Sweetgreen CEO Jonathan Neman believes the not-so-salad-focused fast-casual chain is in early innings.
Currently, the Los Angeles-based brand has 253 restaurants in 23 states. But he has a “line of sight” to 1,000 units at the chain’s current unit economics, saying they are confident that they can achieve 15% to 20% growth.
“We see the opportunity to have thousands of locations in the U.S alone, as well as a global opportunity at the right time,” he said in a presentation at the William Blair Growth Stock Conference on Wednesday, according to a transcript on AlphaSense. “Our bold vision is to be as ubiquitous as traditional fast food, but with the transparency and quality that consumers increasingly expect.”
Sweetgreen has grown from about 186 restaurants in 2022, but the chain slowed growth in 2023 to work on profitability. That appeared to have worked.
Restaurant-level margins have grown from about 15% to 20% last year, with the average unit volume nearing $3 million, said Neman.
And though the chain continues to chip away at a net loss, which was $25 million in the first quarter, Neman contends scale will bring profitability.
“So, as we scale, we’re building a more profitable model and really kind of getting that flywheel going,” he said.
Sweetgreen is moving forward with an arsenal of formats, not the least of which is the Infinite Kitchen, which debuted in 2023 and features an automated makeline able to make about 500 bowls an hour.
The chain has 12 Infinite Kitchen units open, with 20 more to come this year. By the end of the year about 10% of the system will have the automated makeline, including retrofits, and about half of new units currently in the pipeline will be Infinite Kitchens.
So far, Infinite Kitchens outpace classic units on a number of metrics. Margins are up to 8% higher, Neman said, in part because labor costs and turnover are lower.
Still, Neman admits there is more to learn about the format and said it will continue to get better.
Sweetgreen is working on a new prototype designed to create a better customer experience in Infinite Kitchen units, for example, as well as bringing down the long-term cost.
“We feel very confident in the technology itself,” he said. “What we’re focused on is perfecting the overall experience around the IK. What is the layout, the flow that allows us to create a hospitable, warm environment while having the benefits of the technology.”
And the ability to reduce labor costs is key.
Talk of a $30 per hour minimum wage has come up in New York, which Neman said would make “operating restaurants in New York pretty much impossible, unless you have some sort of technology like this.”
In California, where the fast-food minimum wage is already $20 per hour, he said, “nobody can make it work, given where wages have gone.”
Sweetgreen, however, is seeing a lot of opportunity, he said.
“This is where we’re picking up drive-thrus, for example,” Neman said. “But with the Infinite Kitchen, again, we can make it work.”
The plan is to cluster Infinite Kitchen locations in markets that are particularly challenged from a labor standpoint with the goal of undercutting competition on price.
In addition to Infinite Kitchens, Sweetgreen is also ready to add more drive-thru locations, which have been dubbed Sweetlanes.
The first Sweetlane opened in Schaumburg, Illinois, last year, and the unit showed about a 20% increase in same-store sales, Neman said. Another handful are planned for this year—including a drive-thru with an Infinite Kitchen.
“What will be very exciting is when you combine these two,” Neman said. “So, a Sweetlane combined with an Infinite Kitchen where we can now offer the quality of food we do in the speed of fast food in a more traditional drive-thru.”
Like most restaurant chains, Sweetgreen had a rough first quarter, with same-store sales down 3.1%, including a 6.5% decline in traffic. But Sweetgreen was hit particularly hard by the fires in Los Angeles, a key market for the brand, and consumers were made nervous by tariff chaos.
Neman expressed confidence that sales would turn positive in the second half of the year.
Sweetgreen is bringing back seasonal dishes in July after a year or so pause.
Neman said Sweetgreen has learned how powerful the seasonal dishes were in sparking frequency. “It drove a ton of acquisition,” he said.
The seasonal bowls also range in price from about $11 to $13, which Neman said would help “anchor” pricing for the brand at a time when consumers are increasingly value motivated.
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