Dive Brief:
- Sweetgreen will open its first digital-only pickup location on Aug. 1, the company wrote in an email to Restaurant Dive.
- The store, located in Washington, D.C., will not include interior dining or a front-service makeline and will feature pickup shelves. Customers can place orders on Sweetgreen’s website, app or participating third-party delivery services, the company said. An outdoor patio will be available for dining.
- This store model reflects Sweetgreen's focus on growing its digital business, which made up 67% of revenue in Q4 2021.
Dive Insight:
Sweetgreen has been expanding into new formats as part of its strategy to boost digital sales. It will open its first drive-thru digital pickup lane in a Chicago suburb within the next year. The return of its 500-plus Outpost locations, which were put on hold during the pandemic, have also allowed the chain to unlock more digital sales. The chain launched at least 17 more Outpost partnerships, which allow office employees to place orders online and pick up within their office buildings, in March alone.
“With digital sales representing over half of our total revenue last fiscal year, the sweetgreen pickup kitchen is a true extension of our growing digital business,” Nicolas Jammet, Sweetgreen co-founder and chief concept ffficer, wrote in an email. “We are excited to meet our customers where they are, by providing new ways to eat fresh, healthy food, without sacrificing quality or convenience.”
This format could help grow Sweetgreen's urban customer base. The D.C. location, which is in Mt. Vernon Square, is near both offices and residential areas. At 2,190 square feet, the store design is slightly smaller than a traditional Sweetgreen, which starts at around 2,500 square feet. The company believes it can refine its designs for pickup kitchens, which could help with its densification strategy and enable Sweetgreen to reach customers in areas that wouldn’t normally support a traditional restaurant.
When it went public last fall, Sweetgreen said it planned to double its store footprint within the following three to five years and to enter two to three new markets annually. It opened 31 net new locations in 2021 and expects to open at least 35 net new stores this year. During Q1 2022, it opened eight restaurants, according to an earnings release.
New locations, especially stores with smaller footprints, could help boost the company’s profitability. Sweetgreen wasn't profitable when it became a publicly traded company, and EBITDA still remains negative as of the first quarter. Average unit volumes are increasing, however, reaching $2.8 million during Q1 2022 compared to $2.1 million in the year-ago quarter.
While Sweetgreen said it anticipates a future with more pickup locations, it doesn’t have any concrete expansion plans and "will learn and refine the format before future deployment," the company wrote.
