Green Ma­chine

Tossed-salad star Sweet­green gives Inc. an ex­clu­sive, in-depth look at its se­cret weapon: the small farms and food sup­pli­ers that fill its hip, healthy bowls

Inc. (USA) - - FEATURES CONTENTS - By Lind­say Blakely

The fast-grow­ing Sweet­green gives Inc. an ex­clu­sive look in­side its se­cret weapon: the farms and food busi­nesses that make up its na­tional sup­ply chain.

IN 2007, KEANY PRO­DUCE CO., a fam­ily-run pro­duce distrib­u­tor in Hy­attsville, Mary­land, re­ceived a call: Three en­trepreneurs were start­ing a salad restau­rant in Wash­ing­ton, D.C., and needed to set up a re­gional sup­ply chain for fresh greens and vegeta­bles. Like most po­ten­tial cus­tomers, the as­pir­ing restau­ra­teurs wanted to try the prod­uct be­fore they bought it. So Keany packed up some arugula sam­ples and sent them straight to the en­trepreneurs’ per­sonal res­i­dences—the un­der­grad­u­ate dorms at Ge­orge­town Univer­sity.

“We had an in­dus­tri­ous sales lady,” says Ted Keany, the distrib­u­tor’s vice pres­i­dent of sales. “She be­lieved in ev­ery­body.”

It didn’t take long for that ini­tial leap of faith to look like a very smart bet on Sweet­green, the fast-grow­ing, healthy-hip­ster salad chain started by Ni­co­las Jammet, Jonathan Ne­man, and Nathaniel Ru. By the time Keany and his brother Kevin met the co-founders and co- CEOs, Sweet­green had opened its first store­front, in the Ge­orge­town

neigh­bor­hood— one that reg­u­larly had lines down the block.

Fast-for­ward a decade: Sweet­green is sling­ing salad in 70 lo­ca­tions across the coun­try, with plans to ex­pand to 90 by the end of this year. Jammet, Ne­man, and Ru are sell­ing an as­pi­ra­tional lifestyle along with their kale cae­sar sal­ads and quinoa-stuffed grain bowls, a savvy pack­age that ap­peals to food-world celebri­ties as much as to nu­tri­tion- con­scious con­sumers. Each Sweet­green lo­ca­tion proudly pro­claims its trans­par­ent, farm-to-ta­ble bona fides, with sea­son­ally tweaked menus and chalk­boards list­ing the lo­cal farms that sup­ply many of its salad in­gre­di­ents.

“They’ve done a very im­pres­sive job,” says R.J. Hot­tovy, se­nior re­tail and restau­rant an­a­lyst at Chicago-based in­vest­ment re­search firm Morn­ingstar (with which Inc. shares an owner). “It’s not easy build­ing out a lo­cal and re­gional sup­ply chain while build­ing a na­tional brand.”

It’s a huge, on­go­ing chal­lenge—one that will only in­ten­sify with the com­pany’s ex­pan­sion. While Sweet­green won’t dis­cuss rev­enue or prof­itabil­ity (sales were last es­ti­mated to be $50 mil­lion in 2014, with the com­pany un­prof­itable), in the past sev­eral months it gave Inc. an un­prece­dented, ex­ten­sive peek in­side its na­tional farm-to-bowl op­er­a­tion. The lessons Sweet­green and its part­ners have learned along the way can ap­ply whether your busi­ness is a sup­plier to big­ger com­pa­nies or one that’s try­ing to set up its own sup­ply chain.

Sweet­green read­ily ac­knowl­edges that it’s im­pos­si­ble to find, say, fresh arugula in Chicago in the mid­dle of Jan­uary. But when it can’t source lo­cally, it tells cus­tomers where their salad in­gre­di­ents were shipped from. “I think that level of trans­parency is ad­mirable,” says Mark Bittman, the long­time food writer and sus­tain­abil­ity ad­vo­cate, who co-cre­ated a salad for Sweet­green in 2014 and now con­sid­ers Jammet a friend. “Off­hand, I can’t think of a bet­ter way to make this work. And you can’t ar­gue with their suc­cess.”

Sweet­green’s sup­ply chain counts hundreds of re­gional grow­ers, pro­duc­ers, and dis­trib­u­tors, and has played a ma­jor role in its race to achieve na­tional scale. Food-world con­nec­tions also help: Sweet­green has raised $135 mil­lion from in­vestors in­clud­ing Shake Shack co-founder Danny Meyer, Mo­mo­fuku over­lord David Chang, and pro­lific French restau­ra­teur Daniel Boulud. Jammet, whose par­ents owned high-end New York City eatery La Car­avelle, grew up in this world and now over­sees Sweet­green’s food op­er­a­tions: “One of the rea­sons why we’re build­ing this busi­ness is to cre­ate a dif­fer­ent kind of re­la­tion­ship with food,” he says.

Still, in the race to be­come the king of sus­tain­able sal­ads, Sweet­green is fac­ing mount­ing com­pe­ti­tion from other fast­ca­sual star­tups, in­clud­ing Dig Inn and Ten­der Greens (another Meyer-backed salad chain). But its big­gest chal­lenge might be growth it­self. As Sweet­green tries to do for bowl-based vegeta­bles what Chipo­tle did for bur­ri­tos, the younger com­pany is also try­ing to avoid its el­der’s stum­bles. Chipo­tle, one of the first na­tional brands to mar­ket where its in­gre­di­ents come from, has faced sup­ply-chain is­sues and food-borne-ill­ness out­breaks as its restau­rants have grown in num­ber to more than 2,300. Jammet is hop­ing that Sweet­green’s slower growth plans, which re­strict it to mar­kets that can sup­port at least five to 10 restau­rants at a time in a re­gion, will pre­vent sim­i­lar prob­lems.

The other ques­tion: Can Sweet­green’s sup­pli­ers keep up with its growth, and its de­mands for sus­tain­able raw in­gre­di­ents? “You can’t con­vert land to or­ganic in less than three years,” as Bittman says. “You can’t cre­ate farm­ers when land is so ex­pen­sive. It’s not in­stan­ta­neous, ob­vi­ously.”

As shown on these pages, Sweet­green has al­ready worked with some of its sup­pli­ers to in­crease their ca­pac­i­ties or im­prove the ef­fi­ciency of their op­er­a­tions. But the salad chain’s growth has also yielded some com­pli­ca­tions for its farm­ers, cheese­mon­gers, and other lo­cal food sup­pli­ers. Now, as more com­pa­nies try to tell sto­ries around where their prod­ucts come from to meet in­creas­ingly in­formed con­sumer tastes, you can learn a lot from how Sweet­green and its sup­pli­ers went from beg­ging a lo­cal distrib­u­tor for arugula to sell­ing Amer­i­cans on steel­head trout.

SPRING MIX Work­ers at one of Jayleaf’s seven Cal­i­for­nia ranches walk among rows of red mus­tard.

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