Steve Case's Revolution Growth Invests $22 Million to Help Sweetgreen Become 'Chipotle of Salads' Three college kids from Georgetown launched a salad shop on the cusp of the Great Recession. Having managed to thrive in the six years since, it is now poised for explosive growth.
By Brian Patrick Eha •
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Leslie Knope, the fictional heroine of NBC sitcom Parks and Recreation, famously hates salad, as do many of her fellow citizens in Pawnee, Ind., where the show takes place. "When in doubt in Pawnee, slam salad," she says in one episode.
But if Knope could talk to the founders of Sweetgreen, a chain of organic salad shops that has snagged the interest of billionaire venture capitalist Steve Case, she might change her tune.
Prior to opening their first store in D.C. six years ago, Sweetgreen's founders -- Nicolas Jammet, Jonathan Neman and Nathaniel Ru, who met as freshmen at Georgetown University -- did market research in their dorm rooms. They whipped up salads from farm-sourced ingredients, trying different combinations, and tested them out on fellow students. Then, for the first nine months of the restaurant's existence, they worked the counter themselves, striving to make Sweetgreen "more of a destination and a hangout" than a simple in-and-out fast casual eatery, Ru says.
That early sweat equity is earning dividends. Jammet, Neman and Ru have since opened 22 additional locations along the East Coast, and three more are on the way, in New York, Philadelphia and Washington.
On Wednesday, Sweetgreen announced a $22 million investment from Revolution Growth, the venture fund co-founded by Case. (Case previously invested a six-figure sum individually.) Revolution Growth's investment will allow Sweetgreen to continue expanding; the company plans to open six to 10 more stores in 2014, its founders say.
Related: Steve Case's New $200 Million VC Fund Will Invest 'Off the Beaten Path'
"The investment gives us a longer time horizon so we can really do things at our own pace and do it the right way -- focusing on creating the best experience possible, the best quality food, the best culture -- and not be worried about what happens in six months or in one year," Neman says.
For Sweetgreen, doing things the right way means building supplier networks one relationship at a time, partnering with local farmers who grow their crops sustainably. Farmers now grow produce specifically for Sweetgreen, and the company returns the favor with video profiles highlighting their efforts. "We tell our farmers they're like the new rock stars for us," Jammet says. "They're on our website, and they love it."
"The healthier-choices category is going to grow rapidly, and Sweetgreen is perfectly positioned to be the leader of that rising trend," Case says. Although it isn't a tech company that can expand from one million to 100 million users almost overnight, "we think it does have the potential some day to be the Chipotle of healthier options." In addition to salads, Sweetgreen, whose annual revenue is in the $20 million to $40 million range, also offers wraps, soups and fresh-pressed juices.
Better still, says Case, the company "ties into the national imperative to reign in our health-care costs. If people ate more carefully, they would be healthier and we would save money on health care."
To educate its local community about healthy eating, Sweetgreen launched a school program in 2010. After a modest start, it has grown into an eight-lesson curriculum used in multiple D.C.-area schools. Eventually, the company hopes to bring it to other cities as well.
From the beginning, says Ru, he and his co-founders saw Sweetgreen as a brand rather than a mere restaurant. For that reason, they have no plans to franchise. Their biggest challenge is how to create "intimacy at scale," expanding without diluting their core values. "We want to build a soul into each one of these stores," he says.
"In D.C., it's the cool company you want to work for," Case says. "People were drawn into the mission and wanted to be part of it."
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