Local veggies, national scale: Sweetgreen co-founders

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Hey folks, Jeff Berman here. I am thrilled to share some of the new names who will be joining us at this year's Masters of Scale summit. This may be our biggest stage yet. Reed Hastings, Meredith Whitaker, Van Jones, Amjad Masad, and more. Will be there with us October 20th through 22nd in San Francisco. If you're building something great, or you want to build something great, We want you there with us too.

Join us at masters of scale dot com slash apply twenty six. That's mastersofscom slash apply. Twenty six. August first, two thousand seven. Anything that could have gone wrong went wrong that day. Oh no.

I think it was a few days before that that w we were opening, we had uh the laptop with all of the recipes that we had stored on it. Sitting in our apartment. And it got stolen. And this was before the cloud. And so we had to spend the lot the like last twenty four hours before we opened trying to m re-memorize all of the recipes.

And sit in this kitchen all day to kind of reformulate them, whether it's the dressings, how we put things together. We had this thing called sweet float, which was our organic frozen yogurt. And It had a very specific recipe and the ratios, and I just from we'd figured out everything else, but that was the last thing, and I just still have this burning image in my mind, Nate standing over the machine.

All night he's putting together different recipes. His hands are like deep in the machine, we have to clean it and keep doing it. And I remember like right before we're opening it, he like pulls it out, he's like I think this is it. And we're like all taste were like, Okay, that's it. And and that was that was the recipe. We just had to push through.

And it was kind of that gauntlet moment for us to kind of say, Hey, we're gonna do this and even if it's not a hundred percent perfect. Show up and just opening our doors day one. Was a it was a really big milestone for us. That's Jonathan Neiman and Nathaniel Room.

Along with Nicholas Jamay, the three are the co founders of Sweet Green. For the few of you who don't yet know it. Sweet green is a fast casual food chain focused on fresh salads, green bowls and other healthy food. This near disaster story of day one, location one, stands out. Because from the outside.

Theirs is a straight up and to the right unicorn journey. Nick, Nate, and Jonathan founded Sweet Green in two thousand seven as seniors at Georgetown University in Washington, DC. That first restaurant was tiny. Just five hundred square feet. Since then, Sweet Green has grown into a public company.

and has a market capitalization over two point five billion dollars. It's a scale story full of setbacks. Including that harrowing laptop burglary. That led to invaluable lessons. The three co founders have grown as leaders, bringing sweet green from a dorm room idea

To an American success story. That's why we've invited them to share their journey. On Masters of Scale. You gotta have incredible talent at every position. Huge push. There are fires burning when you're going out. Can you believe it? Such an idiot. And then you go back to this is totally gonna be amazing. There are so many easy ways. Sorry, we made a mistake. But you have to time it right.

Not all ten years later and be like, well that's just how you do it. We haven't made it just how you do it. Okay. This is masters of scale. I'm your host.

Jeff Berman. Before I sat down for a conversation with sweet green co founders Nicholas Jamay, Jonathan Neiman, and Nathaniel Rue. Our producers and I went to one of their LA locations for lunch. Can I get a miso glazed salmon bowl? Great.

I want it the way God intended it. Yes. Uh to go, please. Yeah. Thank you. That's great. Yeah, thank you. Just one's fine, yeah, thank you. We're at sweet green in

Mid city Los Angeles on the Brea. I've been going to Sweet Green for probably close to ten years now. Essentially since they opened back in Washington DC And it's kind of mind boggling to think that they now have More than two hundred locations nationwide, more than six thousand employees.

Um I think the first salad unicorn the world has ever seen. So fine. Thank you. Thanks, Karen. Appreciate you. Have a great day. Bunch devoured. I went to sit down with the company's three founders. Jonathan, who's now CEO.

Nate head of marketing and Nick Chief Concept Officer. I told them their work is literally in my DNA at this point, given how much sweet green I've eaten since I first started going to their original store in D C. The three guys know each other and work together so seemingly well that they rarely talk over each other. But they do pick up each other's sentences. So I'd love to hear the story of uh how you guys came together as we as we start the conversation.

This is Nicholas. So our story starts twenty years ago. We met as freshmen at Georgetown. We were next door neighbors in our freshman dorm room. And over the years really bonded around some of the similarities we had in our lives. We were all kids of immigrants. parents that have come to this country and built business.

And so we had all grew up in this context of our parents building businesses, running it, pouring their blood, sweat into tears into something. We also had this other conversation happening in our life of not feeling good about the options that we had around us to eat. And so there's this daily problem. And so we said let's solve it.

Let's write a business plan. And at the time Georgetown was not the most I would say, you know, encouraging of entrepreneurship. Everyone really wanted to, you were geared towards becoming a banker consultant, more institutional career paths. And and DC's not exactly the most entrepreneurial town in America. Yeah, all of that stuff. That that was more of the culture of Georgetown. But the three of us love the idea of starting something and solving a problem. And there was this one lone elective class with an adjunct professor, uh entrepreneurship. So we all took the class separate semesters.

And it really taught you how to build a business plan, how to think about Um creating something, reaching out for advice, creating a network of other entrepreneurs. And so we started writing the business plan. And so each of you took the class, but at different times had you communicated with each other about the class, had one of you taken it first and like you guys have to do this, or or was this total happenstance that you'd each taken the class? This is Nate. I think we all know.

We also have the class, but the thing that actually bonded us even more was that actually all of our parents were entrepreneurs. They almost gave us the permission to say yes in a way. Where where we we were getting a lot of no's other places and just knowing that we could Jump off the cliff and like

Do it as three young twenty one year olds. And having the support of our parents because we watched them was really helpful too. And so the I I I I can see why you'd come together given the the shared family history and the foundation of this class. But it's not obvious that you would launch a Salad franchise. Um so how how did that become the idea that that got you guys going in this direction?

for m for me, I had gone to we'd all studied abroad somewhere our junior year. I had studied in Australia. And I'd just gotten back senior year from that that experience and one of the things that really stuck with me was the culture there of food and the lifestyle around being healthy. Like the cool kids. surfed and skated and were healthy and went to these healthy cafes. And that was the cool thing to do. And it was such a contrast to

how health food was viewed here in the US, especially at the time. Healthy food was not cool. It was this idea of like Let's create. tiny little restaurant for ourselves, our friends. We just counted how many I remember we went, we were like, How many people do we have to serve in a day to break even? And we went and stood outside the other restaurants in the area. We went to the subway, we went to the Chipotle, we went to the

buoy mongers, all these places with a clicker and we literally count it, like, okay, like They got three hundred people in a day. How many people do we need to break even? And it really just started v Very, very small. And I think if we want to be honest We thought it was gonna be easy. We thought it was like how hard can this be?

We found a location. It was right across the street from our dorm. It was five hundred square feet. Tiny. I mean this thing is a tiny little thing. And I remember we looked at ourselves, we're like, Okay, we'll have this open by April first. It was October. We're like we'll raise the money, we'll write the business plan. We'll go buy the food, we'll go buy the kitchen equipment, you're gonna put it in, we're gonna prep the food and we'll hire some people and call it a day.

And it was the middle of the recession. Yeah, it was the middle of recession. Like, oh well, you know, we'll design a cool logo and like a brand and and we'll be off for the races. to actually remember the landlord of our Georgetown, our first location. wouldn't even return our call. John called her thirty days in a row, every single day. So she finally took a meeting just to stop the calls. And she ended up giving us our a chance. She let us sign a lease and in hindsight we're like Wow, what crazy for her to sign at least the three students with no background and, you know, not much cash in the bank.

I've heard a lot of other entrepreneurs talk about this, that if they knew what they were actually getting into. They would have never done it. I remember even when we opened the first one at one point, we're like, we'll get to three and then it'll be self-sustaining. It'll just grow on its own. And I think you underestimate How many

micro challenges you have to solve. It's really so many different businesses within one business in order to be great. You have to master supply chain, you have to master real estate, construction, design, customer experience, technology. Today automation є to be great at leadership in people. So many. And I think for us we've

fallen in love with the difficulty. Because how hard it is is what Makes the most. And what makes it so valuable and powerful over time. Adopting a mindset that your business will be successful is important.

But what matters more is what you do when the naivete and rush of newness wear off. And the challenges set in. It takes an infinite learner's mindset at that point. Because the challenges can seem insurmountable. In October 2006, the founders were all still finishing school. When they started to take the plan off of paper and into the real world, the feedback got more blunt.

I remember the specific point where we we thought originally that we could do it for a hundred grand. And So we wrote the business plan. It was uh Christmas break and we all start to go to friends and family and all our old bosses to raise money. The average investment for us in that first round was about five thousand dollars. We hired an architect.

hired a general contractor, they sent us the budget and the first budget was like I don't know, three, four hundred thousand dollars or something. And we just looked at each other like Oh God, this is not gonna work. This doesn't make sense. We thought it was gonna be a hundred thousand dollars and open April first and all of a sudden it was gonna open sometime that summer and cost many times. More than that. And I think that was really the moment where where it was

Okay, this is for real. I called my dad. And I pitched him this idea that I had with these two guys and Just long pause. And he goes, Nathan.

That salad dressing better be damn good. And then hangs up the phone. And that was uh that was my first piece of advice I got on the business. It's one thing to raise a hundred thousand from friends and family. It's a lot, and not everyone's in a position to do that. You guys were amazing. But now you need closer to a half million. So what how'd you get there?

Talking to a lot of people. Hundreds and hundreds of people. It's a painful process raising money, especially when you're unsuccessful in it, especially when you have to do it with a lot of people. But the value in it was sharpening your vision. We ended up getting about fifty investors in that first round to raise three hundred thousand dollars.

That means we have to talk to like 50 people. So when you have to have 250 conversations, selling this vision, answering all these questions, it really again forces you to sharpen your plan. That was really, really valuable. We had to think about so many aspects of the business'cause people were giving us money and we had to be able to answer those things. They had hundreds of conversations to raise the capital they needed.

When you're pitching your business. Especially early in around. It's essential to urge respective investors, including friends and family, to ask tough questions. Mm. This includes getting feedback from investors who say no.

Not only did this experience help the trio hone their pitch, It forced them to take a deep dive into their business plan. Helping them uncover problems before they reached more critical stages. Their persistence in incorporating feedbed off. Sweet Green opened at the end of the summer the year they graduated.

Yes. After the recipe laptop was stolen. They launched the restaurant August first, two thousand seven. It did well enough for them to expand. Two years later, they opened their second sweet green.

In DC's busy DuPont circle. It was gonna be our flagship location. Three times the size. Three times the cost. And

We opened our doors in April of 2009 and we had no customers. Yeah. Nobody came. And that was another moment when we looked at each other and we should shit this isn't gonna work. What went wrong?

We were on the wrong side of the block. Cross the street was one of the number one Starbucks in the city. And we just had to figure out a way to get people from that side of the street to our side of the street. That's when Nate had an idea. The only things that we knew how to do were to serve healthy food and DJ.

And so we Went to guitar center, but for a four hundred dollar speaker, we put it outside. We faced it towards Dupont Circle on the park. And the three of us sat out there, we played music, we passed out menus, we passed out samples every Saturday and Sunday. And it just created this kind of community vibe and energy outside that got people to come to our side of the street.

And so the next year. We did a block party in the parking lot that we shared with the farmers market, which was really great. A free block party with local musicians. And then we uh we really wanted to throw a a mini festival where you could serve healthy food and hear great music and We got linked up to the The guys that produce Nine Thirty Club and uh they have a bunch of venues in DC.

And they sent us, you know, a few ideas and I remember getting an email from them saying that okay The strokes are interested in playing your salad festival. decision to make at the time where we had to push our chips in and say we're gonna do this Big fifteen thousand person festival.

But in order for us to do this, we have to sell it out, otherwise we're gonna lose a lot of money. Mm-hmm. You're now in two of the hardest businesses in the world, by the way. Now we're in big music production and healthy f healthy food and And we looked at each other, I remember that moment, and we said It's almost like a no brainer decision because this is something that no other restaurant company would do. And we could think about it as like a

At the time a content platform for us and a community building platform for us. And so we did it, uh we booked the strokes in two thousand eleven, sold the whole thing out. And that's what became the Sweet Life Festival, which we ran for six six or seven years in DC. I mean, I'll never forget the cover of the Washington City paper. The next day was the headline was something like, What the hell are three salad kids doing hiring the strokes? And it was a full page article, and we're like, Yeah, that's exactly why. And it would start with twenty people, thirty people, forty people. ended with 25,000 people in a field at Merryweather Post Pavilion.

But it was really the beginning of sweet green starting to build this sense of community and that we're building something different that wasn't just another fast food brand. Sweet Life Festival ran for six years. Helping build a large follow in the DC area and beyond. The founders knew that simply offering a healthier alternative to the fast food around them was not enough. Sweet green would only reach the heights they aspired to if it was more than a restaurant.

The founders wanted to build something that their customers felt emotionally connected to. An identity brand. The festival was a big gamble is a way to do that. But they were willing to take that risk because of how it could burnish and seal sweet green's reputation. and gain an even more loyal following.

By two thousand thirteen, fewer than six years after opening that first restaurant in Georgetown. Sweet Green had expanded to nearly twenty locations. Perhaps counterintuitively when it comes to blitz scaling. Sweet Green did not want to franchise. They preferred a central ownership model.

But that meant they needed to build their own foundation for scale. Very early on we said we don't want to be a franchise restaurant because if we do, we may lose control of the quality of what we do. We'd rather go a little bit slower. And o own the end to end experience to ensure that quality And stand the test of time versus On opening the floodgates and selling franchises.

But at one point we got an offer from like a very legitimate large company. that wanted to license the brand and put it in over a hundred places. It was a very lucrative deal. It was so attractive. And you know, at some point when you're in that business, you think that everything is a race. You're like you're looking at your competition and you're like, Oh my God, they're going they're franchising, so they're going faster than us, they're gonna beat us, it's first to market. But we you know, thought long and hard and we wanted a business that wasn't just gonna

have this short term pop and not be around for a long time, but something that could truly stand the test of time. Here's Nick. I think the foundation of the values was really helpful because it allowed us to make the proper decisions then as we started to build out our team, make sure that We were hiring people that also lived by those values and made decisions in that lens. So much of how we operated those first three restaurants was very

Mom and pop. It was like farmer coming in the back door. And so we said, how do we put the right systems in place around the things that really make us special? Right. So we had the values and we were trying to prioritize this food ethos we were creating around serving a different type of product. And so we really started to build, I guess, V1 of scalable supply chain according to the ethos that we wanted to serve. And at that point we decided let's go deeper in this DC, Virginia, Maryland region. Let's really own, build a brand. um master this model a bit more before we start spreading ourselves to all these Different cities. And in hindsight, probably one of the best decisions we ever made. And and in part, I assume because you could work with the same suppliers, right? So you had some quality control. Same suppliers, understand what it looks like from going from one to three to ten in a region and understand what that system is. And also, you know, you can wrap your arms around one region. You can get to every restaurant. You can be really thoughtful.

having restaurants around the country really early is just a whole different set of challenges. This level of attention to sourcing the highest quality local ingredients is an example of the values driving the company's scale strategy. Founding trio of Nate, Nick, and Jonathan prioritize environmental sustainability. and more healthy eating. At scale.

But how do you scale a national business model that relies on locally sourced produce? After the break. We hear how sweet green's early pattern of steady growth gave way to a new strategy. And big changes. When you've built substantial wealth through your business, it's often tied up in a single equity position.

The upside is real, but so is the risk, and knowing when to act isn't always obvious. Creative planning works with business owners to build a strategy around concentrated equity. When to diversify how to manage tax risk and how to protect What you've spent years building. Creative planning where wealth works together.

Learn more at creative plating dot com slash masters of scale. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show. Because every Friday we release a second Rapid Response exclusively in the Rapid Response feed. The guests and topics are just as compelling and timely from Ford's CEO to NASA's administrator to the lessons from The Devil Wears Prada. It takes about 10 seconds to find, just search rapid response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there.

Humans will never be more intelligent than AI. Those are great at AI and those that went out of business because they weren't. How do we build a future? That is human centered. I'm Rana El Calyubi. And on my podcast, Pioneers of AI, we answer that question and so many more.

As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future. And we take you behind the scenes of the AI that's transforming our lives. Find pioneers of AI wherever you tune in. We're back with Jonathan Neiman, Nathaniel Rue, and Nicholas Jamay, the co founders of Sweet Green. To watch the extended conversation, head over to our YouTube channel.

We can find this and more. Before the break, the three co founders had decided that rather than go national right away, They would grow in the D C, Maryland, and Virginia area. Known to locals as the DMV. When they did enter new markets outside the region.

It was with careful planning. Here's Nick. We wanted to build enough confidence in the model and the brand before we went to some of these larger cities. And building the brand over the first couple years and just you know we got to around 20 restaurants in DC, Virginia, Maryland. We've gone to Philly so a little further really understanding what a second city feels like. And we made a bunch of mistakes on how you hire, how you operate remotely. how you build a second supply chain, how do you build a brand from scratch in a new city, all these micro learnings that really allowed us to once we were ready to go to New York, Boston, California, go with some set of a playbook, some sort some sort of belief of how we introduce Sweet Green the right way in a in a new city.

New York is just a whole different type of operation than what we were used to and We wanted to almost start from a blank canvas. And say if we were Redesigning this concept for the future. And thinking about future proofing sweet green.

for New York and then beyond, what would we do differently? So we hired a brand new architect, we hired a digital agency to help us build a mobile app. that was kind of first of its kind, uh mobile order and pick up, which was new for sweet green. And so We spent almost a year and a half in 2012 and 2013. Building a new concept.

And when we launched New York and Boston in I think in the summer of twenty thirteen. It felt like a different business and It felt different than the competition and it also had a digital component to it, which was really important. When companies hit that

Second. founding that second inflection point. Often there are members of the team who've helped get from the first stage to the second stage who are not the right people to get from the the that point to the next. Is that what happened with you all as well? I think that's one of the hardest things about

building a a startup is at each of these inflection points as you're building scale. You almost have to start. Over on everything. all of your systems, all of your tools, all of your you know, everything that you do, including a lot of your team.

may not, you know, what was right to get you from zero to one may not be right from one to two. Because When you start, you know, you've small team and everyone's a generalist. You need just generalists that do everything. And as you get bigger, you need more specialists. And that generalist may not have the experience of a of a specialist, but there's such value in having some people along for the whole for the ride the whole way.

because they're those culture carriers. And so we're really lucky that even today, many people that have been with us, you know, ten plus years. So fascinating just watching the dynamics among you guys and how seamlessly you move back and forth between who's answering questions and how you play off of each other. How did you define your roles at the beginning and how has that changed over time to now? So in the beginning we did every single job. Cashier. Putting lettuce in a bowl.

Chopping tomatoes. Cutting onions, we did it all and We always say the answers lie inside the restaurants because it was a really important moment for us to really understand one, how to operate one of these things and two

understand all the the f the flaws and the imperfections that kinda make it better. Um And then But in the beginning we were all kind of co founder, co CEOs of the business. Uh we each

Did have our own I would call it Passion or natural sphere of influence. So John was uh in charge of leading a lot of the financing conversations, um

even construction at one time, develop store development of real estate. Uh Nick was always in the center of all the food conversations we were having, talking to farmers. thinking about how to build a supply chain a little bit differently. And then my world was always around how do we tell our story.

Then How do we have fun in terms of building community? that vision that we laid out in the beginning. We think sweet green whether it has us or not, can be a hundred year business. And that's what we're trying to do and

So we've always tried to just leave the ego. out of it and do what's best for the business. We had John Mackie on Master Scale recently and he was talking about the importance of the real estate choices that Whole Foods made and being very deliberate. How has your real estate strategy influenced what you're doing? What we've learned is that

Every m Community. Is different. So what's great. In one city.

may not be great in another city. And I'll I'll give you an example. We're here in Los Angeles. So in LA. It's all about accessibility in New York. very intentionally wanted to tell a story with our real estate. So the best place to probably to open in New York would have been Midtown Manhattan. Today our highest volume locations are in Midtown.

Very intentionally did not go to Midtown. because we wanted to build a br a lifestyle brand and be part of the community. So we went to the Nomad Hotel, we went to Nolita, we went to Williamsburg, we went to these like little communities to build a brand that then gave us license. To be everywhere. So the closer you can get to your customer. and to that local community and remembering that restaurant retail, it's a local game.

So we talk about scale nationally. But it really is like Our business is Two hundred and thirty individual restaurants. That that's what makes the that's what makes the business. Did any of that inform the decision to move to LA in twenty sixteen?

As we looked at the trajectory and arc of the business, we were at this point where we had built a good sized team, we'd opened a couple of restaurants, and we were thinking about this journey to being this national brand we wanted create. We wanted to win this category, be a national brand. And we lived at California and we knew it was gonna be one of our biggest, if not our biggest market, and the importance of winning California. And so we decided you make that move really once and let's do it thoughtfully. And we had about thirty five, forty people on the team at the time and they all moved with us.

Wow. And it was quite a journey. And we're really grateful to DC. Our roots are there. It's where Sweet Grand is born. But you know, we really thought the headquarters to California would allow us to really take that next step in being a national brand. Win, win, win. Yeah. It goes back to values. Yeah. Tell me about the decision to go public. We're very capital intensive business. We own all of our restaurants. That means we're building each and each one of these restaurants, as well as uh, you know, a lot of infrastructure to support what we do, whether it be the supply chain, the technology, the brand, et cetera. And I think we got to a point in the business where the markets were in a place The company was in a was was in a place and we had an opportunity to raise

a lot of money to fuel that next chapter for us. And it's funny that some people view an IPO as an exit. We don't view it as an exit at all. It's just It's a financing. It's n it's a way to bring capital onto the balance sheet, have it create a more public platform and more exposure. and continue on this mission. So it's just another day one type of experience for us.

we thought a lot about it going in into it about the fact that this really shouldn't make how we make decisions. Especially the important ones. There's that there does create a public scoreboard. There is some short term accountability. And in many ways that helps you operate better. But we're very intentional that having that quarterly earning cycle not change the investments we make over the long term. And I think we've been very fortunate in how we've set that company up, the shareholders that we've chosen and brought on.

that are clear with that that vision. It's also created a bit of a constructive pressure on keeping us focused as we try to e scale and execute. You know, with three founders, there's a million ideas we want to go pursue and we probably have a history of trying to do too much at once. Being a public company, you have that expectation of having to execute on what you've promised to the street. So it actually creates a bit of this constructive pressure for us to actually try to stay very focused on the business plan at hand. One key component to sweet green's growth is their adoption of technology to make processes like ordering lunch, paying, and pickup efficient and quick. The sweet green app was created well before pandemic restrictions forced a lot of restaurants to pivot.

Giving the company a huge head start on the competition. It was born out of a response to one of the good problems a company can have. So th the sweet green app was one of if not the first restaurant apps that I had on my phone. You mentioned that as a a a key part for the growth. I'm curious how you decided to make that investment

how it evolved and particularly what happened for you as Covid hit and the world shut down, that you you already had that in place. Yeah. You know, we started our b the we opened our first restaurant. August first, two thousand seven.

The iPhone had not been released yet. So the iPhone comes out just a couple months later. It's just like crazy to think how much the world has changed. I mean I was working in MySpace at the time. And in many ways I think we were very lucky'cause we were twenty two years old. digitally native in many ways. And all of a sudden this revolutionary product comes out.

And you know, if you you know, fast forward, we open we have a few restaurants that open at the time Amazon you know, the world is moving towards e commerce. And I remember the The saying was Well, you guys are luckier in food because that's the one thing Amazon's never gonna do. Yeah, it's funny it's funny to think about that today as they own whole foods and kinda do a do a lot more. But at the time it was it was viewed that why no no one's gonna buy food online. It was almost thought as crazy.

But for us, we had a huge problem in our business, which was like really an opportunity, which was we had these huge lines. Once we once we got going, we would have huge lines. We were known for these massive lines that that would wrap around the block. And we because m at the time most of our business uh was very lunch driven. So you had a very short window to make all of your money. So it's just how fast you could go. And so the simple idea was Why can't you

Just order on your phone and have a second line. The funny story about that is At first, probably like most companies, the online orders would be held behind the counter. You'd have to walk up to the to our team member and be like, Hey, my name is this, and they'd go behind and grab No one thought you could just

Leave. food out there. We didn't think you could either. Well one of our restaurants was really small. Didn't have much space behind. And had a lot of online orders. So they just started stacking the bulls. In l in the in the they just took a no no call to headquarters just like hey this is what we gotta do to make it work.

out there and just started stacking orders and customers just started taking them and we realized They actually preferred it. Like it was great. It was like this pure frictionless Pick up experience. And so then we're like

Okay, let's build this into the restaurant. As part of their experimental nature, The founders are keen to find new ways of making their business more efficient wherever possible. While maintaining the quality and experience their customers have come to expect. This is one of the most important parts of sweet green's DNA.

So when they do venture into new tech. They do so with a commitment to their values and to their team members. We see technology as an enabler. In order to improve that customer experience. And we use technology in so many parts of our business, whether it be our online ordering or our delivery channels.

you know, digital makes up about sixty percent of our business happens digitally. Well Um, we also use a lot of technology in how we enable our operations, whether it be some of the tools we use in the back of house. w some of the forecasting around how we order, how we schedule labor, how we prep our food, and more recently We've invested in automation, which we think is another accelerant. to improving the customer experience.

So when you think about a sweet green, we do a few things. We do prep in the restaurant. We buy great food. We prep it. We then assemble it and then we serve it. Within that process what we realize is most restaurants as they get bigger

They begin to To outsource the prep. They take the prep and they put it in a commissary. The food ends up showing up in a bag, the chicken becomes pre-cooked, all of those sorts of things in order to manage consistency and And create better unity economics.

That's something we didn't want to do. We saw the valuable parts about what we do being the hospitality. And the prep and the sourcing. And the assembly in many ways is actually where there are a lot of the challenges are. It can be, you know, it you can get orders wrong, you can be off on time.

We're like, this is a perfect opportunity for automation to actually improve the customer experience, improve the team member experience, and improve our unity economics. So like a perfect. Win win win that over time can actually protect our ethos because we're gonna find deficiencies Not in sacrificing the quality of the food. But using technology to innovate the experience.

Is AI in the same lane for you? Are you you finding efficiencies through AI that improve the customer's we have been for a while. There's a lot we do on the marketing side. CRM, we're doing a lot today using AI for um for labor deployment and ordering. Um we have been playing with a lot around order recommendations, kind of like personalized personalized menus and those sorts of things. So it's a very exciting time for us to take advantage of some of these. some of these different tools, but the automation is really the big platform shift. that we've led. We have two restaurants that are automated today.

Um, it's called the Infinite Kitchen is the technology and we we we acquired a company to help us enable this. And we think that you know Over the next Twenty years automation is that next platform shift similar to the digital transformation we've seen over the past fifteen. Infinite Kitchen automates assembly of sweet greens, signature salads and bowls.

Kitchen staff still cook and prepare all of Sweet Green's ingredients, sauces, and more. And workers still serve guests, guiding them through the menu and helping them get their order just the way they want it. Orders are placed at a kiosk, and then the technology helps ensure any specifications or modifications are followed to a T. You can see how this would reduce human error on orders. The automated system delivers your lunch without onions or with those extra cucumbers.

Jonathan says the impact on labor. Is nuanced. And the idea of automation, does that replace workers? Does that eliminate workers? Is that part of the vision for as how you expand? So it we're mostly putting them in new restaurants. We we don't plan on eliminating any workers as part of the roll out. So it's going mostly in new restaurants and in any retrofits. that we have, we will we will keep those jobs for our for our team members.

Um, the way we see it is it's actually elevating the role of our team members and getting to focus on what really the core of the restaurant is, which is around service and hospitality and also coaching and development. And the automation in many ways helps us do that because now it's a little bit easier to run. You can run a really high volume location without having to worry out one part of it and get the team members get to focus on the parts that they enjoy, be it the cooking of the food and the culinary aspect. or the hospitality or the coaching. You know, it's interesting is when we announced that we were a little bit nervous. How are our teams going to feel? But the response has been like

Can I have one first? Like people are people are lining up and the happiness we're seeing in the stores that have it. are much higher. We're seeing much less turnover. in the in the restaurants that feature the Infinite Kitchen And so it's still very early, but we're very excited about the opportunities. With Sweet Green, Nathaniel, Jonathan, and Nicholas are in so many ways an embodiment of the American dream.

Children of immigrant entrepreneurs who turned a dorm room idea. into a publicly traded company. Valued at more than two point five billion dollars. Their persistence and their willingness to learn from challenges while adhering to their core values around sustainability and healthy food. have helped drive their scale strategy and key decisions.

and at each inflection point of growth. They have found a way to adapt their business model and their team. Demonstrating to evolve. You may have to start over. As they implement big ideas like an automated kitchen.

They're staying mindful of changing palates. Setting up their business to outlive them. And adding value to the world. On so many levels. I'm Jeff Berman.

Thank you for listening. Masters of Scale is a Wait What original. Our executive producer is Eve Tro. The production team includes Chris Gautier, Tucker Vegerski, Masha Makutanina, and Brandon Klein. Mixing and Mastering by Erin Basconelli.

Original music by Ryan Holland. Our head of podcasts is Lital Mulat. Visit mastersofscale.com to find the transcript for this episode and to subscribe to our email newsletter.

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