-growth restaurant chain with a unique business model.
Investment firms have a lot of cash to spend right now and some incentive to spend it. And though they are picky about their investments in the restaurant industry, they will willingly throw a lot of it at restaurant chains that seemingly revolutionize the business.
Sweetgreen is one of the more unique restaurant chains in the U.S. It is part of a generation of smaller fast-casual chains that focus on sustainability and local sourcing of its ingredients. Its menu features bowls and salads and shifts based on season and the restaurant’s location.
But it’s infused with technology as well. More than half of its customers order digitally—until relatively recently, sweetgreen had been a leader in the cashless movement. It’s developing its own software to let customers personalize their orders, uses blockchain to increase the security of its supply chain and will deliver to designated pickup areas in its “Outpost” program.
The company in June, meanwhile, signaled another unique strategy with its acquisition of a local Washington, D.C., meal kit delivery service called Galley Foods.
Really good chains are hard to come by. The industry is largely full, and growth is challenging. That makes chains that can pique consumer interest all the more valuable.
Sweetgreen has a loyal base of customers and strong unit volumes—average unit volumes exceeded $1.8 million last year, according to data from Restaurant Business sister company Technomic. It also grew U.S. system sales by 24%.
At the same time, however, there is considerable risk in a deal like this one. Its valuation will demand further growth and expansion into different types of markets than the urban areas it currently occupies.