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Sweetgreen lays off 20% of its corporate office

The fast-casual chain, which raised $350 million a year ago, is facing a challenging future as downtown workers continue to do their jobs at home.
Photograph: Shutterstock

Sweetgreen, a darling of investors that was valued at $1.6 billion a year ago, has laid off 20% of its corporate office as it prepares for continued business struggles due to the pandemic.

The reorganizing and restructuring plan was put in place “so we can put our company on a stronger and more focused path to profitable growth,” Jonathan Neman, Sweetgreen co-founder and CEO, posted on Medium last week.

In the spring, Sweetgreen—known for serving customizable salads to the cubicle crowd--had expected more employees to return to offices after Labor Day, leading to a “stronger ramp in economic recovery,” Neman wrote.

“The reality is many of our restaurants in dense urban areas, particularly in NYC, have yet to recover,” he noted. “We expect that this will be the case for the foreseeable future, but the one thing I’m absolutely sure of is that we’ll recover as people, as a business and as a community.”

Los Angeles-based Sweetgreen created a two-year plan that includes store growth in “new communities,” reduced menu and operational complexity, enhanced digital ordering and store-level leadership investments, Neman said.

Sweetgreen did not immediately respond to a Restaurant Business request to comment on those updated business plans.

A large number of fast-casual chains that have positioned their expansion strategy on feeding downtown office workers are facing a reckoning right now, as many employees continue to work from home amid the coronavirus crisis.

The fast-casual segment is down 12% year over year, according to date from RB sister company Technomic.

Several urban fast casuals have declared bankruptcy since the pandemic began, including bakery chain Maison Kayser, Garbanzo Mediterranean Grill, Le Pain Quotidien and TooJay’s.

Other fast-casual concepts that were popular with downtown office workers are reportedly struggling, such as Corner Bakery Cafe, which was said to have hired restructuring and financial advisors last month to explore strategic alternatives. Pret a Manger, the U.K.-based chain known for its high-end grab-and-go offerings, pulled out of the Boston and Chicago markets over the summer.

Pre-pandemic, Sweetgreen went all-in on feeding office workers.

In 2018, the salad chain began testing its Outpost program, which placed designated Sweetgreen pickup areas in large office buildings to encourage high-volume orders. By February, it was reported that Sweetgreen had added nearly 800 Outpost locations, inspiring other chains to copy the program.

It was that innovation, in part, that attracted investors. The chain had raised $479 million since 2009, according to financial services site Sentieo, the majority of which came from two large funding rounds last year.  

Sweetgreen had 102 units in 2019 and saw 16.8% year-over-year sales growth, according to Technomic.

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