Dive Brief:
- Sweetgreen plans to roughly double its footprint in the next three to five years, according to an S-1 filing submitted to the Securities and Exchange Commission on Monday. The company had 140 stores as of Sept. 26 and plans to open at least 30 company-owned locations this year.
- The fast casual chain expects to enter at least two to three new markets every year over the next three years and diversify with drive-thru and pick-up only locations to densify its markets. The restaurant said it is confident about opening new locations, especially since new units that opened during the pandemic in places like Miami and Austin, Texas, have secured strong initial sales volumes, surpassing company expectations.
- Sweetgreen, which filed for a proposed maximum aggregate offering of $100 million on Monday, joins a growing list of newly minted public restaurants with ambitious growth plans. Portillo's plans to grow from 67 to 600 units over the decade, while First Watch is gearing up to expand from 420 restaurants to 2,200.
Dive Insight:
Despite its diversification plans, Sweetgreen seems to remain confident in its restaurants located in large urban markets like New York City. The chain opened a location this week in World Trade Center Tower 3, one of the first food and beverage tenants in this location. The unit doesn't offer indoor seating and has an extensive pickup area, the company said in an email to Restaurant Dive.
While this isn't the company's first location with only outdoor seating, customers have been opting for open-air and outdoor dining over the last year, Pamela Haber, head of real estate, East at Sweetgreen, said in an email. Much like other standard locations, customers can order in-store at the World Trade Center restaurants through an assembly line, online or through the app.
Sweetgreen has also been reopening its Outpost locations as more people return to the workplace, further expanding its reach in urban areas. Outpost locations, which allow workers to order online and pickup from a designated location in their office buildings, initially grew to over 1,000 locations as of March 2020, but were closed during the pandemic. The company opened 350 Outposts as of Sept. 26.
The company continues to test new restaurant designs as a way to densify its markets as well, the company said in its S-1. Sweetgreen has added exterior pickup windows as well as curbside pickup in several locations. The chain is also looking into smaller format, digital-only fulfillment restaurants, as well as drive-thru and drive-up ordering concepts in suburban markets.
"As we have opened new restaurants in the same geographic market, we have not historically experienced cannibalization of our existing restaurants," the company said in the filing.
Sweetgreen has more than tripled its store count from fiscal year 2014 through 2019 and has grown its average unit volumes in its markets by 85% from $1.6 million to $3 million during this time. AUVs decreased 36% to $2.2 million in 2020 due to the pandemic, but have since recovered to $2.5 million as of Sept. 26, according to the S-1.
The company's ongoing focus on building out its digital customers will likely help bring its AUVs back to pre-pandemic levels, especially because average digital order value was 21% higher than in-store orders as of Sept. 26 year-to-date. In that same period, 68% of the chain's revenue also came from total digital channels. This includes 47% from owned digital channels, which consists of its pickup, native delivery, Outpost and digital scan-and-pay offered in stores.
The restaurant has been offering an expanded digital-only menu with curated collections and chef collaborations, promotions and lower prices compared to what is on third-party marketplaces to encourage customers to order directly through Sweetgreen and personalize their orders.
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October 26, 2021 at 09:48PM
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Sweetgreen expects to double its footprint as a public company - Restaurant Dive
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