Operations

Sweetgreen to bring reward program to in-restaurant guests

So far, the two-tiered loyalty program has been digital only. In the next few months, the loyalty perks will also apply for in-store purchases.
Sweetgreen's loyalty reward program
Digital orders represent about 59% of sales, so it made sense to launch the Sweetpass program initially for online and app orders. | Photo courtesy of Sweetgreen.

Sweetgreen is planning to expand its two-tiered subscription program. Soon loyalty program members will be able to earn and redeem rewards for in-restaurant purchases.

Launched officially in April after testing various versions, the “commitment-free” first tier of the Sweetpass program allows members to earn discounts by opting into personalized “challenges.” They also get early access to new menu items, birthday gifts and first look at merch drops.

The higher-tier Sweetpass+ program is a $10-per-month plan that gives loyalty members $3 off their daily order, priority support, delivery perks, premier access to merch drops and other exclusive experiences.

Both tiers, however, are currently tied to digital orders through the chain’s app or website only.

But, in the next few months, loyalty members will be able to begin both earning and redeeming rewards in restaurants, said CEO and co-founder Jonathan Neman in an earnings call on Thursday.

Neman expects the move will be “super accretive in terms of the value,” especially since most new customers come through the restaurants first, rather than ordering online.

“So if we think about Sweetpass as a channel to acquire and hold new customers, as well as drive frequency of our lower-frequency guests, that in-store unlock is really important,” he said.

So far, the Sweetpass program is showing early success with membership growing steadily, though Sweetgreen did not share the number of members. The program will take time to build, he said.

Neman said there has been a “pretty healthy” mix of low-frequency users joining and the group is showing “really healthy incrementality.”

The launch has come with some cost.

Sweetgreen’s same-store sales for the second quarter were up 3%, boosted by a 4% menu price increase and a 2% increase in traffic. But the comps had a negative impact of 3% in mix that was blamed in part on the early impact of the Sweetpass discounts.

The impact of those discounts is expected to continue, but offering the ability to earn and use rewards to in-store guests is also expected to boost traffic, and that’s fundamentally the point of loyalty programs: incentivizing guests to choose Sweetgreen more often.

“Over time, we believe Sweetpass will have a significant impact on unit economics,” said Neman.

Earning loyalty rewards has become standard practice for many chains, and subscription programs are also in play at Panera, P.F. Chang’s and Pret.

The personalization aspect is also key.

Chipotle, which said this week its loyalty program has grown to 35 million members, is also using more personalized messaging. This year, Chipotle launched the “Freepotle” program with 10 free rewards dropped into member accounts each year, based on their history of orders.

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