As white-collar workers ditch the office or flee to the suburbs, Sweetgreen’s filing to sell its shares to the public provides a window into how remote work could reshape office urban centers.
In its S-1 filing this week, Sweetgreen, a cult-y, fast-casual salad chain, warns new investors that remote work could pose a financial risk to its business. If the shift toward remote work continues even after the covid-19 pandemic has ended and workers do not return to offices in urban centers, or work on a more flexible basis, that could hurt its revenues and force it to close locations, the company states. “Post-pandemic long-term customer behavior trends are uncertain for all of our channels and the duration of such trends is unknown,” the filing notes.
Having catered to the hustle-like, yuppie millennials who would forgo their lunch breaks to eat a $15 salad at their desk, Sweetgreen had been hit hard by the pandemic. Its restaurants are heavily concentrated in the urban markets of New York City, Los Angeles, Boston, and Washington. Foot traffic had “significantly declined,” while delivery surged, according to its filing.
Further, the company had previously told media outlets that it was profitable, but its filing reveals ongoing annual losses since 2014. In 2020, its yearly net losses doubled from $67.9 million in 2019 to $141.2 million. It reported annual revenue of $220.6 million in 2020, down from $274.1 million in 2019.
Sweetgreen was founded in Washington DC in 2007 by Jonathan Neman, Nicolas Jammet, and Nathaniel Ru who were undergraduates at Georgetown University looking for healthier fast-food options. The company has always seen itself as grander than just a restaurant but as a “food platform” that uses technology to boost speed and personalization of its salads or investing in blockchain to increase transparency in food supply chains.
Sweetgreen plans to expand outside of major metros
As remote work opens up the possibilities of working just about anywhere, Sweetgreen, now based in Culver City, California, is looking to push into suburban and residential areas. But that could require more upfront investment to build brand awareness and to attract new customers, according to its filing. And because it sources locally, Sweetgreen may have difficulty obtaining ingredients from suppliers with close proximity to these new location. Recently, the company opened up new sites in Miami and Austin, which have become buzzy cities for remote workers.
To date, Sweetgreen, which has 5,000 employees, operates 140 restaurants in the US, and it plans to double its current footprint of restaurants over the next three to five years, according to its filing.
The company has also recently been expanding its “outposts,” which are offsite drop-off points at offices, residential buildings, and hospitals, to 1,000 locations. Most were shut down in 2020 due to covid-19, but as employees begin returning to offices, it has increased the number of outposts in operation to 350 as of September, according to its filing.