How Salad Chain Sweetgreen Figures Out Its Next Product to Sell

Podcast Summary

• Understanding Customer Needs and Market Trends: Principal Asset Management and Sweetgreen succeed by catering to customer preferences and focusing on quality ingredients. Principal Asset Management uses local insights and global expertise to identify investing opportunities, while Sweetgreen differentiates itself in the salad bowl industry.

  Principal Asset Management, a real estate investment firm, leverages a 360-degree perspective to deliver local insights and global expertise across various asset classes. Meanwhile, in a different context, the Odd Lots podcast discusses the crowded market of salad bowl chains, including Sweetgreen. The hosts and their guest, Nick Germain, the co-founder of Sweetgreen, delve into the reasons behind Sweetgreen's decision to switch from using seed oils to olive oil and other higher-quality oils. The discussion covers aspects of customer demand, science, and quality. Principal Asset Management's success lies in its ability to identify compelling investing opportunities through local insights and global expertise. In the salad bowl industry, Sweetgreen differentiates itself by catering to customer preferences and focusing on ingredient quality. Both Principal Asset Management and Sweetgreen demonstrate the importance of understanding customer needs and market trends to stand out in their respective industries.

• Redefining Fast Food with Transparency and Healthy Options: Sweetgreen balances consumer demands with their commitment to making important changes for the food system by researching and addressing concerns, such as removing seed oils from their menu, for the betterment of the food system and their customers.

  Sweetgreen was founded with a mission to redefine fast food by offering delicious, craveable, and healthy options, while being transparent about the sourcing and preparation of their food. Over the past 16 years, they have focused on reducing friction between consumers and their meals, making it convenient for customers to understand what they're eating and how it makes them feel. The consumer's connection to food and the questions they ask have evolved significantly during this time. One area of concern that emerged was the use of seed oils in their food. After researching the issue and considering customer feedback, Sweetgreen made a decision to shift their practices and remove seed oils from their menu. This is an example of how Sweetgreen balances consumer demands with their commitment to making important changes for the food system. They continue to strive for transparency and excellence in all aspects of their business, and remain dedicated to providing customers with delicious, healthy options.

• Sweetgreen invests in premium cooking oils: Restaurant chain Sweetgreen upgrades to extra virgin olive oil and avocado oil despite high prices, offsetting costs through direct relationships with farmers and growers, and a commitment to transparency and high-quality ingredients.

  Sweetgreen, a restaurant chain, made a significant investment in upgrading their cooking oil to extra virgin olive oil and avocado oil, despite the current record-high prices in the olive oil market. They believe in the value this change brings to their customers and have managed to offset the cost creatively within their supply chain. Sweetgreen's unique approach to sourcing involves direct relationships with farmers and growers, and they celebrate seasonality and regionality by working with top-quality producers across the country. They contract prices directly with these partners and use distribution partners to move the product around. This commitment to transparency and high-quality ingredients is a key part of their food ethos.

• Transparency and Quality: Priorities for Sweetgreen and Principal Asset Management: Sweetgreen prioritizes transparency and high-quality ingredients, while Principal Asset Management uses a 360-degree perspective to uncover compelling investment opportunities, both emphasizing the importance of research and understanding their respective markets.

  Transparency and high-quality ingredients are key priorities for businesses like Sweetgreen and Principal Asset Management. Sweetgreen emphasizes the importance of full transparency in their ingredients, believing it leads to the best-tasting food. Principal Asset Management, on the other hand, uses a 360-degree perspective to uncover compelling investment opportunities, delivering local insights and global expertise. In the food industry, Sweetgreen focuses on sourcing high-quality ingredients and minimally preparing them for their customers. The same concept applies to the investment world, where Principal Asset Management actively invests, giving clients an exclusive advantage through their local and global expertise. A notable example from the food industry is the shift towards avocado oil and olive oil, which Sweetgreen believes are healthier options based on their research, independent of any Twitter chatter or anonymous opinions. This commitment to quality and understanding the direction they want to take the industry in has led Sweetgreen to make decisions that may seem unconventional, such as not serving cheddar cheese or beets, but ultimately contribute to their unique brand. Investing, like food, requires making informed decisions based on research and understanding the market. Principal Asset Management, with their 360-degree perspective, is uniquely positioned to uncover compelling investment opportunities, just as Sweetgreen does with their menu.

• Menu evolution at Sweetgreen: Sweetgreen regularly updates its menu to cater to new consumer preferences, broaden customer base, and maintain operational efficiency. Menu changes are driven by customer feedback and the desire to attract a wider range of consumers, not just seasonality.

  Sweetgreen, a popular salad chain, evolves its menu regularly to cater to new consumer preferences, broaden its customer base, and maintain operational efficiency. The removal of beets from one dish, the Shrimami, is an example of this evolution. The menu change was driven by the addition of a new category called protein plates, which was based on customer feedback and the desire to attract a wider range of consumers. Sweetgreen's menu changes are not only about seasonality and celebrating fresh produce but also about keeping up with consumer demands for value and convenience. As the chain continues to expand beyond urban centers, it also broadens its menu to cater to diverse tastes. Overall, Sweetgreen's menu evolution is a strategic move to stay competitive and meet the changing needs of its customers.

• Balancing Quality, Customer Satisfaction, and Resilience: Sweetgreen prioritizes high-quality ingredients, customer satisfaction, and resilience in menu design. They offer protein-heavy plates, customizable meals, and invest in understanding customer preferences to create resonant dishes.

  Sweetgreen prioritizes high-quality ingredients, customer satisfaction, and resilience in the face of food inflation as key components of their menu design and overall strategy. With a focus on protein-heavy plates and customizable meals, Sweetgreen has responded to consumer demand for more protein while maintaining their commitment to no refined sugars. As they've grown from a few restaurants to over 50, they've had to address the challenges of higher commodity costs by building a resilient supply chain and engineering menus that offer both price and value to customers. By investing time in understanding customer preferences and testing new flavors, Sweetgreen aims to create dishes that resonate with their audience and feel worth the investment. Despite being a young and growing company, achieving profitability through a balance of quality, customer satisfaction, and strategic menu design is a priority for Sweetgreen.

• Sweetgreen's Journey to Scale and Expanding Menu: Sweetgreen continues to grow, but recognizes the need for scale to gain pricing power and sustain growth. They've expanded their menu with warmer options to cater to changing consumer needs.

  While Sweetgreen has made progress towards profitability with 220 restaurants, the company recognizes the importance of scale to gain pricing power and sustain growth. With competitors having thousands of restaurants, Sweetgreen sees itself as still being in the early stages of its journey. The company has experienced growth in the Midwest, but acknowledges seasonality in sales, particularly for salads. To cater to changing consumer needs, Sweetgreen has expanded its menu with warmer, heartier options like protein plates. As a leading real estate manager, Principal Asset Management offers local insights and global expertise to uncover compelling investment opportunities. Matt Levine and Katie Greifeld's new podcast, Money Stuff, will bring the popular Money Stuff newsletter to life, discussing Wall Street finance and other related topics every Friday.

• Designing an enjoyable customer experience with salad automation: Sweetgreen's experience with automating salad production revealed the importance of designing an experience that complements the technology and reduces friction for customers. Off-the-shelf solutions may not exist for every menu and ingredient, and simpler automation solutions can save costs and become more common.

  While automation, such as robotics, plays an increasingly important role in the food industry, particularly in areas like salad making, creating a seamless and enjoyable customer experience remains a challenge. Sweetgreen's experience with automating salad production at their Naperville location revealed that the hardest part was not the technology itself, but designing an experience that complements the automation and reduces friction for customers. Off-the-shelf solutions do not exist for every restaurant menu and ingredient, and the goal is to create a transaction where the majority of the meal is assembled by the automated machine but begins and ends with human interaction. Simpler automation solutions, like premixing salad dressings, can also save costs and are becoming more common. The future of automation in food industry is promising, with Sweetgreen opening their second automated restaurant soon, and a range of solutions from small discrete tasks to larger, full concept automation on the horizon.

• Maintaining Quality Service During Labor Market Challenges: Sweetgreen invests in team members, understands their needs, and introduces tipping on iPads to support their workforce, leading to positive customer response and decreased turnover.

  Sweetgreen, a company that has undergone significant growth over the past decade, has focused on maintaining quality service during labor market challenges by investing in team members and understanding their needs. They've also introduced tipping on iPads as a new business model, a response to team member feedback and a way to better support their workforce. Despite the controversy surrounding tipping and subsidizing labor costs, Sweetgreen believes it's a valuable aspect for their team members. They've seen a positive customer response and a decrease in turnover as a result. Overall, Sweetgreen's success comes from their dedication to their team and understanding the market, allowing them to adapt and thrive in various economic conditions.

• Building a tipping feature for team members in a salad chain: A year-long project to incentivize hospitality and enhance customer experience with optional tipping for team members, allowing self-selection and employee satisfaction.

  Implementing optional tipping for team members in a salad chain like Sweetgreen was a complex project due to various technological and regulatory considerations. The team spent a year building the feature, taking into account the experiences of both team members and customers. The tipping option is intended to incentivize hospitality and enhance the customer experience without adding pressure. Consumers can self-select into tipping or not, and some customers have even requested the ability to tip their favorite team members. Despite online criticism, the employees are pleased with the addition, seeing it as a way to connect with customers and earn rewards for excellent service.

• Price pack architecture for self-selection: Sweetgreen uses pricing options to cater to diverse consumers and maintain value, adapts to changing business environments, and stays attuned to food trends while overcoming challenges.

  Sweetgreen, a growing company in the food industry, is focusing on offering a range of pricing options to cater to various consumers while ensuring the value of their offerings justifies the price. This strategy, known as price pack architecture, allows consumers to self-select based on their budgets and frequency of visits. The company has seen a shift towards working from home and suburban areas, which has led them to adapt their business model accordingly. As for food trends, proteins have been popular recently, but it remains to be seen what the next big thing will be. Despite challenges like wage increases and online criticism, Sweetgreen has maintained a positive outlook and continues to learn and evolve.

• The quality of oils and consumer needs in the food industry: As consumers prioritize health and chronic disease management, food chains like Sweetgreen adapt by expanding menus and using pricing strategies, apps, and loyalty programs to cater to various needs and preferences.

  The quality of oils and the increasing use of highly processed oils in food consumption is a growing concern that will lead to more transparency and visibility for consumers. This topic is especially relevant as more people are diagnosed with chronic diseases and turn to medications like Ozempic or GLP-1. Sweetgreen, a higher-end food chain, is keeping an eye on these trends and expanding its menu to cater to various consumer needs, including health-conscious individuals and those on medication. As the industry evolves, there's a growing emphasis on pricing sophistication, labor costs, and the impact of delivery services on hospitality experiences. The use of apps and loyalty programs is becoming more prevalent to offer lower prices. The conversation around the shift towards olive oil and the potential normalization of this trend is also worth noting. Overall, the food industry is facing significant changes, and companies must adapt to meet the evolving needs and preferences of consumers.

• Lack of physical machinery hinders food preparation automation: Advanced AI exists, but lack of robotics hinders its application in food preparation automation, resulting in missed productivity gains

  Despite the potential and business demand, automation of food preparation, specifically lunches and even something as common as coffee, has not taken off significantly in the US. The constraints could be the lack of off-the-shelf solutions, scale issues, or the complexity of assembly. Robotics and physical machinery are needed to put artificial intelligence to use, but there seems to be a gap between investment in robotics and AI. The productivity gains in services compared to manufactured goods are a fact in the economy. A chatbot of robots, a good and functional robot, could potentially bring productivity gains. The investment in robotics has been significantly less than in AI. To summarize, while we have advanced AI, we lack the physical machinery to utilize it effectively in food preparation automation.