Sweetgreen aims to become a $1 billion salad empire, but will have to scale sustainably to maintain its image.

What happened

  • Sweetgreen, the fast-casual salad chain founded in 2007, has grown to approximately 90 locations across California, Illinois, Massachusetts, Maryland, New York, Pennsylvania, Virginia and Washington, D.C. The brand specializes in sourcing local ingredients and cycling a seasonal menu, along with standard favorites that have built a reputation for the brand as premium, but accessible. Between 2014 and 2015, Sweetgreen’s revenue grew from $50 to $75 million with only 39 stores.

  • Now the company is pursuing a $200 million fundraise led by Fidelity Investments that would value the brand at more than $1 billion. In the past, the company has stated that it wants to become bigger than $12 billion Chipotle—a “farm-to-counter empire.” It has plans to reach 100 stores by the end of 2018, and recently was the first restaurant to open in the Hudson Yards development in New York City—coveted space for the dining industry.

Why it matters

  • To date, Sweetgreen has raised a total of $100 million. Few dining establishments have achieved near $1 billion valuation in the fickle food industry—Shake Shack, is one exception, initially valued at $1.6 billion after raising $105 million to go public in 2015. But Shake Shack also exercised an international footprint at that time, whereas Sweetgreen only exists in seven U.S. states and the District of Columbia.

  • The company has yet to elaborate where it plans to direct new funds, but it will likely seek to expand its physical presence and lean into expanding its tech-driven operations. Sweetgreen stores stopped accepting cash payment in 2017 and the company has also experimented with delivery at outposts within office buildings so that employees don’t need to leave to pick up lunch. The company says that online ordering revenue is rising 80% year over year—by the end of 2018, 1 million consumers will utilize its digital platform (launched in 2013), and more than 50% of orders will start online or mobile. (This also suggests that Sweetgreen has successfully attracted a devoted younger and more digitally savvy customer.) In contrast, Chipotle, which launched its app four years before Sweetgreen, sees only 8.5% of orders from digital channels. Still, Sweetgreen will have to scale responsibly to maintain its image and execution of a transparent, localized food business.