The company also is taking steps to manage expenses by streamlining its management organization. The changes include a regional general manager for each region that reports directly to the senior vice president of operations. As part of the restructured organization, Sweetgreen aligned financial incentives with the performance of the regional GMs.
The move allowed the company to remove a middle management layer with a flattened leadership model that creates “more empowerment at the restaurant level,” Neman said. He expects the change will result in better-run restaurants and improved unit economics while providing more stability to restaurant teams.
Sweetgreen last year launched several initiatives aimed at providing more stability to restaurant teams, including investments in head coaches and hospitality training. Those investments are starting to pay off. The company saw its lowest team member turnover rate in several years in December. To further boost employee retention, Sweetgreen plans to roll out tipping across its restaurants by the end of the year.
“With more stability in the team, we’ve recently seen improvements in store execution and our ability to serve more customers,” Neman said. “Throttle capacities across the fleet have increased, with our top 10 volume stores now operating at throttles 20 percent more than they did in December. We have seen improvements not only in labor productivity, but also in our customer satisfaction metrics.”
Another way the company is managing expenses is by cutting its Support Center costs from $108 million in 2022 to $98 million in 2023. The cuts will come from reducing the velocity of hiring, capitalizing on attrition, and reducing non-compensation expenses. Neman said 2023 Support Center spend as a percentage of net revenue will be half of what it was in 2019 while supporting almost double the store count.
Cutting costs and slowing down the rate of new openings are two strategies that could propel Sweetgreen to profitability. Other areas of focus include driving traffic through enhanced digital channels and menu innovation.
Digital revenue was 61 percent of sales in Q4, down from 65 percent in the same period a year ago. Two-thirds of Sweetgreen’s digital revenue comes from users engaging with its app and its website. To deepen brand affinity and customer engagement, the company earlier this year launched a redesigned app and an updated website. The changes, which include easier location search and smoother customization, already are bolstering order conversion, Neman said.
The company also is gearing up for the nationwide launch of its Sweetpass loyalty program in April. The program includes customized offers as well as a subscription component.
On the menu innovation front, Sweetgreen in January introduced its winter seasonal menu, featuring a miso bowl with roasted root vegetables as well as a barbecue chicken and squash plate. In February it brought back its Crispy Chicken Salad. Next month it will debut a Chiptole Chicken Burrito Bowl and bring back its Hummus Crunch Bowl. March also will see the brand offer a side of hummus and focaccia for the first time.
Sweetgreen’s Crispy Rice Treat, a better-for-you take on the classic confection, continues to outperform expectations. The company sees an opportunity to build on that success with additional sweet treat offerings. It plans to pilot chocolate and healthy soda options this spring.
“I think menus are going to be a much bigger sales driver for us going forward, as well as attachments,” Neman said. “Attachments is something that historically Sweetgreen hasn’t had much of outside of the bowl. You’ll see a lot more of that coming down the line.”