Hello, and welcome to another episode of the Odd Lots podcast.
I'm Joe Wisenthal and I'm Tracy Alloway.
Tracy, do you know my favorite thing about working in midtown Manhattan?
Is it the daily commute?
Actually, I have a fine commute. I'm like a few stops away on the subway. That's fine. Yeah, I guess so.
No.
I love the plethora of bowl lunch options that we have around as we're in the bowl lunch capital of the world, maybe DC also, but I imagine like the per capita number of places that let you like get something that's sort of like like you're feeding from a trophy and you can get it right in front of your computer and eat while checking Twitter or your emails. It's very nice.
I feel very old because I remember like when none of these existed, and if you wanted to get lunch in midtown Manhattan, you went to like a sandwich shop and you had a selection of sandwiches and you weren't allowed to make any individual customer choices. And I guess the upside of that was it took everyone literally ten seconds to order, and now it seems to take everyone about six minutes. Yeah, but of course, the downside is
you weren't able to customize. You weren't able to get the specific things that you want maybe pay as much attention as you can now to ingredients. So it's definitely changed.
It's definitely changed.
By the way.
Speaking of change, I've been rewatching I think it's on Hulu or something, the old La Law episodes that are streaming again, and it's so funny watching what professional lunches looked like in the eighties, like white table cloths was at stake. It was like fancier like plates of I don't know, vegetables over a piece of.
Fish, and people actually going out too.
Restaurants anyway, So that's a side that version. But I actually do like being able to just eat in a bowl at my computer and staring at the screen anyway. But it does raise the questions there are all these chains and wan offs doing salads and Mediterranean bowls and cava and knockoff cava and knockoff of the knockoff kava and salad bowls and stuff like that, and knockoff chipotles. How do you stand out? How do you win in this game where there are clearly many competitors.
No, I completely agree. It seems like a crowded market at the moment, and everyone, even the non bowl places have their version of a bowl nowadays. But also I'm really interested in how you come up with the specific offerings for customers and like how much of it is what people are asking for, so demand versus supply, Like what is available to you in terms of ingredients at a cost effective price?
Totally. Well, we really do have the perfect guest to talk about all of this. How the lunches that we eat get in front of us, how the ingredients are selected. Why am I eating this salad that I'm eating right now? Figuratively I'm not eating a salad right now. We're going to be speaking with Nick Jamai. He is the co founder of Sweet Green, one of them success stories in the Salid Bowl Game. So Nick, thank you so much for coming on.
Odd Lots, Thanks for having me.
There's plenty of things to talk about in the bowl game, but let's start with something. You recently announced that Sweet Green is going to be not cooking anything in seed oils and it's only going to be using I think olive oil and other higher quality oils. There is an internet community of people who are like really antiseed oils.
Joe's dream is to finally do the anti seed oil episode.
We're going to do an hour long conversation about seed oils and seed oil Bros. But actually, for real, though, I am curious, why did you make this switch? How much is it actual customer demand, how much is it science, how much is it quality? Where did this come from? And how much is it going to cost you.
A great question. So I'm glad we have an hour because there's lots to talk about here. We can go deep, but zooming out and backing up a bit. The reason we started Sweet Greens was because we did see this shift in the consumer and this between their relationship with food,
and we saw this conversation starting to change. We were seniors at Georgetown, myself with my co founders Jonathan and Ate, and we were missing the options that we wish we had to eat, and this idea of wanting food that was good for you, that made you feel good, but that was also delicious and cravable and cool. We didn't
see any of those options. And when we looked around, all the food that was the most delicious, the most cravable, the most accessible, the coolest brands were all the least healthy, and so we wanted to change that. We wrote a business plan and really in an effort to redefine and rethink fast food, the traditional fast food model of what you were sourcing, what you were serving, how you were prepping it, and ultimately the story you were telling around
that food. And over the course of the last sixteen years, we really tried to create an incredible level of transparency around our food, how we're sourcing it, and why all that is important and ultimately how all that leads to
really delicious, cravable food. And the consumer has changed a lot in sixteen years, and I'm happy to talk about different parts of that, but so much of it has been around removing friction between them and and their meal and their food, whether that's you know, the convenience of how you ordered or how you pick it up or how it comes to you, or just the convenience or friction of understanding what is in your food and what
you're eating and how it makes you feel. And so I think what got us excited to grow Sweeceren was this kind of lifting of the curtain between consumers and their food. And I remember very specifically, you know, the kind of questions consumers asked and we first started Sweecreen about their food and what they asked today are so different the information they want to know about their food.
And so we've been on this, you know, so far as sixteen year journey, which sounds like a long time, but we still think we're very in the very early innings of our of our journey. But in sixteen years, it's it's wild to see just the shift of the consumer. What they want to know, their connection to food, and you know how we are part of that.
Wait, so set oils though, Yes, were they ask that question? So, yeah, this is what I want. Were they what was going on here? Was it actual demand? Was it just tweets? Was it what happened there?
So, you know, we spend a lot of time looking at all of our ingredients, our whole supply chain, and we also spend a lot of time understanding our consumer, what they're talking about, what they care with the value and it's kind of this balance of learning from the customer but also leading them in places we think are important for the food system and for our fast food model and our menu and our sources have evolved so
much in sixteen years. So we had seen this growing conversation around seed oils, and the more we looked at just the consumer conversation around it, and the more we did our research to understand. And I will say on that point, doing the research around any of these supply chains or any of these ingredients can be pretty tricky because a most of them are incredibly probably nuanced in
some ways. Right, there's some parts that are black and white, but there's incredible nuance in what's good for you, what the carbon footprint is, and across all supply chains like seafood, oils, poultry, vegetables, and so we spend a lot of time trying to understand and become experts on all these categories so we can make the best decisions possible and then ultimately be
transparent with those decisions to our customers. So we saw this growing converse and for us, it was really understanding what we think is important to try to shift some of the standard practices in fast food, but also what we think our customers would really value. And so we talk a lot about price value at tweeed Green, and we spend so much time and energy and money sourcing our food and building our network of farmers and growers
and this incredible roster of ingredients and so oils. As you look at the last couple of years, it had become a growing conversation. And to your point, there's all these voices online on social media that have really started to focus in on the specifics around oils and what part of our diet that makes up and our caloric intake and what's good for you it's bad for you. And so as we looked around, we saw that no chains or large scale restaurant groups were really thinking about
this or really talking about it. And we look at our menu every year and we say, what can we upgrade? And this was the investment we wanted to make. We thought it was a really important conversation, and we decided to change all of our cooking oil to extra vergin olive oil and avocado oil, which we were switching from high lax and flower oil well, which again this goes back to part of the nuance, has a very similar fatty asset profile to the two that we're switching to.
And and generally is you know, different than a lot of the other When people say seed oils okay, technically is a seed ol But for us, it's really trying to understand the nuance and what customers would value. And we were excited to make that switch and announcement, and you know, the response has been incredible.
So I definitely want to get into how your supply chain works because my understanding is it's different to a lot of other chain eateries, but just on olive oil in particular, maybe avocado oil as well. But it seems like you're doing this a kind of maybe a bad time, because I'm looking at a chart. Oh yeah, all the oil, yeah, and it's I mean, it reached a record earlier this year and it's still phenomenally high. So how do you
manage the cost of making the switch? And I'm curious also do you hedge something like all of oil purchases?
Great question. So it is if you're looking at the chart around the olive oil markets, given in some of the situation in Greece and Spain and with weather and with the weather and droughts and fires, the olive oil markets have really are at an all time high. We
see that as a more short term blip. We know that ultimately will come down to some version of steady state, we decided it was still worth the investment, and we're able to really think about how to offset that creatively within our supply chain, so there was no price increase connected to this for our customers, and really just wanted to create value there for our customers on the menu. And part of the reason of having olive oil and avocado it was also to be able to hedge between
the two. Typically in our supply chain are more important skews. We do think about contracts to really think about locking in great prices, and we have an incredible supply chain team that spends time in the field with our farmers and growers and with our partners and really does a great job, you know, sourcing incredibly high quality ingredients and you know, paying a price that makes sense for our business but also makes sense for our partners.
So when you decide to switch to you know, from seed oils some flower oil to all of oil slash avocado,
how do you go about sourcing that oil? And again, maybe this is a good way to get into the differences between your supply chain and how you're sourcing things versus other restaurants, because my understanding is the majority of restaurants they will go through like large food distributors, whereas you are sourcing directly from farmers and doing a lot of that transportation yourself, I guess abits.
So the way our supply chain works is, you know, we spend a lot of time understanding the different inputs and having direct relationships with our growers, farmers, food partner, so we go direct to the source. We still use distributors to move that product around just because there was an efficient there's a very efficient infrastructure around that. And you know, we're not in the distribution business and that's
not part of the Speacreen model. But we spend a lot of time directly with the farmers, growers and food sources people growing and raising our food to really understand how those products fit our ethos. And so we have a food ethos that really guides all the decisions and vestments we make in our menu, things like focusing on regenerative organic growers and produce clean oils, really thinking about
the animal responsibility of how animals are raised. And so for us, we have this you know, detailed foody thist that really guides our supply chain team and our culinary team and allows us to really make the right decisions. We then very often will contract prices directly with growers and partners, and then we use our distribution partners to move that product around into our restaurants. And so you know,
we celebrate seasonality, regionality. We work with some of the country's greatest farmers and growers that are growing the highest quality products across the country and really proud of that.
Every single one of our restaurants does have a board that lists every single source and not just of like you know, the cool ingredients like this peaches and season I'm going to tell you where it's from, our oils, our rice, really sharing full transparency around all of our ingredients to really again lift the curtain between customers and
their food. And so for us, we think that's really important, and ultimately we do all that because we think it leads to the best tasting food when things are grown right in the right soil with the right methods and you're sourcing high quality food. Ultimately, we are doing all fresh prep in our restaurants. But it is not like you know, high end culinary chef driven protocols and cooking. It is very simply taking high quality ingredients and prepping them very minimally for our customers.
By the way, just for those at home, are those curious Tracy I did. First of all, I did not realize we actually had spot alive oils on the terminal. I guess I shouldn't be surprised, though the tickerssm one. In twenty twenty it was two thousand euros for a metric ton of extraversion spot olive oil. It's recently eight thousand, so that's a four burgger since twenty twenty. Pretty extraordinary. Okay, one last question on the seed oils. We're not really going to go forty five minutes.
Which is how we met, by the way, yeah on Twitter, right.
But actually this is this is one last question on the seat oil, and then they can move on. How much is it about? Like, okay, there's a bunch of weirdos with you know, anonymous avatars talking about seed oils all of a sudden, so and they're like, okay, there's goodly a conversation here. People want a higher quality oil, et cetera. But I don't know who these people are, and I can't read the science versus like you independently
saying you know what I think? Actually, avocado oil and olive oil sitting aside the Twitter chatter, are better healthier oils that you've independently sort of done research on independent of what weirdo is on the internet.
Great question, It is more the latter, and it's really understanding. You know, we've made so many great decisions around our supply chain and our menu and how we source, just based on what we think is right, what direction we want to shift the industry in. As I look back on the sixteen years, we've made a lot of decision on our menu and supply chain that honestly, folks thought were a bit crazy when we did it. And ultimately, you know.
What's an example of something that people thought was crazy.
You know, opening and not serving, like having a soda fountain program. We don't have cheddar cheese, right, we don't hope we've had terror cheese at moments, we don't have it. What's up with it is that our quest for tetter cheese.
I'm actually like that seems like a weird decision to me. That Like when you say because that struck me, I've gone to sweet grain a handful of times, just a normal cheese like that seems like an interesting decision to me.
Yeah, you know, I would say there are dozens of ingredients that would be incredible on our menu and that we just can't have room for them. All. Our menu does evolve when things come on and off, and so cheddar is definitely something that might make its way back on the menyn day.
Wait, so speaking of red headline breaking news when this comes out, cheddar might come back one day.
So speaking of things that can come on and off the menu, and also weirdos on the internet. As part of my research, I was looking on Twitter and it seems like the thing people are most upset about at Sweet Green at the moment is used to stop serving beats. And I can read you like dozens of tweets on this subject. No beats is killing my vibe. No longer serves beats in the shree mommy, So you're just gonna
completely alter the ingredients? Where TF are the beats? Like this goes on and on and on, But like what happens when that kind of ingredient is no longer available? Is it a seasonal choice? Is a supply choice? Like, clearly there is some customer demand for beats.
First of all, I love that there's this much passion around beats, which which is really incredible. But you know, our menu evolves quite a bit, and this is related to a big menu launch we did about two months ago with a new category on our menu called protein plates, So launching these more center of plate protein plates that have grains and protein and veg and no lettuce so not a salad, and really thinking about just you know, a completely different occasion for customers and new customers. And
this is based on a lot of customer feedback. We heard about options they wish they had at Sweet Green or just out there. In general, whenever we add things to the menu, we also do remove things, Okay, otherwise.
Is that just to like streamline and keep count locations.
This idea of ski rationalization and just efficiency for an operation for your prep for just the number of ingredients you have in your restaurant, And if we just kept adding a couple of things every year, you'd wake up ten years later having way too many ingredients, way too complex an operation, and it.
Would take customers seven minutes to order now instead.
Of I'm surprised though about the beach because one of the stories I remember from years ago was that Sweet Green teamed up with the rapper Kendrick Lamar for a salad called bes Don't Kill My Vibe.
That was that was the reference in that.
Yah yeah, and the Verge headline I ate a salad named after Kendrick Lamar song anyway. But so actually this reason an interesting question. I mean, I like Sweet Green, I go there. Sometimes I go to Chipotle. Sometimes Chipotle doesn't seem to change it's I mean never once in a while it adds, don't have a new meat, something really similar for the decade or however long. Why is it important to switch it up?
You know, today we have two hundred twenty restaurants in twenty states, and we're continuing to grow into different parts of the country and really broaden who our customer is and who we can serve, which is really exciting and so for us, aside from just the seasonality in our ethos and really wanting to celebrate incredible produce and ingredients as they come in and out of season at peak of freshness, it's important for us to just keep evolving
and broadening. You know, the addition of protein plates for us was about creating a new occasion and attracting a new consumer that maybe doesn't want to eat a salad, or our existing customers that maybe don't want a salad every day. And you know, especially one of the things we've been hearing from our consumers, I mean, you know, we're reading and seeing all the same things that you all are in the world around value and just the
consumer wallet and what they're feeling right now. And customers certainly want value more than ever now. And so as we think about places in the world today to get quick, clean, delicious, healthy dinner options and the convenience and a price that makes sense, you know, it's it's not easy, and so for us to launch something like protein plates, it's what our customers are telling us they would love for dinner.
And so to have you know, between fifteen and sixteen bucks a plate of you know, clean, pseudo free cooked proteins and grains that is hardy and delicious really appealed to our consumers and is striking a cord where they are right now.
So you mentioned the number of stores that you have, and I think you are rolling out quite a bit outside of the traditional urban centers, so Midtown, Manhattan, LA. Those sorts of places do you find as you open stores outside of cities that tastes are different there versus say, a midtown Manhattan. Is that part of the reason why you've you know, unveiled the new menu.
Yes. Overall, you know, I would say it's been exciting for us to really broaden where Swee Green is and who we can serve. And so as we do that, broadening the menu is a really exciting objective. And that
doesn't just mean adding new categories like protein plates. You know, over the past year we've also added some really incredible flavors and ingredients on our menu, things like, you know, a really clean barbecue sauce in a barbecue chicken plate and salad that we made with a chef in Chicago named Charlie McKenna who's the world champion of barbecue sauce, and we made a version of his sauce with no refined sugars and according to our ethos and it is delicious,
and so thinking about broader flavors and ingredients, more protein at the center of the plate. The protein plates we did launch have up to fifty grams of protein per plate, which the focus on protein right now for consumers is really really big. And so we heard that.
From our protein to hot right now.
Yes, protein is very hot right now. And ultimately, like anything at Sweet Green, you can come and customize and create what you want. So if you want double protein or no protein, you can really create the mil you want.
Talk to us about the intersection of plate design with the food inflation that we've seen over the last few years. I have to imagine that, you know, twenty fourteen, twenty thirteen, early in Sweet Green era, it probably just wasn't much of a constraint, and I imagine that it's a lot trickier now or maybe more of like an engineering or
puzzle problem to solve. Like, Okay, food has gotten a lot more expensive, and so given these constraints and given the desire to like have an economical price point, you have to like solve for X. Talk about plate design in the era of higher commodity costs.
You know, for us, as we have scaled and now that we're at a certain size versus you know, ten years ago, it's not just about price and design, and I can talk about that, but it's also about just creating more resilience in our supply chain. So when we do launch something like olive oil or sources an ingredient.
You know, we have to think about it at a much different scale and thinking about having secondary and tertiary sources and and so you know, when you have fifty restaurants versus a couple of hundred, just having the resiliency
in the supply chain is more critical than ever. But you know, for us, engineering and designing a menu and a plate in these entrees is really starts with a ton of time spent with our customer understanding and not just existing customers, but prospective customers, people that don't to Sweet Green, or people that have heard about it and have never come, or people that have never heard about it, so really understanding what would drive intend to purchase for
them and what appeals to them. And then you know, then we take that's kind of the science side. Then we take the art side and understand, you know, what we think is exciting in food in our supply chain, what flavors we want to really talk about and celebrate, and we marry those two things, and we do a lot of customer testing, So we put a lot of products in front of customers to truly understand how it
makes them feel and how the flavors work. And then ultimately, for us, when you talk about inflation and price, we
focus a lot on price value. So you know, we spend all this time sourcing really high quality ingredients, creating this experience in the restaurants where our team members are taking those ingredients, prepping them from scratch and creating this fresh, incredible product that then you have all these channels to interact with, so the convenience of whether it's our app or the pickup shelves, and so it's not just about the price of your menu, it's also the price value
and so making sure that whatever the customer is paying, they feel like it's worth it and the value is there. And so that's why so much of it for us is really communicating all the work that goes into the quality of our ingredients and getting credit for that. And all of oil Change was one of those examples where
we really want to tell this story. And you know, for us, we were the first national change to really use clean oils and talk about it, and so you know, we're excited to see if that continues to spread in the industry, if other folks will do that, and there are some other great, you know concepts out there talking about this, but at scale, we haven't really seen that. So it's exciting to see and talk about those things.
So ultimately customers can come to Sweet Green and say, Okay, this feels worth it the values here for what I'm paying.
Nick, you keep mentioning scale, which you know fair enough. You're still a young company and you're still clearly growing. But I guess I'm curious, like how important is scale
to the overall strategy to achieve profitability? And I think you were profitable in a recent quarter on an adjusted ebit daw basis, so like there is some progress there, But do you need to get to a certain in size in order to have pricing power in the market for things like ingredients or maybe even labor in order to start making profits on a sort of regular basis.
You know, scale is definitely important. And you know, as we have made so many incredible investments over the last few years in our technology, our supply chain, continuing to leverage our GNA and our home office to really you know, create that path of profitability. We have had two quarters of adjustity bit of profitability, so we are excited about
the progress and well on our way. And you know, but when you talk about scale, you know, two hundred and twenty something restaurants sounds big, and it certainly would have sounded big to me a few years ago, but it is still very small relative to the opportunity we
have in fast food and in our category. And you look at so many of these larger competitors in there are thousands, if not tens of thousands of restaurants, and so sixteen years in two hundred twenty restaurants, we still think we are very early in our journey, and so we're excited to build sustained and profitable growth and really, you know, in this time, more than ever, being really
disciplined about the growth. You know, we opened in five new states in the past twelve to eighteen months and bringing speakering to communities and states where we probably rewind ten years ago, maybe didn't think we'd get to.
What's Where's that?
You know, We've had really exciting growth in the Midwest, so opening in Indiana, in Michigan, in you know, all over the Chicago area, and it's been really exciting to see in Minneapolis, really excited to see our growth there and how the brand was received, and that's a really exciting growth there also.
How seasonal are sales in places like the Midwest. I'm just curious when it's really cold, I personally do not crave a salad, although I admire your objectives to make craveable options for presumably year round, But do you see like a big dip in places like Minneapolis in the winter.
Unlike say La where I'm at. Yeah, that's all people want to eat three hundred and sixty five days a year.
You know, we've had one full winter in the broader Midwest. But we do see seasonality, right, and I think a lot of restaurants do. But I think with our product, especially the South category, we do see more seasonality that affects it. We have. You know, actually the larger category on our menu is more the warm bowls, so things
that have hardier grains and more proteins in them. And then, honestly, that was part of the intention of the protein plates was also to think about if you are a sweeperen eater and you've eaten, you know, a lot of salad, you know, once a week or twice a week in the summer and fall when winter hits and it's just one of those days where you want something a little hardier, or you want something for dinner and it just isn't a salad even you know, the greatest of salad eaters
don't want to eat that every single day. And so really starting to create that range and breath on our menu for existing and new consumers that just hits a different need state. It's satiating in a different way. And so it's been really exciting to see even early on just the effect on dinner and then now as we enter the winter, to really see how protein plates will perform. We just launched it six weeks ago, but the signs have been really exciting so far.
Let's talk about the Midwest a little bit more specifically. You recently opened up a robotic concept in Naperville, Illinois, in which robots make the sale it and I have to imagine that there's a lot of interest in a lot of people these days for service automation, given tightness of the labor markets, etc. What is the hardest part about automating the process of making a salad.
So we did open our first automated sweet green in Naperville, Illinois about six months ago. We acquired an incredibly talented group of individuals with a company called Spice two years ago and have since started building the Sweet Green version of that machine called the Infinite Kitchen, and so we
launched it six months ago. And really so much about designing this format and that restaurant was you know, the technology was really important in the actual automation and the robotics, but it was more about the full experience that wraps it and thinking about today they experience our customers are
going from where they walk into a restaurant. You know, they're pointing at their ingredients on a line, interacting with a team member, but also thinking about the friction that exists in this existing format of I'm sure you've been into a Sweet Green at peak lunch and it can
be intense, right There's a line out the door. People are trying to move fast, people want to order, things are flying, things are going fast, and you know, our team members, who do an incredible job, you know, have to be fast, friendly and accurate at the same time, which is really hard. And so for us, you know, understanding what we love about our current format and experience
and what friction we want to create. So much of the work was more around the experience we wanted to build around the automation and thinking about the different roles and how the team members play a role that is actually more around hospitality and less surround assembly. So the infinite kitchen assembles the meal, but our team members now get to really spend their time interacting with customers more focused on hospitality, maybe talking to them about our supply chain.
I just want to drive home this question though, of like the Salid construction challenge, because especially I have to imagine, you know, the hospitality component for say like restaurants that are making doing a lot of money on delivery, so it's not as important. What did the change? I was in San Francisco one time and I went to a robotic coffee shop. It was truly a terrible experience, Like I don't know, they just I can't imagine how they screwed it up so badly, and I don't think it's
there anymore. But what is the actual constraint? Because I watched the video of how the Naperville thing works looks pretty straightforward, etc. So from a sort of like workflow operations standpoint, a lot of economists businesses must be really interested in how much service sector work can be automated.
What makes it hard, well, you know, to your point, I do believe that fast forward, in the next decade or beyond, automation will play a role in food right and in restaurants. I think it will have to, and I think it shifts that team member experience, it shifts the experience for the customer. And what makes it hard is just the technology. There's no off the shelf solutions don't exist today, and every restaurant has different menus of
the different ingredients that need to be handled differently. I think you're starting to see, you know, there are many automated solutions in coffee, they're some in pizza. You know, you're starting to see some more spot automation where they can do one task, you know, or one discrete task.
The Infinite kitchen for us that was built at Sweet Green, it, you know, assembles the majority of the meal and then there's a finishing station where our team member gets to finish the bowl or plate with you know, the fresh herbs or the piece of protein or a sauce, and then it's handed to the customer by the team members. So the idea was of the transaction even though your bowl is mostly assembled by this automated machine starts and ends with human hands, and there is this opportunity for
more hospitality in a commer environment. And there's all these other benefits that really start to create a ton of value for the customer on perfect accuracy in the machine, perfect portioning, perfect temperature control speed.
You know, so this is coming, this is coming.
We're actually opening our second one in a few days in California.
What about simpler automation? And I think when we hear salad making robots, you know, everyone has a vision of a robot chopping up let us or something like that. But you could have automation on things like salad dressing so you can pre mix the salad dressings and maybe that saves costs. So something a little bit less high tech.
I guess yeah. I think there will be a number of solutions from small, discrete tasks that are automated to larger you know, full concepts automated or the next couple years. And you know, like I said, you're seeing that today, which is exciting. Over the past decade, there was a ton of funding that went into so many of these startups, and I think the environment's a little tougher today obviously
in that world. That's what we were really excited to partner with and acquire the Spice team because they're brilliant and the technology they had built was really wonderful, and so marrying that with our brand and our food has really been an incredible combination. But you know, today the Infinite Kitchen does do assembly, dressing, dispensing, and mixing, so it has it does the majority of the process and then a few things are finished at the end by hand.
But it's been really incredible to watch that experience and how consumers are interacting with it.
I want to talk a little bit more about the labor market, and I think I read in your last earning call, Munch like much of the economy things you're getting a little bit easier, looks like on the hiring side, on the wage side, etc. But what I'm curious about in particular is during the sort of peak of the labor market Titaness maybe twenty one early twenty twenty two, when so many companies were expressing frustration about hiring, how do you sort of keep up a minimum quality expectation.
You talked about that hospitality and people having a certain expectation of what it's going to be like when they go into a sweet green and at the time of high churn, difficulty hiring, et cetera. Talk to us about the process of maintaining that When I imagine an employee who's been there three years is much better than the person who's been on the job three days, how do you maintain that quality at a time of a lot of I guess, very green, fresh employees.
Great question, you know, I think the last couple of
years was really challenging in so many ways. I think, you know, obviously, at the peak of COVID, so much of the operation and the experience for a team member, not only the customer, but for the team member was totally flipped around, right, wearing masks while you're working, having these plexi screens, and having all this different like safety protocol, which was all there for a reason, and like you know, we had to move fast on so much of that stuff,
but it did alter and shift the team member experience pretty radically. And I forget the exact number, but our industry did lose millions of workers during that time, and
so it was really challenging. What's really been exciting about this year is as we have seen labor markets ease is you know, we have seen our turnover come down, which has been really exciting and to your point, having team members that are here and passionate about the mission and you know, being developed and growing in the organization
is just a wonderful thing for both sides. But whenever the labor markets are hard or even now, the focus for us is really on just like we listen to our customers, spending as much time listening to our team members and understanding how we can better the team member experience.
And that's everything from uniforms to wage, to training modules to physical experience in the restaurants, and so we spend a lot of time really understanding how we can consistently improve the team member experience and just continue to invest in them.
So the other thing that seems to get people worked up on the internet, aside from seed, oils and beats, is tipping.
Oh yeah, an iPad.
Yes on a screen, And I think this is something you recently started incorporating into the business model. So I have so many questions on this issue, and we've been meaning to do an episode exclusively on tipping for a while, but we haven't quite gotten around to it. But first of all, why did you decide to do that? Second
of all, what's been the customer response? And I guess like third of all, the question that everyone asks on this issue is always why are the customers subsidizing the labor costs of a company?
Great question? And when I talk about spending a lot of time understanding and talking to the team members and just understanding the landscape out there, tipping was the number one thing we really heard from our team members that they value and that you know quite often have at other places. And so you know, the back end of how you actually bring that to life can be pretty complex.
It's different state by state, different channel by channel, with whether you know whether it's on the app or and person or so integrating all the different technology behind the scenes to bring that to life is pretty complex. So I mean shout out to our tech team and our CTO, but it was a pretty big project. And what was the change tipping adding?
They didn't have it before where you could optionally adding.
Tipping for our team members and keep going, Yeah, show.
Does this mean you're not tipping your sweet green makers? You haven't noticed?
Can I don't listen? So I haven't been going on the sweet green light. It's just anyway, keep going. That's the only reason I hadn't.
Noticed have to get you back to try to play.
It will come back from the Yeah, keep going.
And so, you know, this is something we constantly heard from our team members when we wanted to round tables, and we just you know, spend time with them understanding how we can improve the team member value, prop and experience. And so we spent a year building thiscent And like I said that, the back end of how this comes to life is pretty complex.
Uh. I had no idea it was that complicated because I always assumed like it was something provided by like the payment vendor, and you could just like plug and play.
You know, it depends what you're existing tech infrastructures of who your payment provider is, who the pos is, you know, what your at, what your app is built on. You know, state We're in twenty states, so the state by state regulation makes it all so more complex. But you know, it's it's a pretty hairy thing to build, but our
team built it. They did it brilliantly. We spent a lot of time talking to team members and customers to understand even the details of the experience of what are the prompts, what you know, how these would make you feel, and did a test and it's been really incredible to see the results so far. I mean, our team members are really pleased. It's adding you know, a great amount to their to their wage. And the most exciting thing is we do believe there is inherently like a service flywheel.
Hear right, So team members know that, you know, the hospitality is incentivized, and so it makes them care about that customer experience even more.
But I guess the thing I don't get about optional tipping for something like a bowl or a salad chain is like, first of all, you know, you talked about the importance of hospitality training anyway, so presumably like everyone should be really friendly. But then I'm also tipping, first off, before I've even eaten it, and it's hard for me to judge like the quality of the salad bowl construction
before I've actually tasted it. So I guess probably, like a lot of people, I feel guilty enough that I will do the optional tipping, but like I also feel a little bit annoyed about it because I'm not sure what I'm tipping for.
You know, that's a great point. I think for us, the experience is built in a way where you know, consumers can self select into tipping or not tipping, and we didn't want to add that pressure. And so you know, one of the prompts is no tip, and it's you know, I think you go to some places today and it's like thirty thirty five.
Yeah, oh yeah, the minimum is now like forty percent or I.
Saw one where it was like twenty five twenty thirty and so they like switched up the order or something like that. So the button were you into, it would anyway.
Yeah, And so for us, there's a lot of intentionality and all the details there. And funny enough, we're also getting a lot of requests from customers that wanted to tip that right, we're going into their sneakering every day, that had their favorite team member that had you know, they were there were just regulars and they said, I wanted to I want to, like I want to connect with my team members and reward them for the incredible
service and they make my day. And so for us, this was just something we you know, we were really excited to launch, both for team members and customers, and we think the experience we built around it is really thoughtful and intentional to let customer self select into whatever journey they want there.
You know, as Tracy mentioned, this is one of those things that on the Internet people are really annoyed by. I'm not surprised that the employees would like it because it seems like almost total, you know, pretty straightforward goes right to the wage line. Have you seen any pushback? Did the whining online translate into any less activity?
You know, it's still pretty It's still pretty early for us, so we are still learning and watching. So far it's been really positive. Like anything we were all out, whether it's menu or features like tipping or you know, we're learning and evolving as we need to. But so far it's been really positive.
I recently learned there's an actual terminology for the idea of companies becoming more sophisticated with their pricing options. It's called price pack architecture.
I never heard of it.
Yeah, I hadn't heard it either, But I do feel like this is becoming more of a thing for companies, where like the goal is to offer a suite of price options so you have a cheaper thing for people who want that, but you also have the premium products. You also now have the option to add twenty percent onto you know, the cost in return for service is that something that you're you're mindful of as a growth company.
It is, And as we really expand all these different places around the country and really get excited about welcoming new customers into Sweet Green into the funnel, the pricing strategy is really built on just having that range of prices so entry points for different people. You know, we have a bowl on our menu that starts under ten bucks in every market, So if you want to self
select into that, you can. If you want to do triple protein and add everything into your bowl or plate, you can get you know, a very expensive plate that fits your needs and fits what you're looking for. But at the end of the day, it also does come back to the idea of price value that I talked about so often. Customers, you know, what we hear and what we know is that regardless of the price they're paying,
it's more about was it worth that price? And so but the range making sure that you know, consumers can self select into whatever price they want, and you know, it also connects their frequency. We have customers that are coming to Spee Green quite often. We have a loyalty program that has a subscription piece as well for those highly frequent guests. That creates some value there as well.
Tracy, now that you're getting into deadlifting, you got to get the protein plate with the triple protein.
I'm not getting into deadlifting at all right now. My capacity to deadlift is absolutely zero. So for people who don't know, I have like a tendonitis type thing that is flaring up again and I can barely like lift my phone, let alone weights. But I appreciate all the guys online who are telling me to use straps when like, just to be clear, I am not going to be deadlifting at all in the foreseeable future.
Okay, well, I guess you don't need the triple protein. Let's talk about introed this conversation by saying, what's great about a bowl of anything is I can eat it at my desk in my office while and sort of just stare at the screen and consume calories. What have
you seen in terms of work from home offices. I'm sure you did not anticipate the degree of working from home and the changing of urban centers and delivery, all these different things when you started it, And obviously the work environment in twenty twenty three is very different than twenty nineteen. What does that meant for Sweet Green in the business model?
You know, over the last couple of years, we have seen our consumer shift around a lot, just like everyone in the industry. What was fortunate for us was, even pre COVID, we had started shifting a lot of our pipeline and our growth into suburban centers. And for the past few years, the majority of our growth and openings have been in more suburban residential areas, so our footprint
has become more balanced. And over the last couple of years, there's been certain assumptions that you know, everyone has made around return to work and what's going to look like, and I think the world is kind of we've all been wrong. So I think we've just accepted that where it is today is maybe where it's days, and we're
building our business around that. And what's really exciting is seeing I think, as we brought in our menu and we have all these channels, things like delivery and pick up, just seeing people fall into their new rhythms and behaviors wherever they are working or living, and so it's been really exciting to see the strength of our suburban restaurants and seeing people really incorporate that into their routine versus before it might have just been the place they get lunch in their office.
So we started this conversation talking about hatred for seed oils, and you mentioned that proteins are becoming a thing as hot. Yeah, they're very hot. Right now, what's the next thing on the horizon, like the next food related matter that we can all obsess over.
You know? For us, I do think oils and the fat quality. I think it will be a huge conversation that will grow, and that's why we decided to make the investment. I think if you look at even the data of the caloric consumption and how much of the average person's daily calorie intake is coming from these highly processed oils, it has increased so much in the past couple of decades, and it's in everything. So I think that visibility and transparency for consumers is going to be
a huge topic of conversation. And obviously, when you connectet to like just the metabolic state of things in this country and chronic disease, I think there's a much bigger conversation.
Yeah, I think I had the same thought when you said metabolic. But how are you thinking about anticipating the world in which more and more of your customers may be on ozempic or a gop one? And I have to imagine, unlike some other you know, you're probably a higher end consumer, typically people who can perhaps afford it
more easily at the current price points. Have you seen anything now or more importantly, perhaps, are you thinking of anything strategically in terms of a world in which many more people are on these drugs, you.
Know, just like anything that grows really quickly, we're watching it and learning and trying to understand. I think what it's really exciting for the type of food we serve is whether you're on something like ozembic, or you're you know, just trying to create a different lifestyle, or just you want food that makes you feel good. Sweet green kind
of fits all those use cases. I think folks that are on a product like ozempic or probably cutting out more of the higher chloric less you know, clean food options. And so we're watching it, we're learning, we're you know, we're trying to understand how our consumer is shifting. But ultimately, I think what's really exciting is as our menu gets broader, I think it creates more reasons for customers to come to Secred, not just for health or for you know,
caloric or metabolic reasons. But that ends up being like a plus on the back end. They eating something that is cravable and that you know, satiating, but that also is good for you.
I feel like we have to get Sweet Green for lunch now, it's like mandatory.
Definitely. Yes, I'm sorry, I haven't been to one a few years. I'll start going, So where.
Are you going to lunch?
There's a knockoff Cova a couple of blocks away. I forget what it's called. It's just it's like the same thing, it's a little worse. And I go to the Dig. The dig it is so mainly because it's like literally love. Uh yeah, I want to I'll check out.
I'll go to this. I say that as a broader common of the rest of the industry, a.
Little subtweet of the industry. Now, that was a lot of fun.
Thank you so much, of course, Tracy.
That was fun. We should go we definitely we should go to a Sweet Green to and test it out. I'm going to get one of those triple protein bowls to max it out.
I have a real craving for protein now.
Yeah, I have a major protein craving right now, and I'm going to put the max tip option.
Yeah.
That was a really interesting conversation and we kind of hit a lot of the big talking points in consumer goods. Well, is it a good in food right now? Yeah, like the idea of labor costs, the addition of tipping, and how maybe that helps a little bit on the labor market tightness. Although, as Nick said, like the worst of that seems to be over the sophistication in pricing. I feel like that's a real trend, and it is true.
I don't know how many of the apps you've signed up for, but it is true that you can get a lot lower prices through like the loyalty programs for a lot of chains.
Right now, just so lazy put in your email.
You should do it.
It's it's download an app. It's worth it. Joe, all right, maybe maybe I will no, But that was that was a really fun conversation. You know, it is pretty striking to switch to olive oils given that chart yeah, a wild chart.
Yeah, it will be interesting to see whether or not it normalizes and how quickly.
Also, I want to do more tracy on the roboticization of services, especially at a delivery Uber Eeds, Seamless, all of these different grub hub whatever it's called. You know, you don't care about the hospitality experience in those conditions. Intuitively, you would think that there's a lot of opportunity and demand from the business side to find ways to automate the creation of people's lunches. But it really just like has not taken off so far at all. And like
I said, I went into a coffee shop. Coaffee I would think should be really like the easy one, and it is a terrible experience. So I wanted to have a better understanding, like what really is the constraint? Is it scale? Is it the fact that there's nothing off the shelf? What isn't Just to.
Be clear, it hasn't taken off in the US. I mean I remember, like twenty years ago in Tokyo you had robotic servers like you would actually order through. It wasn't an app back then, but it was like a little machine at the table and then someone would bring it out to you, and that was like a fairly normal thing at Izakayah's, but it's taken a lot longer.
The assembly side st Yeah.
The assembly side seems difficult, but again, like there's gradations of assembly. So you can have like a giant mixer that's mixing salad dressing and that seems fairly easy to do, versus like an actual, you know, Jetson style robot that's like washing and cutting up the lettuce.
We gotta do more robotics. I feel like service. Like this is a sort of fact about the economy, which is that manufactured goods tend to see productivity gains over time, and services tend to have stagnant productivity, at least as far as the best we can measure them. But if we had like a sort of chat GPT of robots, an actual Google, an actual good robot, which I don't think many exist so far, but if we had one, maybe we would actually see some productivity games.
It is true there does seem to have been this like huge gap between the amount of money going into robotics versus the amount of money going into AI.
Right, so we have all this.
Artificial intelligence, but we don't actually have the like physical machinery to put some of it to use.
Johnny five, Yeah, not feeling all right?
Shall we leave it there?
Let's leave it there.
This has been another episode of the All Thoughts podcast. I'm Tracy Alloway. You can follow me at Tracy Alloway.
And I'm Joe Wisenthal. You can follow me at the Stalwart. Follow Nicholas. He's at Nicholas where he is monitoring your tweets about seed oils. Follow our producers Carmen Rodriguez at Carmen armand Dash Bennett at dashbod and Kale Brooks at Kalebrooks. And thank you to our producer Moses Ondam. From our Odlots content, go to Bloomberg dot com slash odd lots, where we have a blog transcript and the newsletter, and check out our discord Discord dot gg slash odd lots.
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