Sweetgreen is testing the re-introduction of its soft-serve Sweetflow dessert in two units in Southern California. If the frozen dessert makes it through the stage-gate process, it could become the brand’s next tool in an attempted turnaround.
Those who remember Sweetgreen’s early days in Washington, D.C., where the brand first opened in 2007, know that it was initially a salad-and-frozen yogurt concept—hence the “sweet” in Sweetgreen. But the froyo space became too crowded for Sweetgreen’s tastes, and Sweetflow was discontinued in 2014.
Now two Southern California restaurants (Irvine and Marina del Rey) are offering what is described on social media as a dairy-based soft serve, but with a high protein content (vanilla with olive oil and sea salt, and tahini chocolate crunch with almonds).
One post indicated a serving has 13 grams of protein, which is likely to grab the attention of increasingly protein-obsessed consumers.
@sabrinastolin @sweetgreen vanilla soft serve with chocolate, tahini, + almonds. It was so good! I give it a solid 8.7/10. This was chaotic with the whole family chiming in but wanted to share anyways #softserve#sweetgreen♬ original sound - sabrina
Sweetgreen officials did not immediately respond to requests for more detail. But Sweetgreen founders have long hinted that they were considering a return of Sweetflow.
And it feels like the right time. After a dismal second quarter, CEO Jonathan Neman has promised new menu news amid an operational overhaul.
Sweetgreen last week said same-store sales dropped 7.6%, which was the chain’s biggest slide since becoming a public company in 2021. Traffic was down 10.1%.
Neman blamed a convergence of challenges, not the least of which was the “subdued” economic climate that has many consumers cutting back on dining out.
“I think it’s pretty obvious that the consumer is not in a great place overall,” he said, following the earnings release.
And he could have left it there.
But instead, Neman was surprisingly open about the fact that the fast-casual chain has some operational issues that need to be addressed, like the perception of value, food quality and consistency.
The chain’s newly hired chief operating officer Jason Cochran went out into the field to see what was happening this summer. And he concluded that about one-third of Sweetgreen’s more than 260 units were doing great. But two-thirds were not up to par.
Two-thirds. That’s more than 60% of restaurants not meeting standards.
“Fundamentals, like sourcing, cooking and throughput are there,” said Neman, “but they’re not always delivered with the consistency our guests expect or deserve.”
What’s surprising about this admission is that Sweetgreen had a pretty strong 2024.
Sales were up nearly 16% for the year to $677 million, with units growing 11% to 246, according to the Technomic Top 500 Restaurant Chain report. Same-store sales grew 6% or the full year, including a 2% increase in traffic.
There were marketing wins. Sweetgreen worked hard to shift its reputation for being a salad concept. After recruiting former Chipotle culinary chief Chad Brauze, Sweetgreen had in 2023 introduced a new protein-plate category that brought in more male diners. The next year, steak was added as a protein, and both moves drove dinner traffic.
This year also brought the new air-fried Ripple Fries at Sweetgreen, a more healthful take on the familiar side, which the company indicated were popular.
But now, as Sweetgreen struggles to improve core operations, Neman sees fries as a distraction. They will be discontinued next week.
That also raises questions about the complexity of adding Sweetflow back into the mix. Neman said Sweetgreen is also testing a new house-made beverage, which he said was doing “really, really well.”
But the renewed focus on operations has included an overhaul of Sweetgreen’s stage-gate process for bringing new products to the menu, Neman said. That will mean not only evaluating the consumer reaction, but how the menu item impacts the rest of the operation.
“We do see a huge customer desire for us to continue to expand our menu, but the focus is to make sure whatever we put on our menu we can execute really, really well, and continue to execute the rest of the menu,” he said.
Cochran has also launched a project called One Best Way, that will set new standards for operation, with a focus on throughput and elevating food standards, Neman said.
It’s a playbook that has worked for Shake Shack, which in January launched an operational scorecard system that set specific metric goals for its restaurants. It has helped drive efficiencies and grow margins, Shake Shack officials said. And same-store sales for the burger chain were moving in the right direction in the second quarter.
In addition, to address concerns about value, Sweetgreen has already rolled out an initiative to increase the amount of chicken and tofu in bowls by 25%. That effort was already starting to get traction in July, Neman said, even before the company started promoting the bigger portions.
The concern about portions could be an echo of Chipotle’s battle with TikTokers last year, who insisted they were being skimped. Chipotle upped training to ensure consistency and has said the problem is solved, though complaints continue to linger.
And Chipotle’s attempt to solve that problem ended up raising that chain’s food costs. Neman said Sweetgreen has found efficiencies to offset that inevitable impact.
Sadly, perhaps one of the efficiencies was the 10% reduction in open and existing jobs in the Los Angeles support center.
Another move that proved to be more damaging than expected was the decision to pause the seasonal menu over the past year or so, a category that boosted frequency. Sweetgreen brought seasonals back in July, which has helped grow sales so far in the third quarter.
The Summer menu has an Elote Bowl and a Peach + Goat Cheese, as well as the new Chicken Caprese salad. Two more seasonals are coming this fall, and Sweetgreen is planning eight seasonal menu items next year.
“Moving away from our seasonal menu is something that we really missed,” said Neman. “And our customers have told us that. We’ve seen, again, huge engagement on our seasonal menu. And we think one of the best ways for us to drive acquisition and frequency of our guest is newness on our menu.”
And, as the company looks to reposition the brand, Sweetgreen is also bringing in new blood.
The chain has hired as chief commercial officer Zipporah Allen, the former chief digital officer at Taco Bell (the Taco Lover’s Pass, for example, was launched under her watch). Before that, she was also chief marketing officer of Pizza Hut.
Allen starts at Sweetgreen just after Labor Day, and Neman said she will play a key role in sharpening the chain’s brand positioning. One shift coming: more influencer-based marketing on social media, which Neman said has shown more return on investment than traditional advertising.
All of this is against a backdrop of negative income. Sweetgreen has yet to make a profit as a public company, and though ground was gained last year, the net loss widened in the second quarter to $23.2 million, compared with a loss of $14.5 million a year ago.
“While we’re not yet where we want to be,” said Neman, “we’re confident that these actions position Sweetgreen to emerge stronger, more focused and better aligned with what our guests and investors expect from us.”