Sweetgreen IPO: Co-founder says company created 'to solve a problem in our own lives'

Sweetgreen Co-Founder and CEO Jonathan Neman outlines the food chain's health origins, digital deliveries, inflation challenges, and automation plans as it starts to trade publicly.

Video Transcript

BRIAN SOZZI: Better for you restaurant chain sweetgreen debuts on the New York Stock Exchange today. The company priced its IPO above its expected range and will use the cash infusion to expand its business. Joining us now is sweetgreen co-founder and CEO, Jonathan Neman. Jonathan, good to see you today. Congrats on the debut. For those not familiar with your story, you and two other friends essentially created this business in a room out of nowhere, if I'm right, 2007. Take us a little bit through your story.

JONATHAN NEMAN: Yeah, well, first of all, it's really amazing to be here. Thank you for having me. So we started sweetgreen in 2007 really to solve a problem in our own lives. And to your point, I met my two co-founders, Nicholas and Nathaniel, while we were students in college. And we couldn't find a healthy place to eat that was also delicious, affordable, and convenient. And we wanted to create a brand that really disrupted fast food and made it healthy and took care of our communities along the way.

So we opened our first restaurant. We wrote a business plan in our dorm room, opened our first restaurant in a 500 square foot burger shack right off of campus. And here we are today, with over 140 restaurants in 13 states around the country.

JULIE HYMAN: Jonathan, I think I first tasted sweetgreen in Washington, DC, which is where you guys started, because I had heard about it from my friends and I was eager to come down and try it, and I did. And obviously, you've expanded way beyond that. You guys are in New York. I-- we're still working from home. And I miss my sweetgreen salads. But is that a problem for you guys that so many people are still at home and perhaps not in their offices buying salads like they had been?

JONATHAN NEMAN: At sweetgreen, we have a philosophy. We say-- we talk about meeting customers wherever they are. And that comes from this idea of making healthy food as frictionless and convenient as possible. Really, it's this idea of help making healthy food accessible and democratizing it in many ways. With that, we leveraged a lot of technology, which gives our customers many ways to order, whether that be through delivery on our own app, through order on our app and pick up seamlessly within our restaurants, ordering to one of our outposts, and more.

And so we've been able to navigate the pandemic really well and have also been expanding beyond many of our urban centers to many suburban communities as well. And we've seen success across both. So we've been following our customers home. And over time, we look to build a really durable and sustainable business.

BRIAN SOZZI: Jonathan, true story, and I told you this in brick. I ordered sweetgreen last night for dinner, $38 purchase. I was fine with it, but I was surprised by how far the company or whoever delivered it was willing to come to my place. I mean, there is no sweetgreen from me. It took me about an hour to get my delivery. Those 140 stores, how many locations do you touch, and how big is your delivery business?

JONATHAN NEMAN: Delivery has become a much bigger part of our business, but really, we think about it from an omnichannel perspective. Again, we like to let our consumers order however they want. And that digital platform we've built makes it seamless, not only for our customers, but for our restaurants, to prepare those foods in a really frictionless way. So we've built out a lot of core technology that allows us to meet our customers, and again, make it as easy as possible to enjoy healthy and delicious food.

JULIE HYMAN: So, Jonathan, I think we've covered, you know, it's easy to deliver to your home, as Brian Sozzi found out, delicious-- I think Brian and I can attest to that-- healthy. But when you talk about democratizing healthy fast food, it ain't cheap, right? You're talking about-- I mean, usually, if I'm buying a sweetgreen salad, it's a $15 salad, because I don't deprive myself of whatever I like to add into that salad. So, I mean-- and we're in an inflationary environment. So how do you-- are prices going to go up more for the salads? Like, how are you handling costs?

JONATHAN NEMAN: Absolutely. So our mission and our vision has always been to make healthy food as accessible as possible. And every market that we're in, we have options under $10. As we look to scale and become bigger, we're always looking at ways of bringing down the cost of the food, again, to make it more accessible. We also believe that there is a true cost to real food, in terms of, take buying real sustainable food from farmers and partners, treating them right, paying our team members a living wage and having enough sustainable profit to create a company. For us, we call that a win-win-win. And so, it's very important that we charge the real price of food and educate consumers what that's about.

BRIAN SOZZI: Jonathan, ahead of the IPO, you purchased-- you acquired a company called Spice Food Co that does restaurant automation technology, really technology that I have not seen before. Why did you purchase that company?

JONATHAN NEMAN: We think-- you know, we're huge fans of the team and the technology and do believe, over time, we can leverage automation to improve the experience for our customers, from a speed of service perspective, from a consistency perspective, and even more importantly, improve the experience of our team members. You know, working-- making-- bringing real food to life every day is not easy.

And we believe with more automation, we can make that job easier. I hearken it back to when the dishwasher came out. You know, that is automation inside of a restaurant that we could not live without. We believe that it's just going to go further and further into the kitchen and not replace humans, but elevate the job of our incredible team members in our restaurants.

BRIAN SOZZI: Yeah, I'm glad you mentioned that because restaurant technology-- you know, I've been following this space for some time. It's still on the fringes. We hear stories, but I'm not seeing it in a lot of restaurants. Is the reality that, you know, given we have this ongoing labor shortage-- it's probably not going to get better any time soon-- that the restaurant of the future only has one cashier in it, and it has these big machines that are going to get you your food a lot faster?

JONATHAN NEMAN: You know, we believe that humans will be always be part of the sweetgreen experience. Whether that be how we prep our food or the hospitality that we provide in our restaurants, we just believe in continuing to invest in technology to enable them to do their job in a better way. We already do that today with a lot of software inside of our restaurant, as well as a lot of software for our consumers. But over time, we like to continue to invest in that to elevate that role and make it easier and more joyful to work in restaurants.

And what I would also add is people are our most important ingredient at sweetgreen. And while there has been a labor crisis today, people want to work at sweetgreen. We have an incredible mission and culture that people are attracted to, an awesome growth opportunity as we plan to double our footprint in the next three to five years. And you can come to sweetgreen as a team member and work your way up to being a general manager, or what we call a head coach, within three years.

In addition, we really invest in our team, whether that be our best in class pay and benefits or something I'm really proud of that we announced yesterday, which is we offered every single employee at sweetgreen, every single one, every single team member, all 5,000, an equity grant, what we call a gratitude grant based off of their tenure. And so it's these sorts of decisions of taking care of our people that I think position us differently.

JULIE HYMAN: Jonathan, you've been using the word "invest" and "investment" a lot. Clearly, you guys are in growth mode, as you work on doubling that footprint, which is, right now, at around 140 restaurants. When do you see yourself switching to profit-making mode? Because like many companies who are in this sort of growth, going public mode, you are still spending and still posting losses.

JONATHAN NEMAN: Yeah, you know, we've been very intentional about building out our infrastructure, from our brand to our supply chain to our technology, and like I said, most importantly, our people. And we are now expanding our footprint based off of that platform and infrastructure we have built. So it is very important for us to be on a path to profitability and create a very large and profitable company. But we feel like we're in a great inflection point for the business and leveraging many of those investments that we've made.

BRIAN SOZZI: Jonathan, lastly, there was a lot going on in my sweetgreen order last night. It was really-- it was very flavorful, a lot of complexities in there. How do you keep that consistency and that focus on flavor when you have-- now you're a public company. Now you're going to have analysts demanding that you make some form of earnings number every quarter.

JONATHAN NEMAN: You know, I think it just starts with never forgetting what got us here. At sweetgreen, we have a saying. We call intimacy-- we say intimacy at scale. And we've been saying that since store one. Remembering what makes sweetgreen special-- it's the food we source from our partners. It's the way we make it from scratch. It's the way we take care of our team members and our customers. And no matter how big we get, we have to always act small and never forget what got us here.

BRIAN SOZZI: Well, good luck on the debut. Look forward to following your journey. sweetgreen co-founder and CEO Jonathan Neman, we'll talk to you soon.

JONATHAN NEMAN: Thank you so much for having me.