This is my petition for a Sweetgreen at Yale

Wrapping up junior year, Sweetgreen making moves, Yale naked run...

May 12, 2024

Hi guys, I am officially a senior!!! It’s wild, and exciting, and sad at the same time. The past few days on campus have felt weirdly nostalgic - especially spending time with seniors.

I went to a Holly Humberstone concert last night with my high school bestie Slee and it was INCREDIBLE. It’s our second Brooklyn concert together - the first was Olivia Dean last November who is absolutely angelic. These British artists are on to something. I’ve started to gain an appreciation for live music, especially in these intimate venues - we were in the 3rd row for Olivia Dean and standing in front of her family (we had no idea until she dedicated a song to them).

No snippets today, just the main Kiki on how Sweetgreen is revolutionizing quick-service-restaurants.

THE MAIN KIKI - SWEETGREEN IS PROVING A NEW CONCEPT

The first time I had Sweetgreen was at the Boylston Street location in Boston when I was 13. It was so gas and I remember posting an incredibly oversaturated/filtered picture of it on VSCO (the days when everyone went ham on VSCO). It felt so gamified to me as a young person - moving down the line and choosing all my ingredients (a lot of agency for a 13 year old), watching them toss it aggressively in a massive silver bowl with giant tongs, and then giving you the piece of bread that is always so dry but feels like a bargain because it’s free.

Over the years, Sweetgreen became my little treat every time I was in a big city since there weren’t locations near my high school or in New Haven. I’ve said 1,000 times that if we had a Sweetgreen at Yale, that place would be the most successful store to grace campus - Yalies, now that we’ve lost Sushi on Chapel (devastating… does anyone know what happened?) maybe it’s time for Sweetgreen to become the new Theta Canteen. If anyone is friends with the founders (Georgetown alums) pls put me in touch. xx

Sweetgreen’s iconic campaign with Renee Rapp

In March, I saw a bunch of headlines about how Sweetgreen stock popped after an earnings call where the company announced boosted profit margins and projected their first adjusted EBITDA profitable year. Then just two days ago, they announced Q1 2024 earnings and beat expectations again, jumping nearly 40% (!). I thought about buying some shares on Robinhood on Thursday afternoon since I was tracking their earnings call for the letter, and now I’m kicking myself for not doing it.

In light of their stellar performance that I missed out on, I’m going to cover some of the initiatives that I believe make Sweetgreen an innovative company that is setting a new precedent in the Quick-Service-Restaurant (QSR) industry. First, a quick primer on Sweetgreen:

Quick service restaurant that serves customizable and made-to-order salads.
Founded in 2007 by 3 Georgetown students: Nicholas Jammet, Nathaniel Ru, and Jonathan Neman. The company went public in November 2021 (NYSE:SG).
~220 locations scattered around the U.S. (mostly in dense urban areas), $584 million in revenue for FY 2023, and an average unit volume of $2.9million (transaction volume per Sweetgreen store).
Sweetgreen’s mission is centered around “building healthier communities by connecting people to real food” and “reimagining fast food for a new era”.

Sweetgreen’s unique business model executes on their vision, prioritizing sourcing ingredients directly from farmers, as opposed to using large food distributors which limit freshness and quality. They also love to make it known - I remember in the Boylston location there was a blackboard displaying what farm each ingredient was sourced from. Sweetgreen wants to signal freshness and high quality to differentiate themselves from other QSR’s. As a result, Sweetgreen’s price point is higher - $14-$17 per bowl, compared to Chipotle which is typically $9-$11.

While some locations are profitable, the company has traditionally operated at a net loss because of high overhead costs:

Ingredient sourcing model: Most QSRs source through large food distributors who offer bundled services of sourcing and transportation logistics for restaurants at competitive prices. However, Sweetgreen, sources directly with farms to maintain freshness and quality, which is more tedious because it requires continuous relationship building with farms and the creation of an in-house supply chain network (functions that a food distributor would usually take care of).
Labor: Sweetgreen has very high labor expenses relative to other QSRs because their meals are all staff assembled (think about the line of workers they have at each location, passing your bowl from station to station). They also do a lot of meal prep at restaurants because they want to process food as close as possible to the customer, vs other QSRs who process centrally and distribute later to their restaurants.

Their path to profitability includes opening new locations, growing average unit volume by increasing loyalty, and being disciplined with their cost structure.

But what I want to talk about is AUTOMATION! It is every quick service restaurant’s dream to automate food making and serving to increase margins. Many QSR’s now have digital kiosks, or drive-throughs using automated order-taking tech, but the food preparation is still something mostly manual. Sweetgreen is now changing that.

In 2021, Sweetgreen acquired Spyce, a company that makes automated food assembly lines. They opened their first Infinite Kitchen with robot salad makers in Naperville, Illinois in 2023. This video shows how it works, but essentially you order at a kiosk, and then your salad is made in a robotic assembly line of tubes filled with pre-chopped ingredients that are dispensed into a bowl that moves through all the stations (base, toppings, dressing).

Due to the automation, there is 1/3 fewer staff in this location vis-à-vis non-automated stores. Since labor is one of Sweetgreen’s expense pain points, the gross profit margin of the automated Sweetgreen in its first month of operations was 26%, compared to a 20% average. This location also experiences higher average order value, perhaps because ordering on a kiosk is lower friction compared to a human server.

The second Infinite Kitchen opened in Huntington Beach, CA in late 2023. While one location is an experiment, two locations is proof of concept!

This new concept is significantly improving unit economics: On the Friday earnings call, Sweetgreen shared their aggregate average restaurant-level profit margin increased to 18% (compared to 14% a year ago), which likely is in part attributed to their Infinite Kitchens. Either way, Sweetgreen is making big moves.

THINGS I’M LOVING RIGHT NOW

Yasso greek yogurt ice cream bars. Sometimes I find American grocery stores overwhelming because there are too many try-hard products trying to be healthy and keto and vegan and everything at the same time. But if there’s one product that came out of the woke-ification of food wave, it’s these greek yogurt bars.
My dream collab has become a reality - Post Malone and Morgan Wallen released “I had some help” on Friday. The recorded version is good, but I’ve gotten so used to listening to clips of them performing it live at Stage Coach before the song came out. I kind of want a live version.
Cottage cheese and jam mini toast. delish.

Naked run at Yale - every finals period, Yale has a tradition of a naked run through the main library on campus. I’ve only watched it once during my freshman year, but from what I remember, people start crowding at the entrance of the library around 11:45pm and one student announces on a megaphone that all phones must be put away and filming is prohibited. And then all of a sudden a group of naked students burst through the doors of the stacks and sprint past you. This year’s naked run took place last Wednesday. Apparently, it was a star line up (iykyk) - devastated that I missed it.

That’s its for Jackiki 6. Thanks for reading - email/text me your thoughts I’d love to hear from you!

Also… Happy Mother’s Day to all the incredible moms! No comic this week, just some pictures of the amazing woman who teaches me everything I know. Mom, you are the life of every party. Keep dancing through life - I love you!!!

Throwback to this legendary moment when my mom was the first person on an elevated surface at the parents weekend mixer (with the OnClouds too😎). Make this woman SigNu sweetheart already…