Sweetgreen Salads
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Sweetgreen Salad Chain Prepares for Initial Public Offering

Sweetgreen is the fast-casual salad chain known for its trendy salad bowls. It has filed confidential paperwork with the Securities and Exchange Commission (SEC) to go public. The initial public offering (IPO) would be a milestone for the company and provide it additional capital to scale.

High-end salad bowl chains, such as Sweetgreen, Chopt, and Just Salad, have become a popular corporate lunch staple. Sweetgreen’s menu boasts salad choices such as the Chicken Pesto Parm and Kale Caesar, all served in compostable bowls. Sweetgreen also faces competition from other fast casual chains with an emphasis on healthy options, including Chipotle and Dig.

Founded in 2007 by a group of Georgetown graduates, Sweetgreen positioned itself as a healthier alternative to fast food options on the market. The company’s founders, Nicolas Jammet, Nathaniel Ru, and Jonathan Newman started the company just three months out of Georgetown’s undergraduate business program. Originally headquartered in Washington D.C., they relocated the corporate headquarters to Los Angeles in 2016.

Sweetgreen currently has 122 locations across 12 U.S. states, mostly along both coasts. In comparison, Just Salad has 40 locations and Chopt has around 60 locations. The company has over 4,000 employees.

In 2019, Sweetgreen’s revenues topped $300 million. The chain’s healthy salad bowls and classy brand image made it a favorite among office workers and investors. Before the pandemic, over 50% of orders were placed digitally.

As the pandemic took hold, Sweetgreen saw a decline in sales as people worked from home. With more people returning to the office, Sweetgreen is betting that demand for their salad bowls will increase again. The fast-casual salad chain was forced to reduce its workforce by 20% last year as the coronavirus pandemic took a hit on the business.

Sweetgreen Greens
Sweetgreen Greens
Photo by Petra Cigale on Unsplash

The pandemic caused Sweetgreen to focus its business strategy on improvements to tech and their digital platform. Sweetgreen has worked to enhance its digital ordering capabilities, with better delivery on demand. They have made the process of placing an order easier, with options including voice ordering, text ordering, and Slack ordering.

Other rivals have similarly invested heavily in enhanced tech capabilities on their platforms. Chipotle Mexican Grill, has also made significant investments in its mobile app. Chipotle has also made layout changes to its restaurants in order to facilitate picking up orders placed online and to cut down long lines.

As part of a suburban push, Sweetgreen has started experimenting with drive-thru restaurants. The pilot location with drive-thru lanes will open later this year in Highlands Ranch, Colorado. Customers would have to order their salad and warm bowls ahead of time on the Sweetgreen mobile app. Other fast casual chains, such as Chipotle and Shake Shack are also in the process of opening drive thru locations. Similar to how burgers and fries are easily accessible for drive-thru pick up, Sweetgreen hopes to make healthier food also conveniently available in this format.

Sweetgreen has also benefited from celebrity endorsements. Tennis star Naomi Osaka has been a vocal fan of the company. In May, Sweetgreen unveiled the “Naomi Osaka Bowl” on its menu, inspired by Osaka’s go-to-order. The four-time Grand Slam champion revealed on her Instagram page that she eats Sweetgreen a minimum of three times a week while she’s training. Osaka is also now the company’s younger investor at the age of 23.

Osaka is officially Sweetgreen’s first national athlete ambassador. The company hopes the collaboration will build awareness of healthy eating and attract customers to the brand. “Our goal in partnering together is a big one: to change the way brands and athletes speak to future generations about the importance of what they eat. With the help of like-minded partners like Naomi, we want to redefine what the fast food industry looks like in the years to come,” Sweetgreen stated in a blog post.

Previously, Sweetgreen has done collaborations with musician Kendrick Lamar, restauranter David Chang of Momofuku, and former New York Times food columnist Mark Bittman. The company also hosted a music festival called the Sweetlife Festival from 2011 to 2016 in Maryland.

In its latest funding round, in early 2021, Sweetgreen was valued at over $1.8 billion. Some have referred to it as the “Starbucks of salads,” noting the company’s ability to achieve a high valuation with a narrow product focus. In 2018, Sweetgreen raised a $200 million Series H round led by Fidelity Investments. This was followed in 2019 by an additional $150 million Series I round with participation from Lone Pine Capital and D1 Capital Partners.

A Sweetgreen IPO could help the salad chain’s business grow to the next level. Many investors see this as a Chipotle-sized opportunity. Chipotle, which went public in 2006, has been able to greatly expand as a result of the increased brand awareness and additional capital raised from public markets.

Ryan Carpenter serves as Attorney and Managing Director of Carpenter Wellington. Ryan advises clients across a broad set of corporate and commercial matters.