Other efficiency initiatives are more consumer-facing, like Sweetgreen’s planned loyalty launch in early 2023. Ahead of the rollout, the company has examined customers’ response to personalization. At the start of 2022, the fast casual tested sweetpass, a $10 subscription allowing customers to earn a $3 credit on purchases for 30 days. More recently, the brand piloted a rewards and challenges program encouraging customers to opt-in to receive an offer, i.e. add a side to get a free drink, spend $20 to receive a $4 credit on the next purchase.
Then with the menu, Sweetgreen plans to lean toward dessert, wider drink selections, and heartier foods.
“We believe that our planned loyalty program, combined with our healthy and habitual menu, will provide a unique opportunity for incrementality, increased profitability, and the opportunity for us to become a part of the daily ritual of an even larger number of customers,” Neman said.
Though sales are pressured, Sweetgreen’s unit development remains on track. The brand opened its 20th store of the year in Birmingham, Michigan, on Tuesday. In September, the company will open its first digital-only store in Washington, D.C., and later in 2022, it will debut a restaurant with a drive-thru mobile order window in Schaumburg, Illinois. In the second quarter, overall digital revenue mixed 62 percent. Digital orders originating on Sweetgreen’s own channels mixed 40 percent.
In the past few years, Sweetgreen has notably transitioned its system to more suburban markets. At the end of 2019, the fast casual was 65 percent urban, and those units earned AUV of $3.1 million, compared to $2.7 million for suburban stores. Now, the footprint is 50/50, AUV figures have completely flipped, and suburban restaurant-level margins now exceed urban outlets. Sweetgreen has great confidence in this form of growth, as 85 percent of its pipeline is suburban.
The chain is keeping its full-year guidance of at least 35 net new restaurants, and also stands firm on doubling its footprint in the next three to five years and reaching 1,000 stores by the end of the decade.
“I think we foresaw some of the supply chain challenges around equipment, and we were able to do some mass buying last year to get ahead of a lot of this,” Neman said. “And the confidence really comes from the fact that leases are signed and the deals are in construction. We have very high confidence in at least 35 this year and we have a very healthy and robust pipeline next year with some great sites, great deals, and many leases already signed.”
Food, beverage and packaging costs were 27 percent, consistent with 2021. More inflationary pressure is building around cost of goods, especially with chicken and avocados. For the full year, Sweetgreen expects costs to be in line or slightly better than last year, which was 28 percent. As for labor, costs were 30 percent, an improvement of 100 basis points year-over-year. For all of 2022, these expenses are also expected to be flat or a little better than last year at 32 percent.
Sweetgreen anticipates only one more price move before the year is over—bumping its premium chicken add-on to $3.25, up from $3.