Sweetgreen, the Culver City salad chain that struggled last year, is going public.
The company announced Monday it has confidentially filed for an IPO. Earlier this year, the lunch chain raised $156 million at a $1.8 billion valuation. To date, it's pulled in over $671 million in venture capital.
Terms of the deal aren't yet solidified, the company said in a statement.
Founded in 2007 by college friends, the chain has relied heavily on online orders and is popular with young office workers.
Last April, just weeks after the first COVID-19 shutdown, 10% of employees at Sweetgreen's Culver City headquarters were blindsided by layoffs. Though the company was an early adopter of online ordering, orders on the app reportedly sank soon after the pandemic hit.
"Like all restaurants, Sweetgreen's revenue has been dramatically affected during this unprecedented time," the company's co-founders wrote in a blog post last year.
By July of 2020, the company brought back 75% of furloughed workers, hinted at plans to open 20 locations and introduced its first new menu category in years.
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It's a new day for South L.A. natives Gabriel Gamez and Enrique Loyola. The lifelong friends' food tech startup, On The Go LA, recently celebrated its first anniversary, and with California finally re-opening, the entrepreneurs appear poised to leave a mark on the local gastronomy scene.
On The Go LA allows local food entrepreneurs to rent a food truck in just a few clicks for a daily fee of $299, or on longer plans that offer lower rates. The founders don't take any of the trucks' profits. Instead, they make money from the rental and optional add-ons, such as a cleaning service or a location scouter. In addition to managing a staff of four, Gamez and Loyola oversee the logistics, insurance, public relations and marketing.
The company's goal is an ambitious one. Gamez specifically hopes to see On the Go LA to appeal to immigrant communities, whose members make up much of the back-of-house work force in the city's restaurants. As Gamez sees it, his company can provide relatively inexpensive access to a kitchen for would-be food entrepreneurs hindered by the resources required to rent conventional restaurant space.
"We're providing that flexibility and affordability and access to ownership for underrepresented communities," he said. "Commercial kitchens are operating on high startup costs. That can really fete out a lot of communities in the L.A. area, especially in Latinx and African communities. We wanted to help those communities." Already, he said, their two trucks have been rented by a mix of customers: local food entrepreneurs, chefs, catering companies, even a few brick and mortar restaurants looking to expand.
The idea came to Gamez and Loyola in early 2020, not long after both graduated from college and were talking about what they wanted to do with their lives. Food had long been part of their families' history: Gamez's Guatemalan father transported bananas across the country and into El Salvador; Loyola's grandfather sold rotisserie chicken in Mexico. "We know how the other thinks," said Gamez. "We're basically brothers."
After ironing out the kinks on their idea—the original concept centered around a "roaming ice cream truck model," Gamez said, though they quickly settled on something a little less precarious—they were able to jumpstart their business with a $25,000 grant by PledgeLA to address racial inequity in the local tech scene.
The program provided a two-week accelerator program in January 2020 with virtual meetings, lectures, and mentorship to support the 20 Black and Latino entrepreneurs selected to participate. On The Go LA is also taking part in the LA2050 Grants Challenge, which awards prizes up to $100,000 to 25 organizations. Voting for the contest begins next week. (Gamez and Loyola invested more than $10,000 from their own savings at the start.)
In July 2020, right in the throes of a global pandemic, they officially launched. Though it's been slow going, things appear to be picking up — especially now that Los Angeles officially has opened up. "We've seen a surge in interest," Gamez said.
While food trucks have been a staple of L.A. for decades, they've taken a hit during the pandemic. "We would love to help revitalize the food industry," Loyola said.
Given the pre-pandemic levels of growth the food truck sector had been experiencing before the pandemic — about 7.5% between 2016 and 2020, according to market research firm IbisWorld — there's good reason to think that's indeed a very attainable objective.
And investors are taking note.
"On The Go LA provides a short-term solution, which is so much more appropriate for restaurant owners who want to experiment in getting their brand out because it's not a long-term commitment," said Austin Clements, a partner at Slauson & Co., an early-stage venture capital firm.
Meanwhile, Gamez and Loyola have their eyes set on the future, with potential expansion into other cities on the horizon. "On The Go LA is part of a bigger dream for everyone involved," said Gamez. "We want to empower people and lead a movement."
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El Pollo Loco says it will become the first national restaurant company to experiment with door-to-backyard drone delivery.
On June 24, the Costa Mesa-based restaurant chain, known for its fire-roasted chicken, will test "Air Loco," its drone delivery from restaurant kitchens to customers' backyards.
As more and more people ordered delivery during the pandemic, restaurants are looking for alternative cheaper and more efficient ways to bring food to customers' homes. In 2016, Amazon was one of the first companies to discuss using autonomous aerial vehicles to deliver packages to customers' doorsteps in 30 minutes or less. But Amazon Prime Air has yet to get off the ground and into widespread use.
With the Federal Aviation Administration recently approving rules for delivery services to people's homes, it is expected more and more drones will be taking to the skies to make restaurant and other types of deliveries.
For El Pollo Loco, delivery service became a larger part of its business during the pandemic, growing by 250% over the last year, and the drone service is a way to avoid service fees from traditional delivery services like Grubhub, Uber Eats, DoorDash and others that charge up to 30% in transaction fees. It also is a way to make more deliveries more quickly and is expected to be more cost effective and convenient for customers.
"We wanted to lead the way and be the first to deliver a memorable experience to our customers in a cost efficient, fun, and reliable fashion in a way no restaurant brand had previously attempted," Andy Rebhun, El Pollo Loco's Vice President and Digital Officer said in an email.
Other restaurants have tested drone delivery to designated pickup sites, like parking lots, wherein a delivery vehicle will pick up the order from the drop-off site and deliver it to the customer's home for the last leg of the trip. Rebhun said El Pollo Loco wanted to take the step of delivering the items directly to the customer's backyard or front door.
He doesn't think drone delivery for the restaurant industry will be a passing fad.
"I believe drone delivery is one of the more sustainable and cost-effective mechanisms for food delivery in the future," he said. "I believe there will be a bifurcated delivery model in the future where businesses will choose to operate in the most efficient and margin positive mechanism."
El Pollo Loco is launching the pilot with Tel Aviv-based drone startup Flytrex, which manufactures and operates automated drones that travel at 32 miles per hour and use a wire release mechanism to gently lower food orders from 80 feet.
The drone for the service is also outfitted with a fastened delivery box that keeps orders intact, which means customers will receive their orders packed in El Pollo Loco's new special packaging — used to keep food hotter for longer — more quickly than it takes for a conventional delivery to arrive.
When the order leaves the restaurant, the food will be loaded on the Air Loco drone and once it takes off, it will ascend to about 200 feet and start the flight to the destination, Rebhun said. The drone can carry up to 6.6 pounds of food. Once the food is lowered from the 80-foot wire, the tamper-proof sealed delivery bag will detach from the crane and the customer can retrieve their food.
El Pollo Loco will begin its pilot at 10 restaurants, which will be selected within the next 45 to 60 days, the company said. Once the test is completed, it plans to expand to more of its 480 restaurants depending on demand and regulatory approval from the FAA. During the pilot, a select number of El Pollo Loco's Loco Rewards members in Southern California will be surprised with one of the first flights, the company said.
It doesn't appear as though delivery orders will slow down for restaurants.
Analysts predict that online ordering will grow this year even as restaurants open back up to traditional full-capacity dining service. The global online food delivery market is expected to grow from $115.07 billion in 2020 to $126.91 billion in 2021.
The growth rate for online food ordering and restaurant delivery has been 20% in the last five years and is expected to comprise about 40% of all restaurant sales by 2025.
Earlier this year, Pizza Hut Israel said it would deploy drones to deliver pizzas. But rather than delivering directly to customers' homes, the company said the drones would drop-off the orders at a government-approved landing zone, like a parking lot, and from there a driver would make the final leg of the delivery.
In 2019, Uber Eats started testing drone delivery for McDonald's in San Diego.
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