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Can Sweetgreen Hold Out Against DoorDash?
Sweetgreen’s S1 reveals how hard it is for restaurant chains to compete against delivery aggregators like DoorDash and Uber Eats
Existential Threats
Sweetgreen is a thoughtful company. It prioritizes sourcing produce from local, organic, and regenerative farms. It’s in tune with seasonality and mindful of its carbon footprint. Instead of managers, it has assistant coaches and head coaches. Flooded with sunlight and filled with succulents, its stores are Instagram worthy:
It’s also conscious of how it sells its salads. The company is skeptical of delivery marketplaces like DoorDash, Grubhub, and Uber Eats and favors direct channels like its website and app. Jonathan Neman, Sweetgreen’s co-founder and CEO sees delivery marketplaces as an existential threat. On a recent podcast, he noted that:
The question is going to be, how many of those restaurants have direct relationships, versus marketplace relationships? Which is in my opinion, the greatest existential risks facing our industry, reminiscent of…Nike versus Amazon, Disney versus Netflix, Four Seasons versus Expedia. It’s a very similar story of whoever owns the customer extracts more value in that value chain. And I think that’s been a huge focus for us. It has been for years.
Value accrues to whoever owns the customer and bad things happen when someone gets in between you and your customer (ask a hotelier what they think about Booking.com). Sweetgreen is cognizant of this threat. Twenty-five of the eight-five mentions of “marketplace” in the S1 occur in the risk section. For example:
These food delivery marketplaces own the customer data for sweetgreen orders placed on such marketplaces and may use such customer data to encourage these customers to order from other restaurants on their marketplaces.
Despite the disintermediation risk, the S1 also reveals that Sweetgreen is increasingly reliant on delivery marketplaces. Competing with aggregators is hard.
