sweetgreen: a healthy dose of operating model alignment
At the innovative new salad chain sweetgreen, operating and business models align for delicious results. Kale yeah!
Every year around this time, my Uncle Jim faces a daunting task: planning, acre by acre, what he’ll grow next summer on his fruit and vegetable farm. If Jim doesn’t grow enough of an in-demand crop, he’ll miss out on big profits. If he grows too much, he could waste thousands of dollars and employee hours harvesting vegetables that ultimately rot. The winter planning process is understandably stressful for small farmers like Jim. But a couple of years ago, Jim met a supplier who wanted to help reduce his planning stress: sweetgreen, the farm-to-table salad chain. sweetgreen goes out of its way to generate and share demand predictions with its small-farm suppliers months before the growing season, and to work with farmers to accommodate fluctuations in their summer harvest. Watching Jim interact with sweetgreen was, to me, the first sign that the salad chain’s business and operating models are well-aligned.
sweetgreen’s business model centers on providing customers “delicious food that’s both healthy for you and aligned with your values.”[1] The company sells salads made with fresh, local ingredients in a pleasant environment with efficient service and affordable prices. Its 37 stores (as of this writing) target urban, health-conscious consumers on U.S. coasts. Ultimately, sweetgreen is selling both food and a lifestyle – one that’s trendy, healthy, and compassionate.
sweetgreen’s operating model can be broken down into three core elements that support its business model: (1) team and company culture, (2) sustainable supply chain, and (3) innovative technology.[2]
- Team and company culture: About 1,000 people work for sweetgreen across its headquarters and stores. The company hires and cultivates frontline employees carefully because it recognizes that “employees are the face of our store… They are the ones with the most customer interaction, so they should represent our brand in every way.”[3] To retain employees and inculcate them to the brand, sweetgreen offers perks and incentives aligned to the company’s core values of supporting “wellness and balanced living.”[4] For example, employees get a free salad during every shift, a healthy perk that seems to be having a noticeable impact on their waistlines. Employees also free green shirts – the darker the shade, the longer the employee has been with sweetgreen – and an “active lifestyle” gift on every anniversary, from sneakers to bicycles.[5] sweetgreen knows its people aren’t just limited to employees. They treat their suppliers and broader community members well, too. For example, sweetgreen hires local architects to design its stores, runs philanthropic initiatives in schools to educate kids about healthy eating, and lists local farmers’ names and vegetables on chalkboards in every restaurant. Overall, sweetgreen’s people policies reinforce the “healthy” and “compassionate” product it is selling. These practices yield free publicity and enhance their brand image, too.
- Process: sweetgreen’s work process begins with demand modeling that it shares with its small-farm suppliers (described above). During harvest season, specialty food distributors collect the produce and deliver it daily to sweetgreen stores, where ingredients are freshly prepared. All sweetgreen restaurants are small on purpose – they minimize storage space and thereby maximize freshness. Importantly, sweetgreen assumes the risks of a bad harvest. For example, if a farmer’s lettuce yield is smaller than expected due to rain, sweetgreen is responsible for sourcing replacement produce (not the distributor or the farmer). sweetgreen might fill gaps via another small farmer, or (with enough warning) change its salad menu to reflect availability of high-quality ingredients. These practices ease the burden on small farmers, and also deliver on sweetgreen’s focus on “aligning with your values.”
- Technology: To maintain the sweetgreen brand with tech-savvy urban millennials, the company has to stay trendy. For this reason, it works to maintain a “seamless user interface” for its customers. For example, sweetgreen has invested heavily in its mobile and online presence. Its mobile app, where customers can order in advance and collect rewards, now processes 25% of all transactions. [6] sweetgreen also carefully architects its store experience, with open kitchens to allow customers to “watch employees peel and slice raw vegetables as they wait for their salads,”[7] and biodegradable packaging and recycling bins to encourage sustainability. sweetgreen knows its audience, and its technology reflects that.
All in all, sweetgreen’s business model is reflected in more than just its salads. The company’s whole operating model reinforces its commitment to health, sustainability, and compassion – for its customers, employees, suppliers, and for the broader community.
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Sources
[1] http://sweetgreen.com/our-story/
[2] “Sweetgreen Co-Chief Jonathan Neman Talks 2015 Plans,” DC Inno, accessed November 26, 2015, http://dcinno.streetwise.co/2015/02/09/sweetgreen-co-founder-jonathan-neman-talks-expansionhires-sgis/.
[3] “Career Site Showcase: How Sweetgreen Targets Candidates,” Recruiting.com, accessed November 26, 2015, http://www.recruiting.com/articles/career-site-showcase-sweetgreen-targets-candidates/.
[4] Ibid.
[5] Lauren DrellAug 07 and 2011, “6 Companies With Awesome Employee Perks,” Mashable, accessed November 26, 2015, http://mashable.com/2011/08/07/startup-employee-perks/.
[6] http://techcrunch.com/2015/07/01/sweetgreen-harvests-35-million-to-satisfy-millennial-salad-cravings/
[7] Natasha Singer, “A Salad Chain’s Surprise Ingredient: Tech Money,” The New York Times, November 29, 2014, http://www.nytimes.com/2014/11/30/technology/a-salad-chains-surprise-ingredient-tech-money.html.
Featured photo taken from http://iowagirleats.com/2014/04/16/kale-and-wild-rice-bowls-with-honey-balsamic-vinaigrette/
* This blog post was inspired by a conversation with Michael Stebner, Director of Culinary at sweetgreen, November 2015.
Great write-up of a company! They also do a good job publicizing their suppliers – in fact, I recall seeing something about Ward’s on their Instagram not too long ago. I had no idea they were this linked into long-term planning with suppliers but it’s clear how critical that is to suppliers, and probably helps them attract the best growers and suppliers.
Having lived in DC (where Sweetgreen started), it was really interesting to watch them change store operations as they learned more. For example, their Bethesda location didn’t initially have an open kitchen, and also served frozen yogurt, which made their operations more complex.
One question I have is your thought on their success as a lifestyle brand, specifically their decision to run a major music festival in the DC area. Do you think this is a logical extension of their business model, is it irrelevant, or does it detract from potentially running their stores better?
Also, thoughts on their decision to source certain ingredients differently across regions? For example, the bread I get at a DC sweetgreen isn’t the same as what I get in Boston. A customer probably can’t tell the difference between kale sourced from one farm versus another, but they may notice the bread.
Interesting analysis! Not only can operating model help align business strategy of your own business, but could create value for other companies up and down the supply chain.
Great job, Molly! I have never been to a sweetgreen but your colorful description helped me develop a clear understanding of the company. It reminded me of our conversation in LEAD about MOD Pizza which similarly seeks to differentiate itself through how it cares for its employees and interacts with its communities.
I wonder if we could know more about sweetgreen’s financials – has it culture and local-sourcing process increased its profitability relative to its many peers in the space? I also wonder how if its sourcing process can be successfully replicated across geographies where access to local farmers and quality control might differ.
In terms of “innovative technology,” I’d like to learn more about how this aligns with its business model. Do its apps provide its customers with greater knowledge about healthy eating options or ways to engage with the community?