SPEAKER_03: Food is a very, very big problem in this country.
SPEAKER_01: The health outcomes that we have, the way we are treating them, it's just... You can't have 60, 70% of the country be obese and then have obesity be linked to like the four horsemen of the apocalypse, whatever they are, like...
SPEAKER_03: diabetes, heart disease, they all come back to metabolic dysfunction.And I want to be clear, this isn't people's fault.This is not the individual's fault.This is the system.Right now, our subsidies, 95% of our subsidies go to corn and soy.These are things that are then going into the processed food system.
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SPEAKER_01: All right, if you live and work in any major U.S.city, suburb, you know my next guest.Sweetgreen is the fast, casual restaurant chain that specializes in salads, and they got a little bit more protein on the menu these days, as my wife has proven to me in the number of Sweetgreen packages coming to the house.Jonathan Neiman is the co-founder and CEO of that company, which has grown tremendously. like gangbusters over the last 15 or so years first location back in 2007 in georgetown in washington dc since then they've expanded to over 200 locations in the u.s that went public and jonathan and his team have been at the forefront of a lot of innovation so i thought i'd have him here on this week in startups because they're doing some really interesting things in robotics pay loyalty, data-driven menu optimizations.Jonathan, I also think you did a lot with co-working spaces back in the day and thinking about delivery and ways to get more salads to more people.So welcome to the program, Jonathan Neiman.
SPEAKER_03: Thank you for having me.I've been a longtime listener, huge fan.
SPEAKER_01: Oh, thanks, pal.That means the world to me.And I've been trying to have you on the program for a while now.Tell me a little bit about the state and the footprint of the business today.And we'll get into the backstory, of course, but there's so much innovation going on.So just maybe on a scale basis, how many salads you sell a day?How many customers?Tell me a little bit about the loyalty program and the footprint of the stores.
SPEAKER_03: Yeah, absolutely.So today, Sweetgreen is 225 restaurants across the country.We're in about 20 states today.Started the company in Washington, D.C., and we've kind of grew up the East Coast.But today, we have a footprint, both coasts, middle of the country, Texas.So we kind of cover, call it the top 20 MSAs today.Even mix of urban and suburban in terms of where we sit. The menu is, you know, we started off as mostly salads, but today has really evolved into protein plates and warm bowls and a much broader offering.You know, digital is a huge part of our business.About 60% of our business comes through our mobile apps.
SPEAKER_01: Wow.60% of orders come in through the mobile app now.
SPEAKER_03: Yeah.And what's interesting is it was over 50% before COVID, which is, I think, interesting.Yeah.
SPEAKER_01: The interesting thing about that, I think, is we've been talking about minimum wage a lot and the record low unemployment of our lifetimes, right?Isn't it crazy to think that we're living here with this incredibly low unemployment?And my understanding is the hardest workers to get sometimes are these frontline entry-level or mid-level jobs, career-run jobs.And so the act of being a cashier and taking an order, that's kind of going away in this... For what reason?Because there aren't enough workers or technology, or is it just not enough workers causing people to adopt the technology in your mind?
SPEAKER_03: I think it's really about improving both the customer experience and the team member experience.If we think about what the job of a team member really should be, the two things that our team members love to do that they actually enjoy, one is cooking and actually making food the culinary aspect of things, and the other is service and hospitality.At the end of the day, we are in the hospitality business. There's a lot that we do in between there that is maybe less valuable.And I think those are the places where technology can create a better experience, whether that be from how we order the food and making it more seamless to do so, how we assemble the food and other technologies, both software and hardware innovations to just make it easier to provide this type of food at scale.
SPEAKER_01: the customer experience i think is underrated here i know when i go to starbucks which isn't too often i like to make my coffee at home if i'm being candid but i do go to starbucks once in a while and we do have an investment in a company called cafe x or robotic coffee bar that's done phenomenally well of late there's something nice about putting the order in yourself and making sure it's correct because when i talked to a large coffee chain at one point um they um explained to me that the turnover at their cashiers was like 50% in the first three months, it was something extraordinary, I wouldn't say which chain it was, but it was really high.And then there was something to the effect of like, over 50% of drinks were wrong, or had some aspect that were wrong.So, you know, if it's wrong with a consumer app, well, then it's on the consumer for putting it in wrong, isn't it that reduces the error rate, I would think.
SPEAKER_03: It does.It absolutely does.It helps us increase our throughput, serve more customers faster, makes it an easier job for our customers.And it also builds a deeper connection with our guests and gives us that data where we can email them and just find other ways to build on that relationship.
SPEAKER_01: Ah, because you have their email and you're on their phone, you have that intimacy with them.So 60% of your customers, you're on their phone.If you just think about what Ray Kroc would have thought about that concept, he would have
SPEAKER_03: lost his mind which i know and i know you're a fan of that movie that's what i make all my whole team watch that movie it's such an amazing so good i love the scene where they lay it out yes when they lay out the restaurant with the tennis court and we i mean that is what we do we are so much of our job is experience design actually just right before this that's what exactly what we were working on in these new formats because we used to be this assembly line format And now everything's changed with the automation.It's no longer walk in and walk down a line.So how do you now build this new experience in this customer journey?And I always kind of refer back to that, back to that scene.
SPEAKER_01: Yeah, for people who don't know, there's just an incredible movie called The Founder, Michael Keaton, about Ray Kroc, who, although he's not the founder of McDonald's, that's kind of the duplicity of the title.He bought the license for McDonald's essentially and created what you would experience as the modern day McDonald's.But the original McDonald's concept was based upon... ford's assembly line and taking that to food and reducing speed so it is interesting even today the mighty sweet greens is in some way inspired by mcdonald's brothers and ray crock yeah absolutely yeah absolutely and you referred on to the turnover just you know what i'll say is the industry's over 150 percent turnover
SPEAKER_03: That's the industry.
SPEAKER_01: In the first year.
SPEAKER_03: No, that's every year.That means if you have 100 employees, you are hiring 150 a year.It doesn't mean all 100 are being replaced, but that's the industry 50% benchmark. And the other secret that most people who've been to restaurants will understand, what makes a great restaurant is the people.If I look at my store base and I look at the great restaurants versus the mediocre ones or the not so good ones, the X factor is usually that manager, what we call a head coach.You have a great manager and keep that manager in their store for a few years, they have a stable team, productivity improves, hospitality improves, everything starts working. So as much of a food company as we are and a technology company that we are, really, it comes down to that people aspect is the X factor in all restaurant businesses.
SPEAKER_01: So that begs the question, what makes a great Sweet Greens manager?What do you optimize for?And can you make them?Or do you have to find them in the world?And if it is the latter, how do you identify these super hospitality, unusual hospitality, unreasonable hospitality candidates?I'm curious.
SPEAKER_03: You know, that book that you mentioned, Unreasonable Hospitality, I don't know if you've read it.
SPEAKER_01: Oh, I've read it.I have made everybody in my organization read it because as investors, I told them I would like us to take the approach Eleven and Madison Park did to our customers, which are LPs and founders.So how unreasonable can we be with them?But explain to people why it's an important book.
SPEAKER_03: So, you know, Will Goddard, who wrote the book, started Eleven Madison Park before that worked for Danny Meyer and kind of built on what Danny had created, this idea of hospitality being the 51% in a restaurant.Will's a friend and we actually similarly had Will speak at our conferences this past year, our hospitality conferences for our teams, gave everyone the book.And just recently, I actually had everybody watch that episode in The Bear.
SPEAKER_01: Oh, episode five, Forks.Forks.Yes.Episode five, season two.Explain to people the episode.It's incredible.
SPEAKER_03: So, the episode, it's based relatively loosely off Eleven Madison Park.And Richie, you know, one of the guys who's a bit of a punk. Kind of goes and he's staging, so kind of call it like interning at this restaurant.And he goes in and his job is just to clean forks and he's pissed off after the first day.But then he speaks to the other guy working there and there's this moment where he talks about how much he cares about what they do every day. And he goes, you don't get it.Every day is the Super Bowl for us.And the way we have to make people feel.And he talks about this idea of, you know, the fact that the word hospital and hospitality kind of come from the same place.And I don't know, I watched that episode and like, you know, I just got like goosebumps the whole time.
Because that was like, that is what we do at our best.Yeah.
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Even if you've got a big company, they're great for big companies too.W-I-S-T-I-A dot com slash startups. What was great about that moment is you had somebody who was purely cynical, you know, Richie, right?That's the character's name, who, by the way, he's now going to play the thing in the Fantastic Four, which is exceptional casting.I feel like my childhood and like my adult fantasies of running a Michelin star restaurant are coming together here.But he's got this really bad attitude. his cousin sends him to you know what is a michelin star place and he says listen we got this waiting list and he's so cynical why am i wasting my time with the forks and he said you know like you said this is the super bowl everyday people wait for months to come to this evening they look forward to it they spend their whole week's salary on it like we need to make this count and it really does matter and this is like a concept that you see in japan and how everybody you know looks at their work you i'm sure you have you spent time in japan and seen this up close and personal
SPEAKER_03: Yeah, and what do they call it with the three circles?
SPEAKER_01: good for this character.
SPEAKER_03: Yeah.So, a few things.One, you know, this idea that I forget the name of the Japanese concept, but from when we started Sweetgreen, we defined this idea of the sweet life.And the sweet life, all the t-shirts, everything, the way we defined it was passion.
SPEAKER_02: Yeah.
SPEAKER_03: The idea of the Suite Life for us always, and for me, has always been this idea of passion x purpose, where you can align your passion and your purpose, which is a very similar way of saying it.But you talked about the head coach and what makes them great and what you can teach them.It was the next episode, I think, in that series where... They're interviewing that woman and he's sitting there, Richie's sitting there.I don't know if you remember the scene.He's sitting there with the manager and they interview the woman.She comes in with a great resume, seven years experience, but he had intentionally put the napkin and the forks perpendicular.Yes. And at the end of the interview, you know, she walks away and the manager's like, we should hire her.She was amazing.
Seven years experience.And Richie's like, did you see that she sat there for an hour and did not flip the napkin back?The people we want would notice that. Yes.The people we want would notice that this was out of line because those are those that little thing that above and beyond that it's just innate.And so to your question, we can teach you how to run a restaurant.We can teach you how to read a P&L and train you and all those things.But there are certain things about how you connect with your team because what we find is what drives that What drives that stability is actually having relationship, knowing each person on your team and really getting joy from taking care of customers.If you can, if you like have those things and we like to say happy, humble and curious, if you have, if you, if you're happy, humble, curious, and you know, I like to say coachable, we can teach you the rest.
So it's that innate, it's that innateness in hospitality that you need to have first and foremost.
SPEAKER_01: You call them head coaches, the general managers?
SPEAKER_03: We call them head coaches because they're leading a team and their main job is developing talent.Again, the other secret in the business is, you know, if you look at the best restaurants, like Chick-fil-A is an incredibly run restaurant.What is the secret?You don't get your own restaurant at Chick-fil-A until you work at a restaurant for almost 20 years.
SPEAKER_02: Wow.
SPEAKER_03: And it's that promotion from within that really drives the business.So we're very focused and we open new stores.The limiter to growth is not so much, today for us, it's not capital, it's not real estate, it's not our supply chain.People ask like, why don't you go faster?So much of it generally is your ability to execute and that has to do with your ability to develop talent to run those next restaurants.
SPEAKER_01: And you can't speed that up, you have to have the moment where they polish the forks, you have to have the enlightening moments, the coaching moments, where people learn you know, over time.So, you're developing your own talent.I guess that's the dream, right?I get somebody in there polishing forks and then eventually they're managing their own restaurant, yeah?
SPEAKER_03: That's exactly right.And we can do it.You can start as like a dishwasher and be a manager within two and a half, three years.Pretty amazing.Last week, you know, I promote, you know, I called a couple individuals who made it, you know, they've been with us almost 10 years each.Started off as team members worked their way to manager and now they were just got area leader positions.And there is no better, like no call that makes me happier than calling someone that like that's, that's worked their butt off and is now making great money managing like eight restaurants and restaurants on average to $2.9 million.So you have this individual that was making, you know, 15 bucks an hour working the line is now managing a $25 million business.Yeah.
SPEAKER_01: So let's pause for a second here and talk about the franchise model versus owned and operated.My understanding is you are doing the owned and operated model, which means you're not hiring an owner like Ray Kroc did to franchise it.And in that movie, The Founder, and in grinded out Ray Kroc's biography, which is also exceptional, history is written by the victors.So take that for what it's worth.I'm not sure how much is correct exactly.Yeah. But their theory was, and there's a great scene in that movie where he is at the country club with his first wife and he's got rich people who play golf to open up franchisees.And then when he goes and visits them, they've turned into places where hooligans are playing loud music, smoking, there's garbage everywhere, and they've added weird stuff to the menu and destroyed the quality.And then he has to fire them, take those franchises away, which is exactly what the McDonald's brothers told them would happen and why they didn't like franchising. And then he goes and finds the blue collar people goes to a synagogue, he goes to, you know, like a vets association, and he starts looking for hungry people.
And it starts with somebody selling Bibles, and he finds them.And he realizes I need those, you know, more blue collar people who really care, okay, that worked for them.And because it creates ownership.So you must have considered the franchise model, you must have been lobbied heavily by investors.And I know you've had a lot of investors over the years in this business. What were the arguments for franchising versus owned and operated?And how did you navigate making that decision?
SPEAKER_03: You know, this is one of those discussions we had very early on.I remember, you know, we're dorm room level writing the business plan.And one of those things we said from the beginning is we do not want to franchise what we're doing. We wanted to build a company that we controlled more of the snack, the experience.And for us, it was even deeper than most restaurants.We wanted to control our supply chain.We wanted to control our technology.And we wanted to control the restaurant, of course, because that's your interface with the customers.And so, let's call it more of that Apple approach of owning more of the stack and specifically that piece of owning your customers. We also looked at restaurants and just generally, if you look at businesses, there's businesses that over time, as they scale, they get better.
And then there's businesses as they scale, they get worse.And what I mean by better or worse, not financially better or worse, but the product gets better or worse.And technology, typically you get better, right?As a business gets bigger, they invest more in the technology and the product continues to improve and improve and improve.Your iPhone today is much better than your iPhone 15 years ago.
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SPEAKER_03: So in restaurants, when you think about it, it's kind of the opposite.It's diminishing returns of scale from a quality perspective, typically in the industry.As you get bigger, in order to maintain consistency, the fact that you're dealing with fresh food or some people fresh food, some less fresh, there's things you do to ensure the consistency.Typically, some of it's done to increase profitability, but a lot of it's just done so you can execute consistently.Think the commissary model for restaurants.So most restaurants don't actually prep their food in the restaurants themselves.They buy it, they have a commissary called like a giant factory where they make everything, oftentimes actually cook the food there, ship it out into bags.And what they're doing at the node is just putting the food together, right?Keep reheating it and handing and putting it back to you.
And I remember this really hit me when I was at a conference very early in my career when we started Sweetgreen, and I sat next to someone that was working at Outback Steakhouse. Nothing wrong with Outback Steakhouse, but she was telling me when it first started, it was the most popular restaurant.People would come from across the state to go to Outback.It was known as the best steakhouse.And you look at it today and it's Outback Steakhouse.And so, from the very beginning, we're like, how do we ensure we don't do this?How do we get bigger as we get better?And part of that's a mindset. The other is we believe technology can enable us to do that.
So as we think about automation, for example, what most restaurants at our scale start to do is they get to the scale again where they move all the prep off site.But that's what people love about Sweetgreen and really most food.What makes great food is where you buy it, good quality food, and the fact that it's made fresh.And so what we said is instead of getting rid of that in order to scale and find the consistency, let's preserve that. Let's preserve that in the restaurant because that's what people love.Let's even highlight that.And let's automate the part that nobody really cares about and actually is prone to a ton of errors, which is the assembly.So that was our way of, you know, trying to ensure that we maintain that quality of vision as we continue to scale.So, you know, for us, you know, we had a lot of franchise requests in the early days.It was, I got to say, it was tempting because you have one or two restaurants and you have people saying, hey, we can, we'll sign up for a thousand.
No. Like, imagine that.They're like, we'll sign up for a thousand.
SPEAKER_01: We'll take a thousand in China.We'll take 500 in Australia.There'll be 500 in Australia, you know, with some partner.
SPEAKER_03: Yeah.And they'll pay you, you know, some fee upfront and then they'll pay you like five, 6% a year in terms of royalties.But for us, it can be really, it can be a really good business.And I don't, I think there's a world for licensing internationally.I think it can make sense with the right partner. But for us, it was always about thinking sustainably, which was one of our core values.It was how do we build a business that we're proud of and stands the test of time?This has never been like a pump and dump.This is our baby.We're very proud of the quality and we want it to be around for a very, very long time.
So we took the slower approach, the more capital intensive approach.It's a... honestly, a much harder approach.We have to do so many, you know, sweet green.We think about all the mini businesses inside of a sweet green.We have to be great at real estate, design, construction.We have an engineering team.We have a product team.You know, we have huge operations and training.You have an automation team.
There's so many components.If you're operating the full stack that you have to be great at.But that's why there's also such rarefied error.When you look at the world and the market, there's only two companies that I believe have hit terminal velocity in a company-owned model, Starbucks and Chipotle.
SPEAKER_01: And Starbucks had a lot of licensees and I've seen they've unwound them because you know when you're at a franchise because it sucks.And like you go into a franchise at like a supermarket, you ever like pull up the Starbucks app or something and you're like, or even I think some of the airports were franchisees and you're like, this is just not consistent.And the tell was you couldn't use the app there in some of them.
SPEAKER_03: And they still are.They still are licenses.And that's, you know, and that's something that we're going to have to face one day because you want to get into airports.The licensees have a monopoly.HMS hosts and these companies have a monopoly on the airport.So it's like, if you want in, you got to partner with them.Ah, right.So there's places where you have to do it really in alternative real estate.But, you know, if you look at Chipotle, what they've done, you know, 3,500 restaurants, about a $75 billion market cap company, all company owned restaurants.
SPEAKER_01: going slow and thoughtful, and the scale will emerge, the opportunities for scaling will emerge like ordering on the app, or just getting better at hiring and building talent, all that becomes a flywheel.Eventually, you hire great people, they bring great people.Let's talk about robotics, because this is something I And on this very podcast, I don't know, about 10 years ago, I just told my producers, get me every robotic anything restaurant because I grew up in the restaurant business.I had the dishwasher company.I had the salad company.I had the fro-yo company.I had the ramen company.I had the pizza company, Zoom Pizza, that SoftBank, I think drowned in capital and they went out of business.And there was, of course, I think it was, was it Momentum Burger or something?
There was some burger place that was like in San Francisco.I think you became obsessed with this a bit too, yeah?Yeah.
SPEAKER_03: Yeah.I've been obsessed for a long time, almost a decade of obsessed with robotics.Very clearly saw it as the next wave of technology innovation after mobile that was going to transform the business.I remember years ago when I told people, they're like, are you?They thought it was crazy.They're like robotics in a restaurant.No one's going to want that.First of all, that's probably impossible to build.You're going to take away the humanity.
And like, why would you do that?It doesn't make sense for the brand.But I was very adamant that that's where the world was going.And I believe so even more so today.
SPEAKER_01: And yeah, when I tested all of them, there were two that worked really well.The dishwashing robot worked incredibly well, but you had to use their cafeteria style plates and everything, which is a bit limiting, but they have like magnets in them.So, you know, it just lets you do a better job with them.But then Cafe X, the robotic coffee machine that we invested in, which has a couple of locations at SFO and they've got a couple more going into other airports and they're doing amazing, like a million dollars across two machines at SFO.It was the first one that I saw that could actually do it from soup to nuts. And then it had the ability to keep adding stuff.So when you watch a founder go from, you know, making espresso-based beverages to adding a tap, and then you've got kombucha, but then you've also got teas, and then you figure out the cold foam machine, and you put cold foam on... you know, a chai, and then you put an espresso in it, it's a dirty chai, and then you do the matcha and, and then all of a sudden, you put cookies in it, and the arm can do all those things.And then there was a chocolate machine.And you're just like, Whoa, okay, you're starting to see it come together.
And I can't believe that company made it through COVID and everything.But you've delved into robotics, where is it working now?And can it do 100% of a salad slash plate 60%?What's your vision for this?Because I I know you do have it at least in beta in a couple of stores, correct?
SPEAKER_03: So we're actually fully live.We have two stores operating as if they were normal restaurants today with what we call the infinite kitchen technology.So the first one opened last May in Naperville and outside of Chicago.And then we opened one in December in Huntington Beach.The way we saw this little robotics opportunity, you know, it's probably seven or eight years ago, started thinking about it, actually tried to build it ourselves.We went and hired a team. started putting it together realized it was really really hard at the same time we were watching the industry like you were and we saw this group of uh this group of entrepreneurs in out of boston um these four guys and interesting had a very similar story to us they actually they i mean they'll tell you they they loved sweet green and they're like they went to mit they're mechanical engineers i'm like that's where it's all out of people don't
SPEAKER_01: I realize this, but the robotics lab at MIT is where we had a company called Root AI.
SPEAKER_03: Yeah.
SPEAKER_01: That was picking strawberries and got bought by another company.And all the robotic arm technology and the hands and everything came out of MIT.Yeah.
SPEAKER_03: So we met these guys.They were just graduating college.They shared their idea.We're like, this is really cool.Let's stay in touch.They decided that originally they probably wanted to build robotics for the industry.They realized that was very hard to do and that the only way to really create value, at least at that point, was to build a restaurant themselves. So they actually opened two restaurants.It was called Spice Kitchen that were fully automated with their technology.Because they had based a lot of their menu and like vision of the experience off of Sweetgreen, we were very lucky.
Their menu was like almost identical to where we were doing.They were doing bowls.You know, we kept in touch.We really liked these guys.They're just so smart.So it was just so bright, so hungry. And we felt like years ahead of the rest of the industry.And so about two and a half years ago, we acquired the team and the company as well as all their technology.And we began working on a version for us.And they actually had the technology pretty much fully figured out.
What we had to figure out was how to scale it, how to bring the cost down, how to make it easily cleanable, how to make it so you don't need an engineer or a technical person to run it.You need an average worker- A civilian that knows nothing.Not a rocket scientist.Yeah, be able, super easy to use.And so we had a few pilots and now we're off to the races.We opened our first two this year.We're on pace to open about 11 more of them this year, which will be a couple of retrofits and older restaurants and then a few new ones.So for us, it's intentionally, there are still humans there.There's less people.
But the idea is let's take away the things that they may not love doing Let's let them focus on the things they do.So back to the culinary aspect and the hospitality.And let's take away that part in the middle, which is the assembling of bowls.And when we look at our NPS, our biggest detractors were always accuracy and time.Like you got my order wrong or you didn't get it on time.
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SPEAKER_03: So this machine that we've developed can do over 500 bowls per hour. Perfectly accurate.
SPEAKER_01: Pause on that for a second.
SPEAKER_03: It's eight bowls a minute.I mean, it's deranged.It's just, it's an amazing thing to see.And it does it perfectly accurate.And the food is better because it's all held perfectly temperature controlled.And so the hot food comes out piping hot, the cold food cold, portioned perfectly, you're dressing.You know, we ask you light, medium, or heavy.Light, medium, or heavy can mean different things to people. Now you get it down to the gram of exactly what you ordered.And so it does almost everything.
There's a few items that it does not do.And we actually don't mind it because it allows for a moment of hospitality and theater.So it does almost the whole bowl.There's the items that it doesn't do are avocado.It does not do the salmon.And it doesn't, you know, intentionally, we want like the lemon, lime and the herbs to be on the side.So the bowl comes off and they'll put your hot salmon on it or they'll take the...
SPEAKER_01: Sam is way too fragile to have a robot start messing with it.Correct.
SPEAKER_03: Correct.But it does everything else.
SPEAKER_01: Amazing.And is this the kind of cylinder-based approach where you kind of queue up in the cylinders and then each portion can come out?And what this also does is you got portion control, you got safety, you got consistency, and you got speed.I mean, this is like the Holy Grail.Yeah. There's a very weird thing where people, I remember when we were working on Cafe X, we were like, oh, what about baristas?And it's like, you know, when you're in an airport and the line for, you know, Starbucks or Coffee Bean Tea Leaf is longer than the wait for your flight, it's kind of a non-starter.You no longer care about the barista experience.And then let's call it, keep it a buck, right?Like keep it a hundred.
You ever peek behind what's going on at Starbucks now?They're just pressing a button.It's a super automatic machine.It's not the old days where they were, you know... tapping stuff so here it is folks you see it here if you're watching live and the bowl comes around and yeah open up the port the bay door opens and you get your salad you're done easy breezy what's interesting about it is probably like most technology solutions the first 90% is quite easy it was all about dispensing almonds
SPEAKER_03: This would be the easiest thing ever.Yeah.It's hard.You can count them.Yeah.How do you dispense goat cheese?How do you dispense dressing with the right viscosity?How do you get it so it plates?So for us, it actually plates the bowl.You don't want it all dropping on top of each other.
You want your bowl to come out and be photo worthy.So it actually knows where on the bowl it is putting it and it rotates around.
SPEAKER_01: So, you got to hit it like three o'clock by the double score on the dartboard.You got to hit it, you know, a triple 20 with your avocado.I don't know if you use a dartboard or what you use as your metaphor, but you got a little Ted Lasso to you.Yeah.And maybe you get curious about the dartboard and... But everybody was like, people are going to hate this.People said the same thing about ordering from an app.And I go to a restaurant right now, and we have a very weird thing happening in NorCal, and I think it's happening in SoCal, where you just can't get people to be waiters.And so I've watched, and I was shocked when I came from New York City to live in LA, that a quality restaurant... With a $20 entree, you know, or more would have you pick up food at the counter like Earth Cafe or, you know, some places, you know, and or like order at the counter, and then they give you a table stand.
They handed that to me the first time a kid from Brooklyn or living in Manhattan.I was like, What are you giving me this?I'm not the waiter.I'm the waiter over. And they're like, we don't have waiters.I'm like, well, can somebody be my waiter?It's like, no, you have to go to the counter and order.Now with toast and some of these other things, I prefer, much prefer the experience when I'm with my daughters of like, oh, we need to get another thing of dumplings.Bang.I order it.
A runner brings it.Much better experience.And in a high-end restaurant, lower-end restaurant, I really don't care.People are about speed and convenience.And this will also help with price, I would think at some point, maybe not immediately.Or what does this do to margins? For Sweetgreen.I mean, I had read some numbers, some like 20 or 30% even, but I don't know if that was a whisper number or true.
SPEAKER_03: So it's pretty significant what it can do.First, obviously experience improvement.So the speed is a huge one.There's a huge walkaway rate in the business.So all of a sudden that goes away.You can capture all of the demand that is there.Walkaway is I see the line, I'm out.Yeah, I see the line, I'm out.Or even on our app, We have what we call throttle capacity on our lines.
So you go to order in New York at lunch, and that store, even online, might push you out an hour or so.So now with the speed, you're able to capture a lot more, serve a lot more people.You have the accuracy there.What we're seeing is much less turnover in those restaurants.So the team members prefer working here.It's more fun.It's easier to work in.It can be a pretty hard job, to be honest. It's an easier job.Our customer service scores are much better.
And we are seeing pretty significant margin lift off of it.If you look at our business, it's about... We haven't disclosed publicly, but what I will say is our business is split.Our labor is about 50% between prep and 50% production. And this takes most of the production.It kind of takes most of the production.So it can be pretty significant in terms of what it can do for margin.Of course, there's capital involved in terms of doing it.Again, what we've stated publicly is we are seeing incremental return on capital.So in our business, one of the critical metrics is return on invested capital at the unit level. So if a store costs you a million dollars, can it deliver four or $500,000 a year?
That would be a 40% return on capital.
SPEAKER_01: These stores within Infinite Kitchen are more- And that's top line revenue or a bottom line?
SPEAKER_03: So let's say if it costs you a million and the profit is 400,000- Got it.That's how that metric is.Yeah.The metric would be 40% in that case.So what we've said publicly is with the incremental cost of the machine at the unit level, the returns are better.
SPEAKER_01: Oh, so, okay.So I could start to do some math here being a poker player.Hey, if you were 25% better and it cost a quarter million dollars, I put this at a quarter million dollars, maybe a half million.And then as you scale it, every one you do, you're going to knock 10% off or every 20 you do, you knock 50% off.It's going to be a scale business.
SPEAKER_03: To your business as you know, you got two cost curves going the opposite opposite directions.You have one of technology, which is, as we all know, kind of goes down.It's not going to go to zero like software, but it will continue to come down as we scale this.On the other hand, you have we have labor costs and labor, call it complexity availability.That's going completely the other way.You know, California on April.Yeah.April 1st, it's twenty dollars in California and three and a half percent a year on top of that.That's going to be thirty dollars and not, you know, not too far away.
SPEAKER_01: It is shocking to go out to eat or to, you know, see what's happening at supermarkets, restaurants, just the sticker shock is very real.What have you seen in terms of customers and inflation and the sticker shock of, you know, I don't know, when you started, was it eight to 12 bucks a bowl?And, you know, now you're at your 14 to $20 a bowl with, you know, whatever accoutrement.How are customers reacting to that?And then as a business, how do you react to their sticker shocks?
SPEAKER_03: So inflation has been one of the hardest things for us to deal with.I think the big last, you know, COVID impacted us in a lot of ways.A lot of it was immediate.For us, we had a heavily urban business.80% of it was urban at the time of COVID.You can imagine what happened to that business when we were depending on people going to the office.So, you know, I would track that castle return to office metric very, very closely.And who would have thought it was only going to get back to 50 is where we're at today.Yeah. Wow.
50% of 2019 levels is where we're at today, which is just a crazy thing.
SPEAKER_01: Did you have to close places during COVID?Were there some that just didn't make it because city center didn't come back or you just fought the good fight?
SPEAKER_03: Yeah, we just fought the good fight, built out our delivery business and just, it was hard.I mean, I got to say it was the past four years have been the most challenging in my career.
SPEAKER_01: Is that why you have so many suburban places now?Because you're following where people are?
SPEAKER_03: Yes, but also, if you look at the country, that's what most of the country looks like.And it was the next step in our trajectory anyway.So, our strategy was always go to the urban centers, build the brand.So, go to these major cities and then kind of follow the customers home in the suburbs.You know, we'd already gone to the major urban places.And so, the next step was always to move towards suburban.Okay. But on your question on inflation, so we've seen a ton of it.We've seen it in labor, obviously.We've seen it in commodities and food costs.
We've also seen it in construction and build-out.We feel that in a very major way.I think what's helped is a few things.One, given the lack of reliance on beef, we've been a little bit more immune to the commodities inflation that's impacted a lot of people. I think Chipotle's raised prices over 30%, 35%, I want to say, from 2019 levels.Relative to our peers, we have taken less price.So while we still sit at a premium to most of our fast food and fast casual competitors, I think we had a lot of pricing power.And as they continue to take up price, the relative difference actually decreased.So if you look at us versus the rest, there used to be a bigger gap.It's actually a bit closer today.
Robert Leonard
SPEAKER_01: Tell me about delivery.Obviously, you know, everybody can take a shot now.I was a third or fourth investor in Uber.As is tradition here on the show, everybody has to do a shot.So if you're driving a car right now, you could get some dispensation.You have to do the shot when you get home.Jay Collins said Uber. But watching what they've done with delivery and then obviously my friend Travis doing cloud kitchens, this has revolutionized how people eat.And of course, you got to give Stanley and the team over at DoorDash a lot of credit as well.This has changed how millennials look at consumption and food and just how they architect their lives.
This is just like nobody ever thought people would pay five or six bucks for a Starbucks. the idea that people would pay 15 bucks to deliver their dinner eight bucks extra deliver their lunch like that.They seem fine with it.I mean, they might complain, but it's not hitting the numbers yet.So how do you approach delivery?And how do you think about cloud kitchens specifically as a competitor, DoorDash, Uber, and then how do you do that fulfillment?And then how do you control the experience?You expect people to come to the app to order it?Do you think I don't know if you're available in Uber Eats and in the DoorDash and everything?
SPEAKER_03: Yeah, so it's something we think a lot about.And I think a lot changed pre and post pandemic.So pre pandemic, we were very focused on only our own channels.It was we actually had just launched our own native delivery actually in partnership with Uber at the time, where we could only order delivery on the sweet green app only on sweet green channels.And we really wanted to control that we wanted to maintain that direct connection with our guests. Pandemic happens and you're in a fight for survival.If there was one winner of the pandemic, it was definitely the delivery companies, the food delivery company.That is a behavior that shifted and has stuck and interestingly continues to grow.So really impressive to see.And I do think both Uber and DoorDash have executed really well.
You know, it's kind of like a frenemy type of thing.There are great partners.You know, I'm very close to both of them.We love them.
SPEAKER_01: Are you in both the apps?
SPEAKER_03: Yeah, we're in all the different apps.So most companies today are non-exclusive because they find that there is incremental revenue.It's a different occasion in each one.There's two like consumer use cases.One is, I know what I want.I'm a loyal customer.You may have them this week or not.You want loyalty and those things.
SPEAKER_01: Yeah, people have the Domino's app, for example.The Domino's app is pretty great, right?
SPEAKER_03: But then Domino's, I think, made a deal with Uber recently.Domino's just did because it's a different experience where you're like, actually, I have no idea what I want.I'm hungry.Quick.I'm going to open something up and I'm going to browse the options on that app.And they also did a really good job with their passes.They have these membership Uber One, Dash Pass.Most of their revenue is coming through those.And that really has a lock-in nature of those marketplaces. But today, we're on all the marketplaces, or at least the major ones.
We do have our own native delivery service, which is a very robust channel.It's actually our own native is bigger than any of the individual marketplaces.But as a whole, the marketplaces are bigger.But delivery continues to grow.I mean, almost like shocking to me, like you said, with the prices, people love convenience.And they've almost accepted that it's a luxury that they're willing to pay for.And so it does continue to grow. The thing that I think we did really well early on, we were actually one of the... My brother actually worked for Travis at Cloud.And so I know them.I know Travis and the team very well.
We were one of the first customers there.Ended up actually not working for us largely because we realized that we had a ghost kitchen in every restaurant.And this goes back over 10 years.When we saw the opportunity for mobile... We realized that mobile was only going to work if you took a first principles approach to mobile and designing the physical experience to match the digital experience.And so if you see those restaurants, I mean, you've been to them where like they have like 10 tablets up and they have like one make line and they're trying to take care of you, but then like trying to take care of the delivery orders.And it's just a shit show.For those people, a ghost kitchen can be great. But for us, we very intentionally over 10 years ago realized that digital was going to be a big part of the business.We were one of the first mobile ordering apps out there in 2010 and immediately realized we need to build a second kitchen, like a second make line in our restaurants.
And pretty soon after realized we need to think about the flow in the restaurant in terms of where do the delivery drivers pick up and getting them out of the way.
SPEAKER_01: Go to the back door, right?Yeah, get them out of the way.
SPEAKER_03: Yeah, if you see some of our like heavy volume restaurants, we have one on Folsom in San Francisco as an example.We have a separate entrance for delivery drivers.We actually have an area where they can get water and like have a little like pickup area and it's completely out of the customer area.So this idea of like ghost kitchens, you know, we've kind of built ghost kitchens inside of our restaurants taking that first principles.
SPEAKER_01: One thing I could see is if you wanted to conquer a country, Which Travis and Diego and the CK team are really good at.You know, you wanted to go to Mina, you wanted to hit UAE, Qatar, Riyadh, and you wanted to just sweep the whole deck at once.They could probably, you know, accelerate your process by, you know, a year or two, but... again you have to be thoughtful about that and what's the long game etc and so you have this massive um robotics going on the question i always have with the robotics is can this eventually lead to 24 hour a day kind of approach and have you thought about like those kind of concepts because it does seem to me like and i don't know if you do breakfast or not um do you do breakfast not yet one day we will yeah i mean that seems to be a great one you know the the thing i love about the bowl and i i wonder if this is where you got it from i were you inspired by australia and the bowls in sydney because that bowl culture's been going on for a while there did you how did you did you know that i did not know that but i've been going to australia for 20 years and when i did my first speaking gig there they took me to a couple of different places downtown that's amazing and they had these bowls and it was grains plus eggs plus bacon and now i go there because you know i'm trying not to eat bread because i'm irish i get fat i eat a loaf of bread and that's it it's like plus seven pounds i'm trying to say skinny that's uh i mean you're 100 like i'm almost that's why i like reacted like that really is that what you saw balls the way sweet green started is my junior year i lived in australia in college
SPEAKER_02: We're in Sydney or Melbourne?
SPEAKER_03: I lived in Sydney.I lived in Bondi.
SPEAKER_02: Business district?
SPEAKER_03: No, I lived in Bondi.And I loved it.And I think I was taken by that Aussie cafe culture where they had these awesome bowls.And also the fact that those cafes were like the cool places to go.Yes.It was like healthy food was cool.And in America, healthy food was not cool in 2006.Yeah. Healthy food was, you know, it was like granola, eat your vegetables, whatever.And so, even the name Sweetgreen originally was based off of a restaurant in Bondi Beach called Green's Cafe.
So, the whole really like so much of the vision actually derived from my experience there.That's why I was so confused.
SPEAKER_01: You ever go to Pancakes at Bill's?
SPEAKER_03: Oh, yeah.Yeah, I've been there too.
SPEAKER_01: Incredible.
SPEAKER_03: Amazing.
SPEAKER_01: Bill's was like, it's still there.And every time I go, I bring people and they lose their mind because they had a great bowl there which had chunks of corned beef, back to my Irish roots.You get this nice corned beef with some nice poached eggs and they put it on some frisee or I don't know, some microgreens, whatever it is.And I'm like, you know what?This is an easy compromise for me.I'll eat my greens. If you give me some brisket, you know, or, you know, some corned beef, that's an easy one for me to make that.And there's one in Tokyo.So, when I was in Tokyo, I was like, oh my God, in Tokyo, on the third or fourth floor, there's a Bill's.It's the same, you know, same Bill's with the same menu.
And they have this incredible ricotta.That is so funny.It really is interesting how food travels on the go.So, have you gone back full circle?Do you have locations in Australia?
SPEAKER_03: No, not yet.I would love to.I've been back, it's been almost a decade, but I went back a couple of times after.And I just, I love the culture there.
SPEAKER_01: you know you look at japan and you go to tokyo as an entrepreneur and i always tell every entrepreneur if you're thinking about going to japan don't don't overthink it just go and i'll give you a list of places but you will get to see you know as we talked about your life's purpose what people are willing to pay for what the world needs yada yada but you also just see like a commitment to excellence and then if you go to australia it's it's very similar i think they've also been influenced by japanese culture where people put a little bit of pride, a little extra pride into what they do.And when you're an entrepreneur, it just makes all the difference in the world.
SPEAKER_03: It's always that extra 1%.We have this, one of our core values is called add the sweet touch.And the idea is we want to empower our front lines and everyone in the company to just try to do that one thing, that one unreasonable hospitality thing, or whether you're thinking about design, to experience?What's that one little thing that makes someone remember what you did?And that's the best way to build a brand.You don't build brands with billboards.I mean, social media can help, but at the end of the day, it's all about that experience and the best brands are built.Even today, we market, we do all these kinds of things.We used to throw a music festival.
We have all that stuff.But 80% of our business is word of mouth.
SPEAKER_01: I know this because my wife's addicted to it.And, you know, like I would say minimum once a week, not unheard of two, three times a week, the text from my wife at Sweet Greens, what do you want?Or the knock on the door and the Sweet Greens just shows up, you know, and she just gets me stuff and I just. chow down on whatever it is, but you did add a lot more protein.You obviously listened to the Tim Ferriss or the Hooberman or all these lunatics with their protein-based diet.And that seemed to be, I don't know when you did that, but you must have been listening to customers.And I think, correct me if I'm wrong, you know, the keto people probably want to have you know, whatever, six, eight, 10 ounces of protein.And you were, you know, sprinkling on a little bacon, but you know, that's not the same thing.So, so that must've changed the demographic a bit.
SPEAKER_03: You know, from the very beginning, the vision of sweet green was not to just be a salad place.It was salads was the way in maybe just because then we didn't know how to cook and salads were the easiest thing to start with, but always it was more around creating nutritious, delicious food at scale, right?It was, how do you create the McDonald's of the generation, but one that is actually good for you. And so that, you know, always expected us to kind of go expand beyond the salad and protein plates is our biggest, our biggest menu innovation and change, uh, really in the company's history.So in October we launched it and it's a total, it's not a salad, you know, it's, it's, it's a, I think the marketing campaign said, uh, you don't have to be a salad person to be a sweet green person. And the fact that you can eat, you know, for me, healthy food doesn't mean a salad.It just means real nutrient dense food.And so we launched in October.It's done incredibly well.It is starting to shift our demographics.
The bowls have between 30 and 50 grams of protein just with a single serving the way I eat. 30 to 50 grams of protein really 30 to 50 grams yeah on all of them and i i ate it with double protein so on some of them i'm just getting 80 grams of protein in a bowl um at the same time to get to the next level i was told i need to eat my weight in protein and when i i'm starting to lift now i did the ozempic for a bit lost 20 pounds i did fasting lost 20 pounds and now i want to add 10 pounds of muscle and just all about it's all about protein so like i'll do like a plate with the double chicken or double salmon it is starting we're seeing a demographic shift it's broadening our consumer we're seeing i'm assuming it's bringing in more Yeah, it's bringing in more men.It's also, you know, we have restaurants in Texas and Atlanta and kind of different parts of the country.It's starting to really expand.Like people in LA, San Francisco already, like they love salads, but people in other parts of the country, they're starting to love what we do because it's just tasty and it's not about the health.It's just delicious.And so right now we're actually very excited.We are in test.We're piloting steak.
it's a grass fed grass finished tri tip that we're in pilot on.Um, as long as things go well, we'll be launching that, um, pretty soon.Um, and you know, now you have a full offering.
SPEAKER_01: Let me just save you.This is what I want you to do.Listen to Jake out.Cause I know barbecue.I make my own brisket. Just let's cut to the chase here.Just go right for a brisket.You make a 12-hour brisket.You can do it in four or five hours with the Texas crotch.Anyway, if you can do chunks of brisket with a salad, with some greens, man, that is such a great combination when the fat, you know, moist brisket-
holds nice you can cut it into cubes a lot of different preps for it um you can do slices of course but when you mix it with salad and you get a little of that combination of the the fat from the meat and the salad the salad goes down a lot easier and so this is what i explained to my my wife you know you give me a slice of brisket i'll i'll eat you know a bowl full of salad just for my one slice of brisket now i'm
SPEAKER_03: The other thing we did with the plates that was interesting is, I mean, you probably heard this huge conversation around seed oils.
SPEAKER_01: Well, I was about to say, I decided to have you on the show here.I was always like watching you.And then I saw this back and forth you had on X, formerly known as Twitter, where people were like, hey, bruh. sunflower oil it's a great name everybody loves sunflowers this is getting very highly correlated within you know inflammation obesity heart disease cancer and like you know this when you get research and you make changes and you engaged immediately and i don't know who it was who who got up in your grill about the sunflower oil
SPEAKER_03: It was just a random, I don't even know who it was.It was just a random customer.I always like to talk to my customers and get feedback.Listen, it's something we've been talking a lot about.We are kind of nerds about this.We study it.We were actually very proud of the oil we'd used before because it was a high olealic sunflower oil. And if you look at all the data around seed oils, it's relatively unconclusive.It's more of the issue is what the seed oils are in.So it's the fact that if the seed oils are in all of the processed foods, they look at people that eat seed oils and they happen to also eat processed foods and the outcomes are worse.
But if you actually do the controlled studies for seed oils, they're not as conclusive.But what we do know is olive oil is always better. It just, it just, even if this is, you know, and there's different levels of seed oils, but yeah, but it was important to customers.It's expensive, right?It's expensive.And it's especially, it was very expensive.Honestly, it was, it was, it was a big decision, but it was one of those ones back to how do we get bigger, better as we get bigger. And we heard our customers and like, this is important to us.And we made the change and the reaction's been incredible immediately.And listen, the reaction, it is a, it's the Huberman crowd.
It's like, it's like, it's the one to five percent of our most loyal customers.You know, 95% of customers never heard what seed oils are.But for those people that care, they really, really care.
SPEAKER_01: And here's the thing, you and I both know this being part of the generation where science and customer science came to startups and companies, you have NPS score.And if you make a move like this, and you delight that one to 5%, they could have turned into detractors, they could be telling everybody, hey don't go there sunflower oils and people were coming at you with hey don't go to sweet greens sunflower is terrible for you what are you doing to yourself and now you turn a detractor somebody who rates your you know how likely are you to tell a friend to go to sweet greens if somebody gives you one to six or zero to six they're going to that means they're outwardly detracting they're telling people not to go they're costing you customers You get them in 7, 8.Those are kind of neutral people.Then you get the 9 and 10s.And when you get those 9 and 10s, they tell people to go to sweet grits.That's right.And they then become your promoters.That's the net promoter score.
And so, you just turned the Huberman lunatics, and I can say that because I know them.The Huberman lunatics, you get them on your side.Fantastic.And now they're getting 80 grams with a double protein pack.Man, they're feeling pretty good about the, you know. Absolutely great.
SPEAKER_03: We're excited about that.And, you know, I'm actually very excited about, oh, this is the thread.Here we go.
SPEAKER_01: Please fix this.Yeah.Wow.Amazing.Yeah.When was that?That was January of last year.
SPEAKER_03: So January of this year, we made the change with protein plates.So when we did the change to protein plates, we shifted it.You know, something I'm actually, we're actually very curious about is more around this personalized health. I think there's such an opportunity, you know, you think about you and your goals, and it's so complicated.Like, what do I eat to hit my goals?Sweetgreen is perfectly positioned to be able to take what your goals are, understand more about you, what you're willing to share with us, and be like, you don't have to order off the menu.Here, J. Cal, here is your menu. Here's what you should be eating.I know you don't like spicy food.I know you like meat.
I hit, you know, cilantro tastes like soap to you.We can take your taste profile and your nutritional profile.And there's so much cool AI that's already doing this.And they're getting, I mean, there's crazy ways of doing it of like, you know, kind of checking your stool sample and you can go down to your genome in ways, but then there's other just crazy. You know what your goals are and your likes and dislikes are.But if you think about the sweet green menu, it's 55 unique ingredients that can make millions of combinations.And so by understanding, and we're testing this internally right now with our team, when I open up my app, I have a feature where it says, your personalized bowl today.
SPEAKER_01: And it takes, it takes Spotify, your mix.
SPEAKER_03: That's by the way, what we call it is a Spotify for food.That's our internally, the vision, the original, like brief, like memo on it is we want to build what Spotify did for the playlist for the menu.
SPEAKER_01: I love it.Yeah, I mean, and then you start thinking about, you know, whenever anybody wants to lose weight, or they're trying to go on a health kick, what do they do?They spend $1,000 a week on prepaid meals.And I think they overpriced these, they charge twice as much for this food.And they're not good in order to make you commit. It's like part of the commitment.It's like, oh, well, I spent $1,000 a week on these 21 meals and 10 snacks.And then they're like packaged meals.They're terrible.
SPEAKER_03: It's like we want to be able to offer that solution, the convenience of that solution, but with the food made fresh every single day.
SPEAKER_01: Well, I mean, I would take it for two days if I'm being honest because it's a salad.So, if you gave me like a two-day cleanse kind of situation where you're like, hey, here's breakfast. Here's your lunch.A little cheating here on the edges.Here's a snack.Here's dinner.And then maybe you threw in some juice.Maybe do some with like press juicery or something.You guys don't do juice, but you got the vegetables there.
SPEAKER_03: Yeah.We used to actually.
SPEAKER_01: We used to do it.
SPEAKER_03: We used to have something called sweet press.Yeah, it's a tough business. Tough business.And there's a reason they charge so much for it.It takes a lot of vegetables to make a little bit of juice.And there was also, given the pricing that you had to charge, it's like, do you really want to buy a juice for 11 bucks after you bought a salad for 14?It was a challenging thing. We are excited about expanding drinks and kind of functional beverage is probably the next innovation for us.Kombucha, yeah, or something like that.We do kombucha, but think more... Protein-based?
Yeah, interesting, yeah, infusing protein with matcha and some cool flavors.Oh, I like it.
SPEAKER_01: I like it.So you can get a $6, $7, $8 beverage on the menu as opposed to a $2, $3, $4 beverage and you're drinking some... That's right.You got bone broth going yet?
SPEAKER_03: I love bone broth.We run a few bone broth tests.And during COVID, we actually ran a pilot where we did both broth and broth bowls.So instead of having like a lettuce or lettuce base, you could do a broth base and then add everything into it.Oh, sweet.I love it.I think it's something that we'll explore again.
SPEAKER_01: yeah yeah it is the i know like where the trends are going because i'll be at poker games you know home games and then you know that gets everybody's on the health you know one or two people on a health cake and then somebody brings their bone broth with them and they're drinking bone broth and i'm like why are you drinking that it's like oh it's got 40 grams of 40 grams of protein in it it's so good for you the collagen everything and it's it's just amazing
SPEAKER_03: But, you know, some of the best, like the emails I get that are just the most, you know, rewarding is when you get these emails from a customer that are like, we get a lot of these ones, unfortunately, people who are like cancer and they're like, I got, I started eating sweet green every day to like cure, help me beat cancer or, you know, totally turn around their lives through the power of food.And food is a very, very big problem in this country.Yeah.
SPEAKER_01: The health outcomes that we have, the way we are treating them, it's just... You can't have 60, 70% of the country be obese and then have obesity be linked to like the four horsemen of the apocalypse, whatever they are, like diabetes.Heart disease, diabetes.
SPEAKER_03: They all come back to metabolic dysfunction.And I want to be clear, this isn't people's fault.This is not the individual's fault.This is the system.Right now, our subsidies, 95% of our subsidies go to corn and soy.These are things... Yeah, that are then going into the processed food system.And so there's a lot to, I think, unwind of this food system, something we're very interested in.We're just trying to be a good solution towards it.I do believe capitalism can solve a lot of the world's problems.
It is a messed up, is a really messed up food connected to health system that we have here in America.
SPEAKER_01: Yeah, I mean, the convenience of bread and what happened with wheat, there's an incredible book, Wheat Belly.And then if you just do some research on dwarf wheat, you can see how wheat was turned into like a super processed wheat, just immediately has this glycemic index in people and makes you super fat very quickly.When they came up with this like really advanced wheat, it was like, oh, wait a second.If you're on the go, which Americans are, right?We're a fast paced society.You can wrap anything in bread.You can wrap cheese in bread, pizza. Grilled cheese, you can put a hot dog in it, a hamburger, everything is bread and meat, bread and cheese.And, you know, I think what the bowl concept does is even if you're on the go, you got a bowl, you can put a lot of stuff in there and some of it can be green and could be healthy for you or could be even the base of it.And people are a function of their options and their incentives.
And sweet greens is just such a great incentive for people and such a great option.How do you think about communities that are less served and, you know, trying to get access to them?This has always been, you know, one of the harder topics for people to discuss. But you've got plenty of bad options if you live in the ghetto, if you live in, you know, a low income area.And, you know, I can't imagine it's easy to make a sweet greens work there.Do you think about how do you get this long tail and, you know, maybe people who need it even more who have less options?
SPEAKER_03: Yeah, we actually think a lot about it.And I've been thinking about it since we started because, you know, I remember doing early vision boards like what is success for us?It's sweet greens in those neighborhoods. And providing access to real food everywhere, not just where people can afford it today.The problem is multi-layered because there's an education issue, there's an access issue, and then there's a price issue. And I think you kind of got to solve in that order.You know, you got to solve the education, which education is both understanding why it's important and creating desire.And that's why we've always been in like, let's not solve this.The original vision for Sweden is let's not solve this by telling people like, eat your vegetables because it's good for you.Let's solve this by making it sexy and cool.
Coca-Cola sells happiness.Yes. And we're going to tell you to eat your vegetables.Like, no, we got to make this fun and sexy and cool.Why into that?You know, in 2010, we started a massive music festival to just make it like fun.We ran a music festival for seven years to be like eating healthy is cool.Like you can watch the strokes and eat a bowl of quinoa.And that's like a cool thing.It's what the cool kids are doing.
So how do you create that cultural relevancy?So let's start by making it cool.Let's start by making it delicious where they actually want to eat it.We almost have like meet people's taste buds where there are.Then you got to understand why it's important for you.Then you got to have access.And then I think there's a price component.But if you look at like other examples of major brands, take Starbucks as an example, they're everywhere.And they don't really adjust their price in a crazy way.And it's $7 cup of coffee.
in a lot of you know in a lot of these places and they didn't have to adjust their price they just made it cool yeah you'll get there i mean and so we'll get there and i think you know one of the visions for automation is is being able to lower our cost structure in order to be able to eventually bring down the cost of food to be able to be more accessible in other places
SPEAKER_01: Eventually, you'll impact the supply chain.You know, I think, you know, McDonald's eventually was selling so many nuggets.I think they started buying the chicken farms and, you know, you start courting the market on certain things.I know the folks at In-N-Out, they're like a certain type of potato.I don't know if they bought the potato farms.I think they have exclusives with a lot of them to get those specific potatoes to fry them up to get a certain texture or size of french fry.Yeah.
SPEAKER_03: That's another part of the mission is being a positive impact on the food system.And so we take a lot of acres of land with farmers and we convert them to organic every year because we guarantee them contracts.We say, hey, you convert this land over, we will buy from you. And so the impact to the local communities in terms of our supply chain can be mad.I mean, we have 225 stores.It's cool.It's changing local supply chains in some ways.But you imagine that at thousands of restaurants and when you get to 20,000.
SPEAKER_01: Yeah.Now you're telling people what kind of tomatoes you want, what's acceptable.You start dictating.
SPEAKER_03: Yeah.It really starts to change the food supply in the, in the country.
SPEAKER_01: Yeah.And robotics is going to hit that too.You know, like this, the, the greenhouses and robotics and that's gonna.
SPEAKER_03: Oh, that's happening.I mean, that, that, that stuff is happening.Yeah.I mean, you, I think, I think I saw on one of your, one of your, one of your podcasts, the harvesting and the picking with the vision.I mean, a lot of that stuff is starting to happen.
SPEAKER_01: Because they're having the same labor issues.What's really interesting about it is the opportunity.When people were picking, let's just take strawberries as an example.You send somebody out to pick strawberries.Okay, pick this row.So you figure out when the row is ready, you pick it.Now you got a robot.The robot scans or computer vision or camera scan.They're watching a wall of strawberries.And they're like, okay, these strawberries are two days out.
Let's pick those, put them into baskets.Those are going to stores or to markets where they're going to be consumed in 24 hours.And the consumer has 24 hours with them.And then they start degrading after that.Oh, these strawberries are going to go two states away.They need three days.So we'll pick the 72 hours from ripe ones and put them on a different thing.So- You know, now you're getting to what Japanese farmers in Hokkaido have done for a long time, which is when they're picking their strawberries, they're making like, hey, these are the $80 strawberry boxes for people who really care about strawberries.They have like an $80 strawberry box.
It's $10 for eight strawberries or whatever it is, $80 for 12.It's legit.Delicious.And they're worth it.Those have been hand selected.So now you just start thinking about, you know, how quality could improve for the average person.It's truly, but no mock meets yet for you. You got the mock meats going?
SPEAKER_03: You don't believe in them?No, I don't believe in them.I'm a hard no.
SPEAKER_01: Yeah, why is that?They taste terrible?It's processed food.
SPEAKER_03: It's processed.Like, I just think, you know, my definition of healthy food is kind of simple.Just eat real food.You want to eat whipped cream?Have whipped cream.You want to have ice cream?Eat ice cream.Just eat the real stuff. Look at the label, make sure you understand everything on the label and eat that.If you eat that way of just eating whole unprocessed foods, whether you eat meat or vegetarian or whatever, you're going to be fine.
It's everything that's processed that is the problem in this country.
SPEAKER_01: Stay away from all this garbage in your hotel room or whatever.Anything that's in a bag that tastes too good to be true.
SPEAKER_03: Just look at the ingredients.I mean, even with ice cream.Go to a Haagen-Dazs and look at the ingredients.There's like four ingredients in a thing of Haagen-Dazs.But go look at Baskin-Robbins and you'll see like 200 ingredients.If you can't pronounce the word...
SPEAKER_01: don't put it in your body all right listen jonathan i'll have you on again you're a great guest uh thank you we got a couple of recommendations here you got a unreasonable hospitality you got the founder you got the bear and uh yeah just go to sweet green sign up for the membership download the app and get healthy and hey maybe they'll have breakfast with some brisket at some point i'm gonna share one of those bowls what a great guest and we'll see you all next time thank you man it's great to be here thanks brother
