Lots happened in the L.A. tech and startup community this week. dot.LA chief host and correspondent Kelly O'Grady takes you through the key stories:
- COVID: Jukin Media Takes $2.2M in PPP Funds, SBA Claims Bird Took Funds - Bird Says It's a Mistake
- Startups: Q&A with Sweetgreen CEO on Their Growth Plan, Get Help Platform Tackles Homelessness
- Investing: Lots of Deals! Popshop Live, Nomad Homes, Karma and Riders Share All Raise Funds
Weekly Recap: www.youtube.com
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'Sweetgreen is Not a Tech Company': The Company's CEO on How He's Adapting to the Pandemic
Jul 07 2020
Jonathan Neman, the 35-year-old co-founder and CEO of Sweetgreen, wants to make one thing clear.
"Sweetgreen is not a tech company," he says. "If you want to make that the headline, you can."
With a lofty $1.6 billion valuation, a sleek headquarters in Culver City down the street from Apple and Amazon, and talk with Kara Swisher about becoming a "food platform," one could be forgiven for thinking Neman has aspirations that go way beyond serving salads, bowls and now plates in 108 stores. These days everyone wants to be a tech company, even if they are just renting office space or selling stationary bikes. Neman certainly has lofty goals – wanting to expand to what he says is "well over" 1,000 locations. But he says he is trying to grow Sweetgreen in the mold of Starbucks, not Snapchat.
<p>"We see ourselves as building the Starbucks of real food," Neman said. "We're actually not even valued like a tech company. If you look at the valuation it's much more like a high-growth food company. We leverage technology to build a better experience and make smarter decisions. And I think it is an accelerant to how we can grow and scale and build our model. However, at the core of what we do, we are a consumer brand."</p><p>Sweetgreen's origin story is decidedly techie. Neman <a href="https://www.washingtonian.com/2018/09/18/nicolas-jammet-sweetgreen-got-its-start-georgetown-the-tavern/" target="_blank">hatched the concept </a>with classmates Nicholas Jammet and Nathaniel Ru in a dorm room during their senior year at Georgetown University. Three months after graduation, they opened their first location in Washington D.C. in 2007. In 2016, they relocated to Los Angeles after opening their 39th location.</p><p>Last year, Sweetgreen reported $300 million in revenue and $3 million per store, well above Chipotle or Starbucks, which generated $2.2 and $945,270 per location, respectively. </p><p>The company would not disclose its numbers for this year but in an <a href="https://medium.com/@sweetgreen/why-we-decided-to-return-our-ppp-loan-9ffa870d1363" target="_blank">April blog post</a> Neman and his co-founders described revenue being "dramatically affected" by the coronavirus. That month, Sweetgreen <a href="https://dot.la/sweetgreen-layoffs-2645746821.html" target="_self">laid off about 10% of workers at its headquarters</a> and furloughed nearly 2,000 store employees after deciding to <a href="https://www.forbes.com/sites/alexandrasternlicht/2020/04/23/sweetgreen-returns-10-million-ppp-loan-but-it-may-not-get-redistributed/#11ab3f07155c" target="_blank">return a $10 million PPP loan.</a></p><p>"As soon as we found out that they had run out of money, we decided to give it back, which we think was the right thing to do," Neman said.</p><p>Now 75% of the furloughed workers have been brought back and Sweetgreen has reopened all but 11 of locations. All dining rooms in California remain closed though some locations with outdoor seating can accommodate diners. Headquarters is officially open, though it is mostly empty as the company is not requiring anyone to come in for the foreseeable future. Despite some permitting delays because of COVID, Sweetgreen is planning to open 20 new locations this year and considerably more next year. And in late April, <a href="https://www.qsrmagazine.com/news/sweetgreen-launches-first-new-menu-category-4-years" target="_blank">it introduced its first new major menu category</a> since adding bowls four years ago – nine different plates, ranging from Hot Honey Chicken to Shroomy Asada, designed to increase dinnertime sales. On Wednesday, Sweetgreen will hold its first-ever <a href="https://www.businesswire.com/news/home/20200706005515/en/sweetgreen-Launches-5-Greens-Day" target="_blank">$5 Greens Day</a> where it will offer select bowls and salads for well under half the normal price.</p><p class="shortcode-media shortcode-media-rebelmouse-image image-crop-4x3">
<img type="lazy-image" data-runner-src="https://dot.la/media-library/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzQzODM5OC9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyMzIxMjcyMn0.EHXGN3onEvw1KTRV9bqaqVxn7bUsPeCf96lbW5Pce0I/image.jpg?width=2000&coordinates=0%2C56%2C0%2C56&height=1500" id="41571" class="rm-shortcode" data-rm-shortcode-id="864b26bda1f88418328922d8f2702bf3" data-rm-shortcode-name="rebelmouse-image" />
<small class="image-media media-caption" placeholder="Add Photo Caption...">Sweetgreen<a href="https://www.qsrmagazine.com/news/sweetgreen-launches-first-new-menu-category-4-years" target="_blank"> introduced its first new major menu category</a> since adding bowls four years ago – nine different plates, ranging from Hot Honey Chicken to Shroomy Asada.</small></p><p>dot.LA spoke to Neman about how the company is adapting to the COVID era, why he ended an exclusive partnership with UberEats, and when Sweetgreen might IPO.<br/></p><h4>A lot of your business has been centered around offices. How are you adjusting since people aren't coming into offices?</h4><p>To your point, we have a very high penetration in some urban areas and those are the ones that have been more severely impacted. Our restaurants that are more suburban-based are actually doing really well. Many of them have fully recovered to pre-COVID levels through just delivery and pickup. So really the impacts we're seeing are primarily only from the true demographic shifts rather than from changing consumer behaviors.</p>
<img lazy-loadable="true" src="https://assets.rebelmouse.io/eyJhbGciOiJIUzI1NiIsInR5cCI6IkpXVCJ9.eyJpbWFnZSI6Imh0dHBzOi8vYXNzZXRzLnJibC5tcy8yMzQzODM5Ny9vcmlnaW4uanBnIiwiZXhwaXJlc19hdCI6MTYyNTMyNDk5NX0.jtrZxOfwT2WmQ73lA-7V5g2pOBinoSN9hyujj9e12mw/img.jpg?width=980" id="45a48" class="rm-shortcode" data-rm-shortcode-id="80db48b78f4c7d0e249083856ea8e65a" data-rm-shortcode-name="rebelmouse-image" />
Jonathan Neman hatched the concept of with classmates Nicholas Jammet and Nathaniel Ru in a dorm room during their senior year at Georgetown University.
<h4>Does COVID change where you anticipate opening stores in the next few years?</h4><p>Yeah, a little bit. We were already on a path of expanding beyond our current markets. This year, we have already opened in Denver and Miami and we're opening in Austin. And so we already penetrated a lot of the larger cities, and we're on our way to going into other markets that are more suburban. If you look at the makeup of the United States it's much more suburban than urban. So there was a lot more suburban growth coming, but I think this has accelerated a lot of that as our suburban model has done better. But we have not given up on the cities. We're going to continue to open in New York. We are very confident people will come back to work, although it may be different and we'll be well positioned for it.</p><h4>Now that we're in a recession do you worry that people will see your menus and think of it as an indulgence to spend $14 on a salad?<br></h4><p>Our prices are different by market. Definitely very top of mind for us is affordability. We like to balance all stakeholders when we think about price. So you have to think about how we pay our team members and our farmers. </p>
<h4></h4><p>This is why food is really complicated. I could charge less, and then pay my team members less and pay my farmers less and then I'd get heat for that as well. But having said that, I do think that Sweetgreen will do more over time to address different consumers and price sensitivity. Over time we will think about different menu items and formats and ways to make it more affordable. One way is when you think about our plates, $12 for lunch may be expensive but $12 for dinner is actually pretty affordable. Another way we do this is through things like Outpost [a central drop off shelf in buildings where Sweetgreen couriers drop off orders.] You're not paying the delivery service fee that you would for a lot of other places.<br/></p><h4>You had signed an <a href="https://www.restaurantdive.com/news/sweetgreen-strikes-exclusive-deal-with-uber-eats-plans-to-create-its-own-d/563504/" target="_blank">exclusive deal with Uber Eats last year</a> and then canceled it. What was the decision behind that?</h4><p>We have a great relationship with Uber but I think we've realized over time that different consumers use different platforms and they're more incremental to each other than they are cannibalistic. Especially in a post-COVID world where delivery will be a bigger piece of the pie, we wanted to get in front of as many consumers as possible. We also are very focused on our native delivery which is which is by far our biggest delivery channel,</p><h4>I'm curious how you think about delivery. Because for a lot of restaurants they're sacrificing huge margins...</h4><p>Correct. Not only are they sacrificing huge margins, but they don't have a direct relationship with their consumers. We have a direct relationship where we can tell you when new menu items come out and we can personalize the experience to you.</p><h4>So why not just have it all be native?</h4><p>I think there's certain customers where the marketplace becomes a great place of discovery, it becomes, you know, almost like a customer acquisition marketing tool for us a way to amplify our message and reach more people. </p><h4>Have you ever thought about doing brunch or breakfast?</h4><p>We definitely have. Sweetgreen is an ethos, which is connecting people to real foods. Eventually we'd like to take that ethos and expand way beyond salad, bowls and plates, whether it be brunch or otherwise. The vision is to go much, much broader. </p><h4>That's a perfect segue to my last question. What's your current thinking on a possible IPO?</h4><p>There's no current thinking right now. We're just very focused on expanding the brand, delivering a great product to consumers and strengthening the business. Sure, one day, but not not anytime soon.</p>From Your Site Articles
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'In a Weird Way We Were Very Well Positioned for This': Sweetgreen Reopens Stores and Brings Back Workers
Jun 09 2020
After protests sparked by the killing of George Floyd prompted Sweetgreen to close most of the locations it hadn't yet shuttered because of the coronavirus, the Culver City-based fast casual chain said Tuesday that it's on the rebound.
CEO Jonathan Neman announced the company has reopened most of its restaurants and rehired some of the 2,000 workers that it furloughed.
"We've brought back half of employees," Neman said at an Axios forum. "I'm confident we can bring back the other half soon."
<p>During the pandemic, Sweetgreen transitioned to an all-delivery and pickup model. Even before the twin crises struck, about <a href="https://www.nytimes.com/2020/01/04/business/sweetgreen-salads.html?emc=rss&partner=rss" target="_blank">55% of its orders were made online.</a> "We have been able to get back a lot of our business because in a weird way we were very well positioned for this," said Neman. </p><p>Without elaborating, Neman revealed that the company ended an exclusive contract with Uber Eats that <a href="https://www.restaurantdive.com/news/sweetgreen-strikes-exclusive-deal-with-uber-eats-plans-to-create-its-own-d/563504/" target="_blank">it signed last year.</a> "Given all that's gone on we have made the decision to be non-exclusive partners," he said.</p><p>Neman said he had no second thoughts about<a href="https://medium.com/@sweetgreen/why-we-decided-to-return-our-ppp-loan-9ffa870d1363" target="_blank"> returning a $10 million Payroll Protection Program loan</a> the company was approved for in April, even though Sweetgreen had to furlough the 2,000 store employees and layoff 10% of the 350 staffers at its Culver City headquarters. And as it turns out, the PPP program is now flush with cash, <a href="https://www.washingtonpost.com/business/2020/06/09/how-effective-is-ppp-small-business/" target="_blank">as more than $130 billion has gone unspent in the last month.</a></p><p>"I do not regret the decision," said Neman. "Hopefully that money can be used for companies and jobs that better need it."</p><p>Since Neman co-founded the company in 2007, Sweetgreen has been on a lofty trajectory that values it more like a tech company than a restaurant chain. Last year, it raised $150 million of Series I venture funding at a $1.45 billion pre-money valuation, according to Pitchbook.<br/></p>
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