Robotic kitchens, restaurant tech, and fast-casual's future with Sweetgreen's Jonathan Neman | E1910

Jonathan joins Jason. (00:00:00)

• Jonathan Neman, co-founder and CEO of Sweetgreen, joins Jason for a discussion on the state of the food industry and Sweetgreen's innovative approach to healthy fast food.
• The current food system in the US is contributing to poor health outcomes, with 60-70% of the population being obese.
• The obesity epidemic is linked to metabolic dysfunctions such as diabetes.
• The current subsidy system favors corn and soy, which are primarily used in processed foods.
• Sweetgreen is a fast-casual restaurant chain specializing in salads and proteins.
• Founded in 2007 in Georgetown, Washington DC, Sweetgreen has expanded to over 200 locations in the US.
• The company has been at the forefront of innovation in robotics, loyalty programs, and data-driven menu optimization.
• Jonathan Neman also had involvement in co-working spaces and exploring delivery options to increase accessibility to healthy salads.

The scale and innovation of sweetgreen today (00:02:30)

• Sweetgreen has 225 restaurants in 20 states, with a mix of urban and suburban locations. The menu has expanded beyond salads to include protein plates, warm bowls, and more. Digital sales account for 60% of the business, with 6% of orders coming through the mobile app.
• The company is investing in technology and automation to enhance the customer and team member experiences. Sweetgreen is exploring new store formats and customer journey experiences, moving away from the traditional assembly line format.
• Ray Croc, not the founder of McDonald's, bought the license and created the modern-day McDonald's concept inspired by Ford's assembly line, emphasizing speed and efficiency in food preparation.
• The restaurant industry experiences a high turnover rate of over 150% annually, meaning that for every 100 employees, 150 are hired each year.
• Understanding what makes a great restaurant is crucial in creating one, but it is often overlooked by those in the industry.

The x-factor that makes a strong manager (00:07:36)

• A great manager, often referred to as a "head coach," is the key factor in a successful restaurant.
• A stable team, improved productivity, and enhanced hospitality are the results of having a great manager.
• Sweetgreen focuses on the "people aspect" and considers it the X-factor in the restaurant business.
• Will Guidara, the author of "Unreasonable Hospitality," worked at 11 Madison Park and Danny Meyer's restaurants.
• The book emphasizes the importance of hospitality in the restaurant industry, considering it to be 51% of the business.
• Sweetgreen encourages its employees to read the book and watch the episode "Forks" from the TV show "The Bear," which highlights the significance of hospitality.

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The “Sweetlife” and the importance of “polishing forks” (00:12:31)

• The "Sweet Life" concept at Sweetgreen emphasizes aligning passion and purpose.
• Richie's interview example highlights the importance of innate hospitality qualities, such as noticing small details like napkin placement.
• Sweetgreen focuses on developing talent and promoting from within, with general managers called "head coaches" leading the team.
• The limiter to growth for Sweetgreen is the ability to execute and develop talent, rather than capital, real estate, or supply chain.
• Developing talent involves moments of learning and coaching, such as "polishing forks" moments.
• Sweetgreen promotes from within, with individuals starting as dishwashers and becoming managers within two and a half to three years.
• Recent promotions include team members who started as team members and worked their way up to area leader positions, managing multiple restaurants.

Navigating the decision between the franchise model vs owned and operated (00:16:02)

• Sweetgreen chose the owned and operated model instead of franchising.
• They wanted to control more of the stack, the experience, the supply chain, the technology, and the restaurant.
• They wanted to own more of the stack and specifically the customer.
• They observed that some businesses get better as they scale, while others get worse.
• They wanted to ensure that their product and technology would continue to improve as they scaled.

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• Sweetgreen's Jonathan Neman emphasizes the importance of maintaining quality and consistency as the restaurant chain grows.
• Neman believes automation can preserve food quality while increasing efficiency.
• Sweetgreen adopted a slower, capital-intensive growth strategy to uphold its quality standards.
• Starbucks and Chipotle are the only companies to achieve terminal velocity in a company-owned model.
• Starbucks has faced challenges with inconsistency and app compatibility in franchised locations.
• Sweetgreen may encounter difficulties expanding into airports due to monopolies held by HMS Host and others.
• Chipotle's success with 3,500 company-owned restaurants showcases the potential for scaling and growth through thoughtful expansion, app ordering, and talent acquisition.

Robotics in the restaurant industry (00:24:23)

• Sweetgreen, a fast-casual restaurant chain, is investing in robotic kitchens to improve accuracy, speed, and efficiency.
• The company has fully implemented its "infinite kitchen technology" in two stores and plans to open 11 more robotic kitchens this year.
• Sweetgreen acquired a team of entrepreneurs from MIT who had developed robotic arm technology and integrated their solutions into their operations.
• The robotic kitchens are designed to free up human employees from repetitive tasks, allowing them to focus on culinary and hospitality aspects of the business.
• Sweetgreen's biggest customer complaints were related to order accuracy and timeliness, which the robotic kitchens aim to address.

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The details and benefits from the machines sweetgreen has brought into its restaurants. (00:30:33)

• Sweetgreen's robotic kitchen can make over 500 bowls per hour with perfect accuracy and temperature control, addressing common challenges in the food industry such as portion control, safety, consistency, and speed.
• The machine handles almost the entire bowl-making process, except for a few items like avocado, salmon, and herbs, which are added by human staff to maintain a touch of hospitality and theater.
• Concerns about customer acceptance of robotic food preparation were raised, similar to the initial skepticism towards app-based ordering, but robotic kitchens can enhance the dining experience by providing speed, convenience, and potentially lower prices in the future.
• Robotic kitchens can significantly improve the customer experience by reducing wait times and increasing accuracy, leading to reduced employee turnover and improved customer service scores.
• Robotic kitchens can lead to significant margin improvement, with double-digit increases reported, and as technology costs decrease and labor costs increase, robotic kitchens become more economically viable.

Restaurant difficulties with inflation, COVID and “sticker shock” (00:37:15)

• Inflation has been a major challenge for the restaurant industry.
• Customers are experiencing sticker shock due to increased prices.
• COVID-19 impacted the restaurant business, especially in urban areas where Sweetgreen had a heavy presence.
• The return to office has only reached 50% of 2019 levels, affecting businesses that relied on office workers.
• Sweetgreen had to close some locations due to the challenges posed by COVID-19.
• The company focused on building its delivery business during the pandemic.
• The past four years have been the most challenging of Jonathan Neman's career.
• Sweetgreen's strategy has shifted towards opening locations in suburban areas to follow where people are.

Delivery in the business today pre and post-pandemic (00:38:46)

• Sweetgreen intends to expand its presence from major cities to suburban areas.
• The company's limited reliance on beef has made it less vulnerable to commodity inflation compared to its competitors.
• Sweetgreen has been more cautious with pricing compared to its competitors, leading to a narrowing of the price gap.
• Delivery has become a crucial aspect of food consumption, with consumers willing to pay a premium for convenience.
• Sweetgreen initially focused on its own delivery channels but later adopted a non-exclusive approach to capture more revenue.
• The company maintains a presence on major delivery platforms while also operating its own robust native delivery service.
• Despite the convenience of delivery, Sweetgreen continues to experience strong growth in its delivery business.
• Sweetgreen recognized the need for a separate kitchen and dedicated pickup area for delivery drivers to enhance customer experience.
• While ghost kitchens may be suitable for certain business models, Sweetgreen found that having a second kitchen within their restaurants better suits their operations.
• Robotic kitchens have the potential for 24-hour operations, but Sweetgreen is currently focused on perfecting its core business before exploring such concepts.
• Sweetgreen plans to expand into the breakfast market in the future.

How Australia fits into the origin of sweetgreen (00:45:10)

• Sweetgreen's founder, Jonathan Neman, lived in Sydney, Australia during his junior year of college.
• He was inspired by the Australian cafe culture, where healthy food was popular and served in bowls.
• The name "sweetgreen" was inspired by a restaurant in Bondi Beach called Green's Cafe.
• Neman mentions specific dishes he enjoyed in Australia, such as the ricotta pancakes at Bills and a bowl with corn beef and poached eggs.
• He also mentions seeing a Bills restaurant in Tokyo with the same menu.
• Neman expresses his admiration for the commitment to excellence in both Japanese and Australian cultures.

The best way to build a brand (00:48:01)

• Sweetgreen's mission is to create nutritious and delicious food at scale, similar to McDonald's but healthier.
• The company recently launched protein bowls with 30-50 grams of protein per serving, broadening their consumer base and attracting more men and customers in different parts of the country.
• Sweetgreen is currently testing grass-fed, grass-finished steak as a new menu item.
• CEO Jonathan Neman discusses the future of fast-casual dining, including the use of robotic kitchens and restaurant technology.

The seed oil conversation (00:52:28)

• Sweetgreen switched from high OIC sunflower oil to olive oil due to customer concerns about the health risks of seed oils.
• The company values customer feedback and is exploring personalized health options, including a personalized bowl feature in its app and functional beverages like protein-infused matcha and kombucha.
• Sweetgreen aims to address the health crisis in the US by providing healthier and more convenient options, criticizing overpriced pre-packaged meal services and the current food system's subsidies for corn and soy.
• The bowl concept allows for healthier options and flexibility in food choices, serving as a great incentive for people to make healthier choices, but the challenge lies in making healthy food options accessible to underserved communities.

The challenging topic of food options and availability across different socioeconomic groups. (01:01:12)

• Sweetgreen aims to provide affordable, delicious, and culturally relevant healthy food in underserved communities.
• Education, access, and price are the main challenges in promoting healthy eating in low-income areas.
• Sweetgreen uses various strategies to make healthy food appealing, such as organizing music festivals and creating a cool and fun atmosphere.
• Automation and robotics can help lower the cost structure and make healthy food more accessible in the future.
• Sweetgreen positively impacts the food system by converting acres of land to organic farming and influencing the food supply chain through its large-scale operations.
• Robotics is transforming agriculture, including harvesting and picking, addressing labor issues and optimizing the supply chain.
• Premium quality produce, such as Japanese farmers' $80 strawberry boxes, highlights the potential for improving the overall quality of food for the average consumer.

The definition of healthy food (01:05:58)

• Jonathan Neman believes in eating real food and understanding food labels.
• Processed foods are the problem in the US, not whole unprocessed foods.
• Even with ice cream, look at the ingredients. Hog and Doll has four ingredients, while Baskin Robbins has 200.
• If you can't pronounce an ingredient, don't put it in your body.