Sweetgreen Is Going Fully Cashless In 2017

The fast-casual salad chain is betting on a future where restaurants are ultra-convenient and personalized.

The Mighty Salad: a collab product from Food52 x Sweetgreen

[Photo: courtesy of Sweetgreen]

RUTH READER 12.22.16 8:00 AM

What's in your wallet? In 2017, Sweetgreen will go fully cashless in all 64 of its stores after successfully testing the concept for about a year, cofounders Jonathan Neman and Nicolas Jammet tell Fast Company. Next year, the fast-casual restaurant chain plans on opening another 30 storefronts in the eight markets where it currently does business. Already in New York, signs are popping up in some Sweetgreen shops alerting customers.

Sitting at a couple of wooden tabletops at the Sweetgreen north of Madison Square Park in New York City in early December, Neman and Jammet laid out their rationale for dispensing with cash at a time when plenty of restaurants haven't quite made the leap.

Some of the reasons are simple: Cash-free stores reduce the likelihood of robbery, keeping employees safe. In addition, the company can avoid the expense of transferring cash in armored cars, they said. Without greenbacks in their registers, Sweetgreen won’t have to worry about bad hygiene with employees handling cash and then touching food. Managers, who are often responsible for counting cash, will have more time to do other things, like mentor and train staff. (Sweetgreen managers get a bonus for every "head coach" they promote.) Getting rid of cash might also speed up transactions, alleviating Sweetgreen’s peak lunch lines, which often spill out the front door and onto the sidewalk. The company says that employees can perform 5% to 15% more transactions every hour when they don’t have to handle money.

But most importantly, Neman and Jammet say that going cashless will help Sweetgreen usher in a new wave of technology to make its stores more efficient and personal.

IS THE U.S. READY FOR CASHLESS?

While countries like Sweden, Denmark, and South Korea have been rapidly shifting toward becoming cashless societies, in the U.S. that trend hasn't yet taken off. In the restaurant industry, that’s particularly true.

"When it comes to fast food, the major portion of the purchases are cash," says Bonnie Riggs, a market analyst at NPD Group. She also makes the point that moving to a cashless system cuts out customers on the lower end of the economic spectrum who may not have debit, credit, or even prepaid cards. "What would you say to somebody who came to your restaurant and didn't have any of those things? We don't want your money?" Riggs asks.

But Sweetgreen’s execs insist that their customers carry less and less cash. And going cashless could give customers something they prize more—convenience. Already some other healthy eateries like Tossed in London and Mulberry & Vine in New York have gone cashless for similar reasons. Easta, a restaurant chain that serves up healthy quinoa-based lunch bowls, has also dispensed with cash and cashiers in an effort to get food to customers faster. A reporter for the New Yorker noted that on two occasions she received her order between two and eight minutes. Sweetgreen is also focused on speeding up its operations, not just by trying to shorten its queue, but by getting more people to preorder their meals.

[Photo: Flickr user Elvert Barnes]

"We’re working on ASAP ordering," says Neman. "So it will be much more like Uber, where it says you can have your salad in six minutes or eight minutes." He says everything in an excited, self-assured way that gives me the impression he believes his own messaging. People, he says, dine out for one of two reasons. They either want to get their food fast and get out, or they want a special experience. He thinks people are willing to forgo cash for more efficient service. Jammet, who is more soft-spoken, hits me with the numbers. He argues that cash isn’t particularly relevant to his restaurant’s core demographic.

"Cash has become such a smaller piece of our tender," he says. "When we opened nine years ago, it was 40%. Now, all stores are between 10% and 15%." But just to be sure that consumers wouldn’t be turned off by the change, during its pilot, the company tested stores with both low-cash transactions and those with the highest. They found that customers largely didn’t care whether they accepted cash or not. They claim that when employees explained why they were switching to card and app only, customers were generally understanding.

MOBILE APPS DRIVE GROWTH

The move away from cash might also steer more people onto the Sweetgreen app. Over the last year, app use has grown 95%, says the company. Roughly a third of the business is run through the app, Neman tells me. That’s significantly higher than the percent of transactions that roll through the Starbucks app, according to a Bloomberg report from March. Starbucks has said that its app is core to its growth strategy at large. Sweetgreen acknowledged that while there was an increase in app usage among its cashless stores, it was not a substantial spike. But if cashless stores don't drive adoption, there are plenty of other reasons that Sweetgreen customers might adopt the app, like free salad rewards.

"Mobile ordering will grow exponentially," says Riggs. She notes in particular how order-ahead functionality helped sales skyrocket at Domino’s Pizza, which launched a "zero-clicks" pizza ordering app earlier this year. In the past, the company has baked ordering into Facebook Messenger, Twitter, Siri, Amazon’s Echo, Google Home, smart televisions, and even Ford Sync. In the third quarter this year, Domino’s revenue grew 16.9% year-over-year. That’s impressive, given that most of the fast casual industry has stagnated, according to Riggs.

Despite the slowdown, she thinks that other chains can spur sales by being innovative with their mobile strategy. Sweetgreen's app already has a good amount of traction, especially with its order-ahead feature. Over half of the people on Sweetgreen's app are using it to order their meals ahead of time, and Neman says this offering is a key factor in driving adoption.

PERSONALIZATION

To get to the next level and drive both sales and transaction speed, Sweetgreen is pursuing a more individualized approach. In addition to going cashless, the company plans to roll out a revamped app in 2017, likely in the first quarter. Before the big relaunch, Sweetgreen will introduce group ordering, notification alerts, and more personalized touches via iterative updates.

"We’re starting to already test things," says Jammet. "Like if we know you don’t eat chicken but you open your app and half of our salads have chicken, why should you see six salads with chicken on them?" He says this is just the beginning. He envisions a future app that recommends salads in much the same way that Netflix suggests movies. The big dream goes far beyond simple menu guidance. Jammet says based on a customer’s buying behavior, the company’s chef can start to craft individual off-the-menu salads. Customers will be able to get custom salads without having to think about it.

But Sweetgreen doesn’t want to limit its tailored experience to in-app only. "One of our visions for tech in the future is how can we use technology to empower our team members to provide better services," says Neman. Through its app, Sweetgreen has been able to garner behavioral data about which locations customers eat at regularly and what they order. In the future, Neman and Jammet hope that they can develop a way (possibly using a tablet) to get that information to salad servers so they can more meaningfully interact with customers.

"We believe the future is hyper-experiential and hyper-convenient," says Neman. "The middle is going to get squeezed out."