A Super Niche Product Creates a Unicorn Brand
The story of Sweetgreen from tavern to unicorn & all the learnings along the way
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Through this article, we will talk about:
A. Rise of Sweetgreen — a fast-casual salad restaurant rising to $1.6 bn valuation.
B. Learnings and takeaways from strategies of Sweetgreen in “Use this, how” column!
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A. Rise of Sweetgreen; learnings & takeaways
The Short Story
At some point of the day, we are scrolling through numerous restaurant options on a food aggregator app, scratching our heads an hour into the search, getting fed up by the repetitive, unhealthy and boring options.
Nicolas Jammet, Nathaniel Ru, and Jonathan Neman: three gentlemen from Georgetown decided to start a food company building a solution to this exact problem.
Thus became Sweetgreen.
A fast-casual restaurant outlet serving only salads, although of various types. Sweetgreen partners up with local farmers to bring fresh produce to the farm has an open display style kitchen where sauces, meats and falafels are prepared from scratch.
In terms of technology, Sweetgreen boasts of 50% of its orders coming through its app. Sweetgreen has also been working on blockchain technology to create transparency in their operations and supply chain of produce for themselves and their consumers.
The latest $200 million in a funding round led by asset management mogul Fidelity Investments puts the fast-casual salad restaurant at a valuation of $1.6 billion.
How could a fast-casual salad chain be valued at $ billion? My thought exactly. Let’s explore.
Product
A super-niche product?
There are many places you can get a salad on the side, a salad as a main along with smoothies, buddha bowls etc.
This describes a niche restaurant appealing to the fitness audience.
But the product of Sweetgreen is super niche, a fast-casual salad restaurant.
Why a super niche product?
Although there are various downsides of super-niche products like serving a very very particular need, frequency of consumption of the product, creating the need for the product etc.
All that being said: the big winning bet is placed on the mindset of the audience.
The attempt is to transform the thought from whenever you think of a salad — you think of Sweetgreen.
The same could be achieved by niche brands but the impact and effect of super-niche are significantly more. How?
The conversation goes from “remember that place on 5th” to “remember that place which serves really healthy food” to “remember that place which serves those awesome salads”!
The first impact of the super-niche brand is: The brand has the ability to becomes synonymous with the product.
Eg. Ben & Jerry. : Get me a Ben & Jerry
Eg. Starbucks. : Coffee here sucks, but it’s not coffee, it’s Starbucks.
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When a business is dealing with a super niche product, it is imperative to start thinking about the business of the product. The decision to not add other products can only be fought by
doing variants of the same product + selling it at a “specialised” price.
It does not hurt the brand in any way to sell the product at a higher price than the market, given the product is great.
As far as the mindset of the audience goes, when a business is doing only a single product, the audience pre-conceives it as great.
The average price of a salad in Sweetgreen goes between $9–$14. In all certainty it is a premium price consumers wait in line to pay.
Revenue of Sweetgreen topped $300 million, from 9 stores across the United States, 12 years since it opened its first tavern at Georgetown.
Use this, how
1. The super niche brands have the ability to become synonymous to the product. When you decide to go super niche, go all in in-terms of quality & service on variants of a single product.
2. Consumers don’t mind paying a premium price until and unless the product meets their expectation. Also, super niche brands have a preconcieved notion of being premium in quality & cost.
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Supply Chain & Production Leveraging Technology
The most important part of any machine is the one which ensures it keeps running smoothly. In a product business, production and supply chain forms the backbone.
It’s no different for Sweetgreen. They connect with local farmers wherever they go before the opening of the outlet in the respective city to ensure the quality of produce. It also creates business opportunities for farmers and creates a sustainable long term relationship which gives Sweetgreen a competitive advantage in the long run.
The production of sauces, meats and recipes majorly takes place in the kitchen, very well in front of the consumers. It encourages and builds trust.
Leveraging Blockchain technology
Sweetgreen uses blockchain to derive and show consumers information on where the food comes from, conditions it was grown in and how it reaches Sweetgreen and consumers.
Sweetgreen also leveraged its mobile app and went cashless to prevent robberies in stores among various other business benefits.
The transparency from farm to counter builds trusts and ensures a quality product for the premium price consumers pay.
Use this, how?
1. The most common threat of restuarants for consumers : Is it hygeniec enough, in all sense? It’s the major reason why there is a demarcation in the terminology : home cooked food vs outside food.
To go past this : it is important to build trust with the consumers and the only way to do that is by being trasnparent. Show them your hand!
2. The more control you have in your production, the better quality product you can yield.
Culture
Basics on culture before we go ahead:
1. Culture is the most overlooked aspect of building a brand!
2. Culture is not communicated, it is practised.
3. Culture is internal and external. Internal culture reflects on the external culture of a brand. Richard Branson puts it in the most spectacular way:
Employees come first. If you take care of your employees, they will take care of the clients. -Richard Branson.
It is a millennial brand. Every millennial brand has one thing in common: Passion. So does Sweetgreen. It says Passion X Purpose on the back of t-shirts of store staffers. How do they practice this?
- Hiring employees based on their passion.
- Starting every morning at the store with a huddle.
- Handwritten Gratitude notes to internal and external consumers every month.
- Creating a safe space to fail by celebrating lessons from failures
- A mock shark tank held every year for employees to pitch their passionate ideas which could be rewarded by seed funding.
Use this, how?
1. Culture is built by practice not by preaching. Identify your values & beliefs, how you want your brand to grow. Develop practices in line with those beliefs.
Marketing
Marketing is very different from what it was 5 years ago. A lot has happened in the last 5 years.
Content creators are growing by an alarming rate of 30% every year, differentiation has become a common lie, social media is overused and unnecessary. My favourite one: every brand is a lifestyle brand.
I don’t want to comment on real lives but the emotional intelligence in marketing has taken a huge hit. The only emotion being leveraged today is aspirations. The obvious reasoning is the overuse of social media channels & filters.
Asides from developing a super niche product, maintaining a well-controlled supply chain and a passionate culture, Sweetgreen also relies largely on the aspirational value of its brand for marketing.
Sweet life festival (culture & music)
The Millenials & GenZ are a big chunk of the consumers frequenting the premium-priced fast-paced salad restaurant.
Entertainment in the form of live concerts, music festivals, screenings etc has become a huge part of these two generations, I’m guilty of the pleasure too.
Sweetgreen started by setting up a rostrum outside the second “Sg” store with a mic set and a band. People started gathering and nearly 500 people had come around. Investors started aggregating and it became an annual thing. A musical festival featuring the greats of the music industry like Kendrick Lamar, Solange, Haim and the Weeknd etc.
Sweetgreen hosted the festival for 6 consecutive years. It called the quits in 2017 due to decreasing consumer attendance and fatigue.
Beyond Sweetlife, Sg also attracts its audience by collaborating with Celebrity chefs to develop menu items.
Sweetgreen in schools
Sg finds this as an opportunity to educate the future generation about healthy eating. A way to pass on the values to the future generations, and creating a future flow of cultural consumer base at the same time.
Use this, how?
Fundamentally, marketing is understanding your audience, resonating with them and communicating with them creatively.
Marketing does not always have to be about selling the product by talking about the features, it could be simply resonating with the audience creatively.
Challenges Ahead
Every company’s primary aim is to maintain the supply chain, keep experimenting and developing the product, adding technology to the mix and increasing spend on advertising and marketing. I agree that all of this is important to survive and grow.
I believe the storefront of Sweetgreen should be the future investment of the company. The consumers interact with the staff on the storefront more than they interact with the app even though Sweetgreen has more than 50% of its orders coming through the app:
Technology has reduced the probability of error drastically, but the storefront is liable to human error.
Scaling to more locations comes with a higher probability of error and deteriorating of service. Food only tastes as good as the service.
I am not saying that Sweetgreen should replace the human heads with robots. I believe quality rewards welcome a devoted service.
Keeping in line with the motto of Sg: passion meets purpose, I think rewarding storefront staffers with systematized perks & increments in their compensation could enhance the quality of service. Sg can develop techniques to help in the fulfilment of their staffers.
Sweetgreen is pro-sustainability from product to packaging. Although, one of the worst-hit industries of global would be agriculture and farming. Sweetgreen currently sources its produce from local farmers ensuring quality. The long term challenge could be ensuring quality flow given the external factor of climate change.
A long bet of Sweetgreen could be focussing on building hydroponic farms closer to their storefronts. It could help in:
Reducing costs in transportation and produce due to proximity of the supply. The multi-level farms are indoors and could be inside city limits.
Assurance of better quality in the long run and reducing dependency on farmers for produce.
The hydroponic farms are a food-tech investment for the company. It could help them extend their business into a new direction ultimately leading to an increased valuation of the company.
The hydroponic farms could also enable Sweetgreens to build an ecosystem model like Apple, Peloton etc. The brand could leverage its credibility to sell surplus greens through specialized outlets.
That’s all for today I hope it added value to your life.
Until next time!