The Best One Yet - BONUS #4 🥗 The Storyteller of Salad: Nathaniel Ru, Sweetgreen Co-founder

Episode Date: June 22, 2023

We recorded an interview in a restaurant, none other than Sweetgreen. We interviewed Nathaniel Ru, Co-Founder and Chief Brand Officer of the billion dollar salad chain. Nathaniel tells us about: Launching a $10/bowl restaurant during a recession How he used a boombox to drive business Long-term relationships with local farmers like Firefly Farms (~15 yrs strong) The new robotic restaurant in a suburb of Chicago Best of all— his must-try salad “remix” order‌On a personal note, these salads were a staple of ours when we worked on Wall Street. We’d chow down on spicy broccoli and arugula, while whipping up takeaways in our early newsletter days. So it was pretty cool when we got to toss our pesto chicken parm bowls mid-interview.Follow The Best One Yet on Instagram, Twitter, and Tiktok: @tboypodWant merch, a shoutout, or got TheBestFactYet? Go to: www.tboypod.comLearn more about your ad choices. Visit podcastchoices.com/adchoices Hosted on Acast. See acast.com/privacy for more information.

The year was 2009. This is April. Yeah. Oh, that is one month after the S&P 500 hit its trough. And this is when you're starting your business. Yeah. So second location. I think unemployment was 10%.

S&P 500 had fallen 40%. It was not a good time for the American economy. And you want to launch a $15 a meal salad chain. It was closer to 10 back then. But yes, we spent a lot of time. We spent a lot more money on it. And we opened our doors April 2009. And we had zero customer.

Zero. Wow. Like nobody. Scary. So anticlimactic. Yeah. And I remember looking at John and Nick saying, this isn't going to work. Like, this is it.

We've had a lot of moments like that, by the way, but this is a very important one. Yeties, our guest today didn't just build a unicorn. He fed a unicorn. Our guest today is the co-founder of Sweet Green, the billion dollar salad chain. He cracked the code on scaling a salad. And he made bowls more important than place. He started this business. from a college dorm. But then saved the business by DJing a block party. On Monday, he meets a farmer

to buy a million organic tomatoes. And on Friday, he meets a robot to toss his robo restaurant. He can curry a cauliflower with one hand. And IPO a salad company with the other. Besties, our guest today is Nathaniel Rood, the co-founder and chief brand officer of Sweet Green. The only thing he hasn't disrupted is dessert. Oh, wait. He did that too. Yet he's this. He's this. This is Nick. This is Jack. And today's interview pod is the best one yet. Let's hit that jingle.

Fifteen years before this song, two boys from the Northeast met in the dorm. They had an idea to cause a cultural storm. It's the best one yet, but the best is a norm. Jack, 50% that's a fat tip. Tea Boy City on your at list. If you know, you know, because we're ready to go. We can't wait no more, so just start the show.

Yeties, Jack and I just got out of LAX. We're in Los Angeles. So we headed over to La Brea, the neighborhood in Los Angeles. We are at a wonderful sweet green restaurant. This is unprecedented. We have never recorded a prod. Nay, I don't think any pot has ever been recorded in a salad restaurant. Now, ironically, our bellies are empty.

So we're salivating, looking at the fresh ingredients right over there that are going to be prepared in lots of lunches today. We're at Sweet Green, the billion dollar salad chain, publicly traded company. And we happen to be sitting down with not just like a sweet green chef, but someone who's really, responsible for creating Sweet Green. We are sitting here with Sweet Green's co-founder, Nathaniel Rue. He was also the chief brand officer and has been at different times, the chief marketing officer of Sweet Green. Now, Nathaniel, we're excited to chat with you about the founding of Sweet Green, Sweet Green today, becoming a chief marketing officer and what's involved in marketing, the future of Sweet Green and food, co-founders and best practices for co-founders. But we want to start by asking

about your parents. Right here in the city of Los Angeles, we understand that. that your mother who's from Mexico and your father who's from Taiwan met each other. How did they meet each other? And how did that influence you moving into entrepreneurship? So, yeah, half Mexican, half Chinese, product of Southern California, for sure. My parents met at the gym. So at the athletic club downtown and they hit it off. And I was fortunate to grow up with two amazing cultures. It ate a lot of amazing Mexican and Chinese culture.

Yeah. Also, I was also very lucky to grow up with a dad that was a first generation immigrant entrepreneur. And I really think because I saw his business with his partners, it kind of gave me the permission to start Sweet Green. And I remember even when I called him for the first time and I told him about the idea when I was in college. Yeah. There was a long pause. And he just goes, that cell addressing better be damn good. Oh, that's great. And that was his seal of approval. So yeah, you know, growing up in LA, it was great. Went to high school out here. My first actually kind of for a, my first taste of business was selling burn mixed CDs. I don't know if you guys remember those. Oh, yeah. Kind of CD burners.

Were you self-burning? Self-burning. I would sell them $5 a pop. I would make mixes. This is pre-streaming. And that was kind of my entry into being an entrepreneur. Wow. Would you call that a legitimate business? I don't know. Looking back, probably not. I bet your father was proud of you. Pretty nasty. But it's not just you. The whole co-founding team is like a model UN. Yes.

It's a melting pot of people. One of your co-founder is Nicholas is French Lebanese. Your other co-founder, Jonathan, is Persian-Jewish. Correct. You're half Mexican. You're half Chinese. Just how does this affect a business? How does this affect entrepreneurship?

When we met each other at Georgetown, I really think it was something that we all bonded over because we all had parents. We all came from cultures where going into business or being an entrepreneur was allowed and we almost had permission to do it. And so I really believe that because we grew up in that way and we had these kind of role models as parents, it just allowed us to do things a little bit differently and take a little bit more of a leap of faith when it came to starting a company earlier in age.

And when you say permission, do you mean permission not to have a steady paycheck? Yeah. Yeah, like permission to fail. You know, when we were also, I mean, when we started tweaking, we were 20, 21 years old. And we kind of looked at ourselves and we said, okay, the opportunity cost of failing early and trying it now is much lower than doing it when maybe we had a family or had a high paying job. And I think that combined with the permission from our parents really allowed us to do it. And then growing up in like an immigrant household. Yeah.

When you guys spoke about careers, what did you speak about? out. Like, was that actually, was there any pressure on what you should do? Was there like an American dream pressure? We came to this country. Do we expect you to do something different? Not really. Honestly, I had no idea what I wanted to do. I thought I was going to be in the music business. My first job was interning at Geffen Records and I thought I was going to be a producer, a manager or something like that. And I ended up in food. Has Geffen Records put out some big albums? Yeah, I mean, they're like legendary in the space.

All right, so you're in LA. You're growing up here. Then you end up on the other side of the country at a preppy school called Georgetown in Washington, D.C., and you end up meeting two guys who become more than just best friends. And how old were you when you met them? 18. Walk us through what that first meeting is like.

Because Jack and I met each other as freshman. How long did you guys know each other? We met each other in 2007, when we were 18, so 16 years. We walked into the same dorm. And we had the same Seinfeld DVDs. That's how we bonded initially. So what was it like when you met two guys who had changed your life? So let's see.

The year's 2003. And I walk into my first day of accounting class freshman year. And I sit down and sitting in front of me is a guy wearing a Lakers t-shirt. And when you go to when you're Georgetown, there's not a lot of a ton of people from L.A. And so I introduced myself. Yeah. And it was John. And it was the first time we met.

And we became fast friends. We weren't like hanging out all the time, but we were definitely spending time together. And then Nick, who's our third co-founder, lived on the same floor as John freshman year. And Nick had this reputation in college where his family owned kind of like a high and fine dining French restaurant in New York. Nice. And he would be the. lucky person that got some of the leftovers to bring back to campus. So he would come back with these like amazing French duck dishes. You got to have a friend like that in college.

That you have to imagine like in the kitchen, in that small kitchen network, there's just the microwave. He would essentially make it essentially like a fine dining experience for everybody who was a freshman night. So he became famous. A couple years later though, it wasn't French duck that was being brought to the dorm room. It was like organic crops. from local farmers. Yeah, yeah. Because you and those two guys had opened up a restaurant across the street. Set the scene for us now of the dorm room.

This is senior year. Like everyone's getting jobs in like banking or marketing or whatever. You guys, senior year, are in a dorm room and you decide to zag when everyone else is ziggin. Yeah, the dressing had to be damn good. Yeah, the way that the Sweet Green was born was actually, I remember, vividly that John and I would walk, so he had an apartment kind of off campus close to M Street, which is kind of the main thoroughfare of Georgetown. And we would walk down M Street for lunch, and there was really only two options. There was a Chipotle, and then there was a Dean and DeLuca.

And Chipotle, we loved, but couldn't eat it every day. And then Dean and Dulca was just too expensive for us. And on that walk, we would always walk by this little green tavern. which is actually our very first location. And we were always just talking about how do we create something that kind of was healthy, was accessible, but also kind of fit the values that we wanted to live as college students.

And so one night we sat up and we wrote a business plan. It was four pages. And one page was a cover page. There was an executive summary. Double space. Yeah, double space, 14 font. footnotes. One page of financials and one page of furniture.

Pictures of furniture. And that was it. Now, it's a good thing that your parents gave you permission to fail, because this looked destined to fail. Yeah. Your first restaurant, Jack and I were researching this, and it seemed like it was not going in the right direction from day one. 500 square feet, a restaurant known as the Tavern.

There was no bathroom, no storage space, no electricity, we understand. And we heard there was a disaster on the opening day. in terms of something that went missing. Yeah. So, okay, the year is 2007, August 2007. We had this big plan of we were going to graduate. Our restaurant was going to be open. Our parents were going to be there.

And then construction was delayed. We were so over budget. All of our friends had left to go work in New York and wherever. And we were just sitting there with a box of T-shirts building this restaurant. So we ended up pushing through. And August 1st, 2000, we opened our doors. But before that, we were scrambling, like anything, kind of like what you would imagine, painting the restaurant, trying to put things together.

Nick, who was responsible for all the food and recipes, had been kind of carefully, meticulously putting together these recipes in a spreadsheet, printing, you know, having like all of these things printed out. And literally the day before we opened, we had been training employees. So we left John's door open to his apartment. Oh, man. And Nick's laptop got stolen with all the secret recipes. With all the recipes.

With all of the, like, training materials that we've done. And this was before the cloud. So nothing was backed up. So it was all gone. It was all gone. On your opening day. Yeah. Wow.

His gateway computer was stolen. Oh, Bill Gates. The Lenovo. Okay. See, that first location, though, you get over the hump. You're able to succeed despite losing all your recipes on day one. Yeah, we haven't talked about the food yet, but we'll get there. Yes.

But then your second location, Jack and I were looking into it, it also seemed like a failure on day two. Yeah. It was kind of on just the wrong side of the street. Literally. A street that was tough for pedestrians to cross. Literally. Exactly.

So what did you do when you opened up and it was crickets? Because everyone was over there and your restaurant was over here. We were this college students that wanted to open a restaurant company in the middle of the recession and try to raise money for it, which was just a disaster. But I really believe it was just the person. power of almost like shared risk, shared upside between the three of us and kind of just pushing through. And it was almost the naivete of not knowing what we didn't know that kept

us in the game a little bit more versus having all the experience. But to your question, the year is 2009. This is April. Yeah. Oh, that is one month after the S&P 500 hit its try. And this is when you're starting your business. Yeah. So second location. I think unemployment was 10%. S&P 500 had fallen 40%. It was not a good time for the American economy. And you want to launch a $15 a meal salad chain. It was closer to 10 back then, but yes. We were launching a healthy salad restaurant, and we had one use case, which was Georgetown.

We had one restaurant, 560 square feet. And this second location was kind of more of a flagship, kind of like this, where we actually were recording this podcast, 1500 square feet. had furniture in it. We spent a lot of time. We spent a lot more money on it. And we opened our doors April 2009. And we had zero customers. Zero.

Wow. Like nobody. Scary. So anti-climactic. Yeah. And I remember looking at John and Nick saying, this isn't going to work. Like, this is it.

We've had a lot of moments like that, by the way. But this is a very, very important one. And I think it was Nick or John turned to me. And he goes, We got to do some marketing. And none of us knew what that meant, right? Like marketing for a restaurant with no customers. How do you even do that?

The only things we knew how to do at the time were to pass out and sample healthy food and to DJ. Yeah. So that's what we did. We got in a car. We went to Guitar Center in Virginia and we bought a $400 DJ speaker. We essentially put it outside. And our second location is in an area called DuPont Circle where it has like a great beautiful park. And we knew that on the other side of the street, there was one of the highest performing

Starbucks's in the entire city. Right next to your location. Just across the street. And they're getting all the attention. You're getting nothing. A beautiful corner. All we had to do was get people to our side of the street. So our brilliant idea at the time was just to play music every Saturday and Sunday, pass

out samples, just be there as founders, and almost do a little bit of grassroots marketing and it really worked. It was this light bulb moment that went off in our head because all we needed to do was get people to try the product. So that was like your first marketing lesson was we know the product is good. We believe in it.

We just need people to try it. So we just need to get any type of attention to just get you to try. And at that point, it's a win. I'm still not sure, though, that we've painted the scene. So the 22 or 23 year old that you were, would you like rock a tank top

and sit out for like John Cusack? We had a lot of embarrassing stories. Stories and photos of us doing that, like, I think we had these, we were sneaking beers in our, like, clean canteen bottles outside. Yes, whatever you could do. We were just having, we're trying to have a good time. Yeah. And it was more about one person at a time marketing, like community marketing, people on the street, just introducing ourselves. And that's honestly still how Sweet Green is today.

As much as it is a bigger company, it's still very much on the ground. It was your unique music background that kind of saved that second restaurant. And throughout your entrepreneurial journey, there were a lot of moments where things could have, this could have be it. Yeah. But it was your boombox that saved the day. That wasn't the end of the musical story for sweet cream. Tell us a little bit about this Sweet Life Festival, which is incredible.

And I know a lot of my friends love sweet green salads, but they're not familiar with what you did in the Washington, D.C. area with music. You're a salad chain, but unlike other restaurant chains, you start leaning into music as a way to grow the company. Yeah. Why and how? It all started from that speaker. Really? I also need a what here, Nick. Let's throw a what in.

Well, yeah, we'll get there. So I just told you how we had no customers. We bought the speaker. We ended up, I wouldn't call it DGing, playing music outside, turning the speaker towards the park. We had this moment where we saw it. said, hey, if we can figure out a way to use music to get people in the door, why don't we do some type of almost like annual block party? We met a promoter friend of ours who we wanted to help produce the event. And he goes, for the amount of money that you're going to spend on building

bathrooms and security and production and stage, why don't you just rent my bigger venue? And you can book a headliner and you can, you know, maybe make it a bigger festival. experience. So again, salad company here, but he's talking about you booking a headliner musical act? Yeah, he called it a salad festival. Okay. And the three of us are actually very passionate about music, but it was the first time we heard the word festival. And we wanted to, we wanted to explore it. And we almost kind of thought of it was a little bit as a joke. So we go, send me some names to headline your salad festival. So we sat there and we said, you know, we want we want daf punk, we want JZ, we want arcade fire. You throughout like crazy big name ideas. Yeah, we go.

wanted all the bands that we wanted to see at Coachella. Yeah. And he calls us, I think, a few weeks later. And he says, okay, the strokes are open to play your salad festival. Wow. It's not just the strokes, though. Nick and I happened to know that this became quite a music festival. The salad festival.

15,000 people in attendance at this festival. In 2011 was the first year you did it, right? So four years after that first tavern restaurant, suddenly you have Kendrick Lamar, Lana Del Rey, Avici. 15,000 people five years in a row, the coolest music festival of Washington, D.C. So if you're an investor, you've got to be asking, is this benefit? Is this a music company or is a salad company? Yeah, were people confused or did it benefit the brand?

Definitely benefited the brand. And we called the music festival Sweet Life Festival. And the idea of that was to one prove that you could almost think, about these experiences that almost thought were mutually exclusive, whether it was eating healthy and seeing a rock show or going to yoga and still having drinks with your friends after. And the idea of not sacrificing lifestyle in order to be healthy was the idea of sweet life. And so we booked the strokes. It was kind of a push all the chips in and see what happens moment because at the time we only

had, I think it was nine restaurants, 10 restaurants. And so it was for a 10 unit, fast, casual, healthy salad company to do a music festival. seemed insane. Yeah. What it really did is it gave us this platform to be more than just a food company, to be a lifestyle brand, to be a little bit more of kind of like a cultural platform for Sweet Green. And we always joke it's kind of like our Berkshire Hathaway Conference because we were able to invite all of our friends, all of our investors, all of our family.

To the concert. To this annual event where we could showcase in real life the manifestation of Sweet Green. It's like Jack and I like to say sometimes companies and They're so hesitant to do this. You need an investment in joy. And joy is what benefits the brand. Yeah. The return was not totally clear.

Like you went with your gut. And for five years in a row, you put on the coolest party in town. Yeah. You must have just won so much love from the Georgetown undergraduate community. But also, you invited your investors to this party. Exactly. And so, you know, these 50-year-old guys in suits had something cool to look for it to and feel young again.

Venture capitalist. And everyone working at the company must have thought this was the coolest thing in the world. I think also from an investor standpoint and just, I would say overall, just brand awareness for us, it really helped us create a conversation that didn't have to be about a menu. It didn't have to be about an LTO. It was about something that was a little bit more aspirational and fun. So the other entrepreneurial lesson here is also around, if you'd known more about every challenge you were about to take on, you probably wouldn't have done it senior year. But the fact that you didn't know about all the challenges you're about to face,

meant you had the freedom in your mind to actually pursue this. Yeah, and I would say sometimes it's so easy to try to templatize something or try to put something in a box and rinse and repeat. And I think the beauty of those early years, and even to this day is that we have this phrase we call intimacy at scale. And it's the idea of still feeling like a small company

as you get bigger. But if you try to over-templitize it and try to have everything perfect, you kind of reduce the space of uncertainty and the unknown, which kind of is that shoulder period that brings the magic in. Yeties, Nick and Jack here from back in our podcast studio. So that was the wild founding story of how Sweet Green figured out how to launch. By the way, Jack, DJing highly underrated business skill, by the way. You never know when it's going to bail you out.

You got to whip out the tables every now and then. But Yeties, in the last decade, Sweet Green has become the most successful salad brand on earth. So we're going to pivot to today. We want to pivot to salads. Jack, let's jump back into the interview. Well, that's a perfect note to fast forward to today. Sweet Green has moved beyond struggling with initial locations and is now a billion dollar salad brand.

You went public. You guys IPOed. An exciting moment. A whole different company today. It's time to talk about salads. Let's talk about salads today. The way Jack and I see it, there are basically two different people in the world. Yes.

There are those who customize. their salads. And those who just order what's on the menu. Full disclosure, this is Nick, and I customize my salad. Full disclosures, this is Jack. If I had to customize my salad, I'd be a deer in the headlights. I don't know what combinations go together. I'll make like one or two tiny tweaks. Okay. Like I'll sub the chicken for a falafel if it's meatless Monday. I like that gray area. That's still yours. Yeah, that's still unique in a salad. It's about the the almonds. We wanted to ask, like, what is the breakout between the Jacks and the Nicks and your customer base? So, great question.

We look at this data all the time. About 25% of our customers order straight off the menu and they don't change anything. So they'll go harvest bowl, guacamole greens, chicken pesto parm, about 25%. There's about that 50%

middle of the curve that do what you do. They take something existing, they tweak one or two things just to make it their own but they kind of trust the flavor profiles that we're creating part of palm.

You've got to throw that in. And then there's 25% of people probably like you who are very much... OCD. OCD. I go Andy Warhol on this thing. You know?

Just go to things around. That start from scratch and like their custom bowl and have been... And those customers tend to be the ones that have been with us the longest. Really? Wow.

Interesting. So do you have a preferred customer type? Like, is one more profitable for you? Is one, like you're saying, it sounds like maybe a longer term customer for you? What's your favorite type of customer? Well, we definitely like customers who have been with us a long time. But we actually think it's important to have a great

diversity of customers because a lot of the customers that just start with something that's on the menu are new customers. And so making sure that we have enough gateway products to kind of think about customer acquisition and funneling new customers in. And if you even go on our app or you see in our menu boards, we have a section that's just most popular. And a lot of people kind of stick with those. And then once they start getting more comfortable, they slowly come and be a custom salad. And then the lifetime value increases as they start customizing. Now, Nick and I have buried the lead.

Sweet green has phenomenal salads. Yes. And when Nick and I launched this podcast in 2018, we ate sweet green salads every day. Our recording studio for the podcast was in the West Village in meat packing. And there's that sweet green on Gonsivort. Jack and I went every single day. It actually doesn't matter what you order on the menu

because it's going to have the perfect combination of crunchy fresh greens. Yes. True. any texture. Vegetables that you know you should eat but are a little intimidating to buy at the grocery store. Feel some mom guilt so you want to eat the veggie. Dressing, that's just fantastic. Yeah.

And then like a protein if you want. Exactly. I mean, it's really terrifically delicious and healthy in a way that only sweet grain offers. From a business perspective, most restaurants want to offer a bunch of things so you can satisfy a bunch of customers. However, you guys have managed to have this discipline where you focus on only one thing. You just do salads. Jack and I have said there's like the steak knife approach doing something well and just one thing. And there's the Swiss Army knife approach doing a whole bunch of things.

I'm surprised there's no vegetable sandwich with avocado and hummus. There is a secret menu, by the way. Oh. To be revealed at the end of the show. Why just salads? So we really wanted, to your point, to do one thing and do it really well. In the beginning, when we were starting in D.C., the thesis, of what we wanted to create was how do we just get the best quality ingredients we could

and not make this such a chef-driven concept but make it ingredient-driven. So we were spending so much time with the farmer's markets, so much time with our supply chain. I mean, we still use a goat cheese farmer that we've used for the last 15, almost 15 years in D.C. Yeah, shout out Firefly Farms because they started with us when they were small. And together we've been able to grow. And so the fact that we've tried to stick to one thing, was really intentional in terms of ingredients. Jack and I talked about market share before, you know, the size of the market you're going after. You guys have this challenge of tummy share,

which is there are three meals a day. And you want to own as much tummy share as you can, but you really focus on lunch. So is this an attempt to try to get into dinner? I would say about 30 to 35 percent of our business happens after 4 o'clock. So a good chunk of it does. I think it's more of a perception of sweet cream being relevant for dinner that we're focused on. Gotcha. Well, because you guys are such big Sweet Green fans, we got you something small. Excellent. Let's take a quick break here.

Maybe a quick break. Does anyone have a napkin? Oh, my God. So this is for you, and this is for you, Nick. We know that I think, Jack, you just had a baby six weeks ago. Yeah. And Nick, you're about to have a baby. Yeah, we are in a week or so.

So this is a little gift from us on behalf of Sweet Green. I love the Hunter Green color. Oh, is this the little baby merch? Some baby gear. I think it says I have a small carbon footprint. That is fantastic. Best is Nick and Jack here again from the studio. That was awesome.

We just got gifted. It wasn't just the babies who got a gift, by the way. Yeah, we paused the pod. They actually gave us a couple of gifts. That's what we were just unwrapping there on the show. We got a crude-ex sweatshirt Nick and made with the word salad exclamation point. It was pretty funny.

Salad. Jack and I wanted to go deeper into the business. So Jack, let's jump back into it. Jack and I know how hard this business is. We talk about food and beverage companies a bunch. 90% of restaurants fail in their first year. It's hard to do a restaurant business. It's even harder to do a multi-location restaurant business,

a chain business. And even harder to do one that's farm-to-table focused at scale. We deeply admire the relationship you have with that go-cheese farmer. Yes. How can you maintain that high level of intimate knowledge and proximity to your suppliers when you're growing a nationwide salad chain? How can you scale a salad? Well, it all starts with being very disciplined about saying no. And there's a reason that we haven't actually added a lot of menu items over the last few years.

We've actually reduced the number of skews, the amount of complexity. Interesting. So that we can have less. things, but making them better. We actually have set up a few different regional supply chains around the country where we're able to still work with, I think, over 200 local suppliers in a way that's scalable and a way that's sustainable and that we can actually grow together. So the example about the Go cheese farmer, we have a lot of those. And so one thing that we actually track is not just how many local farmers we have, but how long we've been working with them.

So we look at farmer tenure and just to make sure that we can have a sustainable relationship. So you're doing like a data analysis on the relationship with the suppliers, the farmers. Exactly. And sometimes what's cool is we do, for example, we do a peach and goat cheese salad coming up this summer every year. And there was one year where there was a big storm and our peach farmer didn't grow any peaches. Yeah. And so we asked him kind of what else he had and he was like, I got some blueberries, I got some strawberries, strawberries, different types of berries. So that year, we changed that salad from a peach salad to

essentially berries and goat cheese salad. And it performed equally as well. And that's what we actually love about sweet green is most fast food, everything tastes the same. But your harvest bowl in LA probably tastes a little bit different than in New Jersey or in the Miami because we use different farmers for different things. Now, if we're looking at sweet green through a business lens, Nick and I think the best way to understand the business, is to look at the unit economics on a per restaurant basis. We jumped in T-boy style to your IPO paperwork and the latest earnings reports. The signatures.

Yes. And we noticed something really interesting about your locations. Each location, on average, is making money. I think it's a 14% profit margin. So for every dollar of salads sold, 14 cents is left over after all the costs, that's profits. Each of your kitchens is doing about two and a half, three million dollars a year. sales and about a $400,000 profit. And that's really similar to like Chipotle, which is a way bigger company. And yet you're doing about the same amount of business at each store. So the

restaurant that we're in right now in LaBreya in Los Angeles probably makes between $300,000 and $400,000 of profit, give or take. And yet the restaurant company overall, Sweet Green, is not profitable. Can you explain the difference between the restaurant level profitability and the corporate unprofitability at the moment? Sure. So, so, So yeah, you guys did your research. I love that. The restaurants themselves make money, and that's a really important piece. So we look at what we call four-wall margin, four-wall profitability, which is restaurant profitability,

and then overall profitability. In terms of our overall profitability, we've really invested in two places. One is our technology, and two is in our investment, recent investment in Spice, which is an automation business that we've done. Okay, robo restaurants. Robo restaurants. We'll probably get into in a second. Yeah, we'll get that. And so we've just taken a few months.

more bets to think about the long-term future-proofing of the business. And that's why Sweet Green's not profitable today. We wanted to compare the Sweet Green business model quickly to McDonald's. McDonald's has, I think, about 15,000 restaurants in the United States. And the way they did that was letting any small entrepreneur in the country franchise. Basically, lease the McDonald's brand, lease the menu, get the playbook on how to build a kitchen and do it themselves. Now, with each restaurant making three or $400,000 in profit. That's a nice opportunity for a local entrepreneur to put together a few in the tri-state area. That could be how you scale a salad. How come you've decided not to go that route? We really care deeply about the quality of the experience.

There's still a bit more for us to kind of perfect when it comes to the experience. The other thing is that the landscape of food and technology is changing so much. When we started Sweet Green, we had you go down the line, you order your food and you leave. Now you order on app, you have delivery players, you have secondary make lines in your restaurants. So much of these stores have to evolve to fit these, like the kind of like changing consumer behavior. And I feel like us owning it today allows us to really evolve with the times. And, you know, put the pressure on us to really create the best quality experience possible. Nathan, you know what sense Jack and I are getting?

We're getting the sense of Jack and I talk a lot about rich versus king and entrepreneurs wanting to be either rich, you know, get money or be king, have control. And it seems like you and your co-founders are really focused on the king part. You really like control. And we get that. Like we're co-founders too. Like Jack and I really like control. We would leave money on the table to have more control of a situation.

This is your baby. It's tough to trust that some guy or gal in some city 300 miles away is going to raise your baby and build a new restaurant properly. Do you think that you're over indexing on control? Like sometimes do you think you and your co-founders are too focused on controlling a situation that holds you back? Potentially. I think it's what you said before, right? This idea of finding joy. Like our whole, when we look at the customer journey or the customer experience from,

from ordering a salad to ordering it online to picking it up, we want to find ways to continuously add moments of joy to that experience. And I think that's why we care so much about keeping it company owned for now, is that we really want to continue to do that. And as the business grows and as the business evolves, as long as we can maintain that element of joy and the experience, we'll be happy founders. We were preparing for this interview, Jack's like, preemptive disruption.

Preemptive disruption, because, you and your co-founders are determined not to be blockbuster. Don't want to end up like Blockbuster. While you were burning CDs and selling them for five bucks, Blockbuster had a VHS empire. Yeah. And Blockbuster got Blockbustered. You have taken so many measures to make sure that Sweet Green doesn't get Blockbustered.

You were one of the first companies to let people pay for their salad and order their salad on an app, which is the only way that Nick and I order ourselves. You were one of the first companies, and we covered this years ago in the pod, that only took credit cards or digital payments and stopped taking cash. You came up with the locker concept, which you call outpost. If there's a building that's 50 stories tall in New York City, you let those busy white-collar workers order this out at 10 a.m. And it's delivered to the locker because hundreds of other workers wanted to do that too.

Are there other things that you guys do when it comes to future-proofing as a management team? Something you do to kind of get in the mindset of thinking, how can we be getting ahead before someone comes after us? That's a great question. So the three of us actually do one annual offsite by ourselves together. So we kind of commit this sacred time to just make sure that we can talk about the things that are working, the things that aren't working. And as founders, as we've been together 16 years, just like you guys have, it gets harder and harder to do that. And so we really try to carve out the space and do a weekend where we can focus on the things that you're talking about.

Like, what are the innovations we want to do? What do we see that's coming around the corner? Or what are the things that we want to stop doing? And I think that practice of kind of like an annual retreat as founders has been really, really important in making those decisions. We'd love to ask you about outpost. So this was one of your big innovations. The idea that you can expand a sweet green locations footprint by delivering salads directly to an office building.

The pandemic hit and emptied out office buildings. What do you think about the future of outpost, given the new normal of post-pandemic, work from home sometimes, work from office, other times. In the pandemic, outpost was the first thing to go. That revenue went from a lot to zero overnight. Is outpost gone?

No. So the interesting thing about outpost is that over the last year, it's really started to take off again. And what's interesting about outpost, as you said, it was very much a traditional kind of office. lunch in your lobby shelf, people would go and pick up. But now we've gotten a ton of requests to do more alternative piece types of real estate. So in residential buildings, in hospitals,

in schools. Gotcha. So you basically took the innovation you had and you didn't shut it down just because the environment changed. You evolved it. You adapted it. So it still can thrive, even though it looks a little bit different. It reflects the reality that a lot of people work from home sometimes. Yeah. Yeah. So, Jack, Jack and I noticed this kind of interesting paradox. On the one hand, there's incredible enthusiasm for it. People love the product. Jack and I love the product. We have it all the time. On the other hand, the stock price is down from your IPO. So it's almost like investors in Wall Street haven't loved the product as much. How do you reconcile that difference and how do you explain

it to your employees and stakeholders? Well, first, I just have to start with gratitude and say thank you for being such loyal customers and having the love. There's actually a lot of people like you. And we're just really grateful and happy that we do have so many loyal customers that come to Sweet Green every day. Currieed cauliflower is a passion. Deep passion. And I would say at the time that we went public in 2021, I think investors really prioritize kind of growth over profitability. And I think over the last few years, that's flipped. And so we are just now focused a lot more on profitability than growth, both are important. But I think as we get closer to hitting our goals of profitability, hopefully the investor sentiment, as you say, will change. How do you block out the

fact that the stock price is down and still focus on innovation? What's the mental health? What's the mental shift you do? The most important thing when it comes to thinking about the stock market or the price or the market conditions is just talking about it and like being transparent and not trying to sweep it under the rug. And we try to do our best, whether it's in town halls or one-on-ones or smaller meetings or even in store with our employees, to just let people ask questions. The three of us are very still involved in the business and be as transparent as possible and have a therapy session around it and not try to hide it.

And I think that's worked really well for us. That is really cool. And actually, it fits with a theme we noticed. We were talking about transparency before the show. Well, Sweet Green is a pioneer in food transparency. I'm looking at what I think is the source board right now. Yes. And every Sweet Green restaurant has a list of the farms where the produce was grown, where the milk was cultured.

Let's go with cultured. Where the bread was baked. And it's just incredibly transparent. It shows you the town and the state where everything is made. You were a pioneer in that, and it's a core value proposition. Like, we really try to showcase the quality of our ingredients through the experience itself. And we believe that people kind of, one, they eat with their eyes. Ooh, okay.

And taste matters. So if you look at the restaurant, there isn't, like, big signs of produce, right? There isn't like a photo of a farm or a photo of kale. But we have a source board in every, every restaurant we do. And our kitchens are open. And we always have kind of what we call a prep cube moment. where you see people prepping vegetables like a baker, like a bakery would. So that exposure, full transparency.

I think we still have, but we still have a lot of work to do. I think a lot of people come to Sweet Green and I think they still don't understand fully the quality of the ingredients. And that's going to be a continuous challenge as we get bigger. So this is a great moment to talk about your role on marketing. We've never interviewed a CMO, a chief marketing officer before. And Jack and I also love how great brands have their own language, great brand storytell. But we're wondering, with something so physical as food, how do you story tell food? I would say first from a marketing standpoint, if you're a founder, you're a marketer, right?

I'm sure you guys know that, like whether it's designing logos or thinking about brand strategy or thinking about the language that you guys use. I think it's intrinsic in being a founder, startup entrepreneurs. learn how to sell. Yeah. None of us were classically trained CMOs or anything like that. The way that we think about telling stories is a few things. We have three parts.

One is we start with the best ingredients. Two is we leverage data to understand a bit more about our consumers. And then we use really great human creativity to tell stories around food. Yeah. I love that third part. And that's kind of the recipe for Sweet Green. And then what we do is we try to do the unexpected. So when we started our business in 2007, we saw that the food companies with the best marketing were actually the ones that were the most unhealthy.

And we said, okay, well, why can't we do that for healthy food? Yeah. And take some of these lifestyle elements, cultural moments, and apply it to sweet green. And so over the last 16 years, with a very small budget, we've really tried to do things like the festival or working with great chefs or working with athletes and musicians. and bringing that lifestyle angle into Sweet Green and finding people's passion points, whether that's if you love food or if you love traveling or you love music and using that as almost like the tip of the spear

to have a larger conversation. Can you talk about how you've woven music back into the brand in some creative ways? Yeah. So music has been part of our DNA since that speaker that we DJed out of. We think about music across the full experience. So even on our restaurants, we have different playlists for different restaurants.

And they're different by day part as well. Really? And so we actually work with a company that are all ex-DJs, and they kind of help us curate suburban location at lunch versus downtown Nolita at night. Oh, different beats. L.A., which we're in now. Yeah.

And so it starts there, and it feels like an integrated process. We got to ask you about this. We've noticed you're a millennial core brand. Jack and I are millennials. You three are millennials, but you also are trying to reach Gen Z customers. Naturally, who's not? Yeah. How have you adjusted the brand to reach the Gen Z? And can you reach both millennials and Gen Z with the same brand? We think that there's ways just to kind of evolve some of the marketing that we're doing to having the same message and the same purpose, but making it less shiny, making it a bit more

real and interesting and humorous. And so what we're doing is two things. One, we're bringing a lot more humor into the language, into the brand that we're doing. And then we recently just launched a merch site where we're selling Sweet Green merch, and that's kind of struck a chord with the younger demo. When you talk to most young kids,

they all care about the environment, right? They all care about sustainability, and those are core pillars of Sweet Green. So there is a natural, like, affinity for the brand. It's just making sure to show up where they are. We were just talking about external marketing of the brand, But there's also internal marketing that goes on in a company. Like Jack and I noticed, you mentioned that speaker, Nathaniel, that you guys had at your second location, that saved the second location and ensured the future of Sweet Green.

When Jack and I were at the Sweet Green headquarters yesterday, we noticed you have that speaker. It's displayed like it's a museum statue, like the statue of David, right in the main area there. They put this old speaker, this like 20 year old speaker on a podium in the Sweet Green office. Is that like internal marketing? What does that stand for when you work at Sweet Green? Well, that speaker was in my garage for a while. So I feel like we had to give it some love. No, we wanted to kind of pay tribute to the idea of Sweet Life in general.

And so if you saw that speaker was next to all the concert posters that we have as well. And just making sure that we use our office or use our community space as opportunities for storytelling. Yeah. And giving people, whether it's a tour, Or just an interesting wink to some of the history of the brand. Yeah. And it's always important just to remember those moments. Yeties, Nick and Jack here again from the studio.

Remember when Nathaniel mentioned earlier the robo restaurants? Pretty cool idea here. Robots whipping up your bowls? Like maybe you're picturing like a robot chopping up some cilantro. Naturally, we were curious. So let's get into that. The future of sweet green. And the future of the food industry plus Nathaniel's advice for all of us.

Let's hit it. So here we are. Sweet Green has an epic founding story from three undergrads. We're 20 or 21 years old. You have 185 restaurants. Each one of them is profitable. You have high ambitions. And we want to shift to the future a little bit. Let's flash forward 15 years from now. You guys have said that you want Sweet Green to replace big fast food brands. You want to be right up there with McDonald's. You've dreamed what would happen if sweet green became the fast food for a new era? What would the world be like if at every exit on the interstate there was an option to grab a sweet green? Yeah, that's the goal.

We think we're still at the very beginning of the sweet green story. And the story, as we've been talking about, it started from just three of us in a dorm room trying to put this thing together. and we never thought it could be this big, even when we started. But the one thing that we had was we always told ourselves that we're going to continue to do this as long as we can't. And so every year that we've been opening new restaurants, the white space and the opportunity keeps growing. And so, yes, it is our personal dream to one day be as big as McDonald's or some of these other amazing companies over the last decades of our time. But making sure that to do it in the way I talked about around intimacy at scale. and to have quality ingredients.

And so when you are driving down the side of a highway and you see the sweet green sign, you know that quality equals flavor and that you can get something healthy to eat and still feel good about it. We talked before about preventive disruption. The latest disruption is in Naperville, Illinois, which is just outside Chicago.

Just outside Chicago. You just opened a restaurant last month that's basically robotic. Yeah, it's basically a robo restaurant. There's a tremendous series of tubes, and each tube is filled with beets, zucchini, cherry, tomatoes, hard-boiled eggs, chickpeas, spinach, arugula. What am I missing? You got it all. These tubes dispense the ingredients into the hexagonal bowls that you're known for and provide

an experience that some reviewers say is just as good as what your employees create right here. This is a robo restaurant. A robo salad. Do you see this as the future of the food and beverage industry? Too early to say. And we actually don't want to promise too much with the robo restaurant. We call it the Infinite Kitchen. That's a great branding of it. And it's our very first pilot store. So the first location is in Naperville. It's about 45 minutes outside Chicago.

And the reason we wanted to choose that location is because we wanted to make sure that we could get the experience right in a place that was a bit more suburban. Okay. And a place that people would almost like feel comfortable dining in it. Yeah, you're not stress testing this in the middle of Manhattan. Yeah, this is not a Bryant Park location. This is a more suburban location, which is representative a lot of our future growth. To your point, I mean, it's been three weeks since we've opened this store and we've been there a lot. So far, we're really, really pleased the experience.

I think the best thing about the Infinite Kitchen is that we find the quality of the food is the same, almost better than when you get in a normal sweet cream because the ingredients are brighter. They're not sitting out in the line oxidizing. The portioning is perfect. The thing that we make the most mistakes on at Sweet Green is we forget a dressing or we forget a chicken. The control. And the precision and accuracy of the machine is 100%. You're so right. This fits to the control element that you guys love so much.

We're all OCD to get together. But here's the other side of that, which is you guys are also artists, right? Like you're super creative. So there is the human element and the imperfection. Do you lose that? So we actually really believe in Wabi Sabi and I think the interesting thing is... And Wabi Sabi being the idea of imperfection. imperfection and leaving space for the unknown.

Right. So what's important for us is, yes, we have this machine. It's very much pioneering the industry. But still, when you walk by in that storefront, the first thing you see is that PrepCube. And you see people cutting, cleaning, washing vegetables. And that was a really important thing that we wanted to make sure that our customers knew is that isn't just a robot in the corner making your food.

There is still humans starting with your food and then finishing with your food. So this fits with the thing. So this fits with the theme of, yes, you're adding robots to this process, but you're not fully displacing humans. There needs to be a human element is what you believe. And there needs to be a quality ingredients story to it as well. So the food industry is notoriously challenging. Yeah.

We talked about the many moments that Sweet cream could have failed and ended. But through perseverance, it hasn't. And it's a great success story. But over 90% of restaurants fail within the first years is the story you hear. What advice do you have for people thinking of getting into food or opening up a restaurant? A great question. I would say really focus on what makes you different. There's so many restaurants and I think the ease of starting restaurants today is a lot easier as well. But I think what's important is making sure that you can clearly differentiate yourself from the beginning

of what you're trying to do and just know that the road is very, is very, is very windy. What I always tell food entrepreneurs is that this is not like a one-year business. This is a 10-year commitment. This is like a almost like a fun life sentence of committing yourself to food because food is, it's messy and inherently it's a social experience. Like you think about eating, it's human. You're sitting around a table, but back to that joy element, it's probably some of the best moments that you've had in your life is sitting around a table eating food. Totally. And so the more that people are kind of committed to that joy, I think the easier it is to deal with some of the headaches that you guys see. Jack and I've got to ask you to,

similarly, co-founders, we go all the way back to college. And so many co-founders actually do begin that relationship in college. It's like where you build the friendship first, and then you build the co-founder relationship. You're not two co-founders. You're three co-founders. So Jack and I have been wondering, what business tactics and then also emotional tactics to use to stay sane and to continue to love each other because you guys have a best friendship. The deep love. Have you guys dropped the album on each other?

I feel like it slipped down. Stiped on a few times. Jack and I were just talking about how we invest in each other in terms of like celebrating the wins. Yeah, of we get together and we celebrate the wins because there's always a win you can find to celebrate. But like what else do you guys do from the business standpoint, but then also from like a personal standpoint? It's deep.

You know, it's behind a marriage. And so we work together, we party together, we hang out together. And even our now wives joke that we prepared each other for marriage because we spent so much time together as roommates and as business partners. But I think as we've gotten older, it's actually gotten harder. Like all of us have kids and families. And what we really try to do is one, we actually still sit in the same office. Wow. And it sounds counterintuitive.

We have a separate meeting room when we have meetings, but there is something about the casual nature of sitting at a table and not having to have a meeting to have a conversation or to have a specific time when you have to make a decision. But just having a conversation about something that just passed through your brain. And I think a lot of that is really powerful when you're trying to deal with hard problems and big decisions. Okay. And so one is the casualness of. how we interact. Two is that kind of annual offside or the time that we take to ourselves where it's just us three. Right. It gets harder and harder, right? Especially as, you know, as you guys know, with kids, it's just different. And so making sure that we commit that sacred time to get.

Nathaniel, this show is called The Best One Yet, but right now we want to ask for your best ones yet. So Jack and I have whipped up some rapid fire questions for you. First, what is the best slice of pizza yet? My favorite pizza is Scar's Pizza in New York. Nathaniel, what is the best book yet? My most favorite recent book is a creative act by Rick Rubin. Who is the best business leader yet? Warren Buffett. What's the best coffee order yet?

I'm not a big coffee drinker, so I'll go with macha. What's the best salad or bowl yet? That's not prepared at Sweet Green. The Italian shop salad. What's the best airport terminal yet? DCA. Who's the best performer yet? Prince.

And finally, what's the best podcast yet? That isn't the best one yet. How long gone with Chris and Jason? Nathaniel, Nick and I like to end every story by asking, what's the takeaway? So we would like to know from you. What's the takeaway on Sweet Green? Finding more moments and joy in the customer experience. Since we're here and it's like almost luncheon.

I'm hungry. You want to actually whip something up? I'd really love to make my own sweet green if that's okay. Jack. Wow. If we could go back to five years ago when we were launching this podcast and we were just growing our audience and we were eating at sweet green every day before we would do this pie. If you had told us we would one day be sitting in a sweet green with the sweet green co-founder talking about the business and then making salads at that sweet green, honestly we would have been shocked. This was a win to celebrate. Now, Yetis, before we go, we want to do a shout out for Matt Zions, a huge Yeti.

Matt works at Sweet Green and helps set this interview out. Oh, and by the way, if you want to know Nathaniel's go-to sweet green order? I do. Here it is. Thanks to all the Yeties and besties who listen, thanks to Nathaniel. You look fantastic. Nathaniel, we also have to ask you, your salad order as the co-founder of Sweet Green. So my salad order evolves, changes.

But right now I do kale, wild rice, spicy broccoli, avocado, Zatar breadcrumbs, black and chicken. Half spicy cashew, half green goddess. Wow. I can feel the umami from here. But, Nathan, you did mention a secret menu before. Yeah. Yeah. Stay tuned for that next time.

God.