Sweetgreen Hikes Prices to Offset Higher Wages, Better Benefits

Sweetgreen, the company known for its salad bowls and sustainable sourcing, quietly raised prices this week. It didn’t take long for fans to notice, with some complaining about the hike on Twitter. In a statement to Eater, president and COO Karen Kelley says the price increase — which “represents on average 56 cents more per dish,” though prices in some cities are significantly higher — allowed the company to increase wages “in some markets by more than 20 percent over the past year alone.”

A kale Caesar salad with chicken was priced at $8.85 in NYC in 2014; it’s now $1.30 more, or $10.15, at NY-area Sweetgreen locations, and $2.05 more, or $10.90, in Los Angeles and San Francisco. That’s a 14- and 23-percent increase, respectively, a significant jump because it bumps Sweetgreen’s menu over the $10 lunch threshold, a longtime marker of affordability in major U.S. cities.

As of this week, nothing on Sweetgreen’s menu in NYC costs less than $10, though a handful of bowls and salads on menus in D.C., Pennsylvania, Massachusetts, Chicago, and Virginia clock in at between $9 and $9.85. In California, only one menu item, the Mexican Corn Elote Bowl, a vegetarian option, is priced at less than $10. Add in tax, and even in Crystal City, VA, and Downtown Crossing, MA (where a Sweetgreen Caesar still goes for $9.65, the lowest price in any of the chain’s eight markets), a salad with some chicken on top costs more than $10.

It’s still possible to order a salad at Sweetgreen for less than $10, using the build-your-own option, though that salad will probably not include any protein. When Sweetgreen opened its first location in NYC in 2013 the entry point price for a salad was $7.95; its most popular item at the time, Guacamole Greens, a salad topped with avocado, roasted chicken, and tortilla chips, was $9.65. Today, Guacamole Greens at the original NY location is well over the $10 mark at $12.15, a 26-percent increase in four years. Increasing food costs and real estate prices could have also contributed to the reasons behind Sweetgreen’s price hikes, but reps for the company have yet to confirm.

The D.C.-based brand, which was founded in 2007 and now operates 66 restaurants in eight markets, says this is the first time it has raised prices in three years. In a statement now posted to its website, Sweetgreen explains that the price increases will allow the company to pay higher wages to its 3,000+ workers. Along with a raise, employees will now receive a better benefits package — including paid parental leave — and what the company describes as “a robust career development roadmap so our people can grow with Sweetgreen, increase their earning potential and learn essential leadership skills.”

Hourly employees now start at between $12.50 and $13.50 per hour in New York City; general managers start at $60,000 and earn annual bonuses that increase over time. The company does not say how these wages compare to staffers in other parts of the country, where menu prices have not gone up as much as they have in New York and California.

Sweetgreen raised an initial $375,000 for startup costs in advance of its 2007 opening. It has gone on to raise nearly $100 million, mostly from venture capitalist group Revolution Growth. The privately held company has not yet turned a profit according to a 2016 report by Inc., which explained that the salad chain was using its cash to expand and invest in technology like cashless payment systems and online ordering ostensibly to increase sales, minimize loss, and cut labor costs. (The chain also recently introduced controversial new bowls for its salads and warm entrees; the new packaging is supposed to speed up service and cut down on water usage.)

Three years ago, in 2014, Danny Meyer (of USHG and Shake Shack fame) and Daniel Boulud (Dinex Group) signed on with Sweetgreen’s longtime funding partner Revolution Growth to invest an additional $18.5 million in the chain. After that investment, Meyer told Eater that he had “huge respect for the leadership and love [of] the product.” He also praised the “dynamic leadership team that’s prioritizing a culture of hospitality, employees and community.”

Meyer (and Boulud) were called “passive” investors at the time, but Sweetgreen’s new higher wages, higher prices, and more-competitive benefits package echoes moves Meyer’s Union Square Hospitality Group and Shake Shack have made in recent years. In January of this year Shake Shack raised prices — by about 2 percent on some items and 5 percent on Shack burgers in NYC — to offset the pay increases it gave employees in 2016. This meant that a meal composed of a Shack burger, fries, and a drink would cost a diner in NYC more than $10. It also allowed the company to start employees at an hourly rate of $12.50 and pay managers up to $44,000 a year while offering health insurance, matching 401K plans, and the best parental leave package of any major U.S. chain.

Among Sweetgreen’s new benefits are paid parental leave for mothers and fathers, and what it’s calling “Sweetgreen Impact Hours” or up to five paid hours of leave to “volunteer, participate in community events, or work at a farm.” Price increases to offset higher wages, better benefits, and costs associated with the greater good (locally-sourced food, environmentally-friendly purchases and practices) are a common theme among progressive restaurants in all sectors, from massive chains like Starbucks to full-service restaurants like NYC’s Union Square Cafe. As operators navigate this new normal, will diners continue to eat the costs? Sweetgreen is betting big that they will.

• We’re Raising Our Prices — Here’s Why [Official]
• All Sweetgreen Coverage [E]