Salad Chain Sweetgreen Is a Digital Innovation Leader. What Chipotle and Wingstop Could Learn

Barrons

Tae Kim

Jan 28, 2020

Salad chain Sweetgreen is a prescient leader in using digital strategies for the restaurant sector, according to Gordon Haskett.

The firm's analyst Jeff Farmer believes other larger restaurant companies can benefit from following Sweetgreen's methods.

"Sweetgreen has consistently lit the restaurant sector path for both digital and off-premise strategies and we believe that there are valuable lessons to be learned for public equity investors who closely follow Sweetgreen's progress," he wrote on Tuesday. "Sweetgreen is not only ahead of the curve, but also shaping the curve."

Sweetgreen is a privately held premium salad concept with 107 stores in nine states. Farmer noted it was the first chain to implement multiple food production lines (2010), mobile order and pay (2013), and pickup shelves (2013).

The analyst noted Sweetgreen's digital sales are already at 50% of total revenue, which is "best-in-class" for non-pizza restaurant chains. He is optimistic about the company's innovative "Outpost" program, which started in September 2018. It installs order pickup shelves in corporate offices, building lobbies, and apartment buildings, offering free delivery to customers who use them. Sweetgreen has nearly 800 "Outpost" locations already.

Last September, The Wall Street Journal reported hedge fundLone Pine Capital invested in the salad chain at a valuation of $1.6 billion.

Farmer said Wingstop (WING) and Chipotle Mexican Grill (CMG) are "best positioned" to follow Sweetgreen's successful strategies. He has a Buy rating for Wingstop and a Hold rating for Chipotle stock.