UPDATE: Nov. 14, 2022: Sweetgreen announced it will open its first “Sweetlane” drive-thru pickup window in Schaumburg, Illinois, on Tuesday. The building, located at 1320 N. Meacham Rd., features a large mural by local Chicago artist Cody Hudson and will be open from 10:30 a.m. to 9 p.m. daily.
Dive Brief:
- Sweetgreen will open its first drive-thru pickup window, or "Sweetlane," in Schaumburg, Illinois, within the next year, the chain announced Wednesday. The unit's opening date and hours of operation have yet to be determined.
- The Sweetlane will be available to customers who place their orders in advance through Sweetgreen's digital platform. The restaurant will also feature an observation window so customers can watch meal preparation from their cars as they wait to pick up their orders. In-store pick up orders and dine-in service will also be offered at this location.
- Sweetlane is part of the company's overall strategy to boost digital experiences for customers. Digital sales made up 67% of the company's 2021 revenue, and two-thirds of these sales came from its app and website, Sweetgreen CEO and co-founder Jonathan Neman said during the company's fiscal 2021 earnings call in March.
Dive Insight:
Sweetgreen has been eyeing drive-thrus for several years, but the pandemic helped accelerate its plans. The chain's urban locations largely struggled during the pandemic, pushing Sweetgreen to build out its presence in suburban markets, where drive-thrus are a natural fit. In 2021, the fast casual chain opened 31 units, with 18 in suburban and residential communities, Neman said. Sweetgreen ended 2021 with 150 locations.
The company expects to reach 1,000 restaurants by the end of the decade and has plans to open 35 restaurants in two to three new markets, as well as within existing markets, in 2022, Neman said. As of early March, the company has opened six restaurants.
Rapid growth could come with additional development expenses, which could be risky for a company that has yet to reach profitability, but additional restaurants with heavy digital sales could help boost revenue. Chipotle, for example, noted that its restaurants with drive-thru pickup lanes tend outperform its traditional restaurant sales by 15%.
Digital sales also come with higher order frequency, bigger average order values and access to customer data that reveal preferences and behavior, Neman said. Its digital strategy will also include enhancing its in-app experience by offering seasonal menu exclusives, personalized promotions and curated collections with chefs and influencers, he said.
If Sweetgreen decides to expand its drive-thru model, it will be up against significant competition for standalone and corner units that accommodate drive-thru lanes. Along with Chipotle, which has leaned heavily into its Chipotlane model, Shake Shack, Panera, Jimmy John's and Famous Dave's are among chains either expanding or exploring drive-thru models.
Sweetgreen is also looking into smaller locations without extensive dining rooms, which could reduce its real estate expenses in expensive urban markets. In 2021, it opened a pickup-focused location in New York City at World Trade Center Tower 3. That location only offers outdoor seating. It has also been adding pickup windows and curbside pickup in some of its restaurants.
The fast casual chain did note an improvement in restaurant-level margins, which improved to 13% in Q4 2021 compared to negative 4% in 2020. Neman said this progress stems from sales leverage, price increases and the elimination of its loyalty program. Sweetgreen's average unit volumes increased to $2.6 million last year compared to $2.2 million in 2020.
