Salad chain Sweetgreen Inc. is reassembling a delivery program for office buildings as employees trickle back to workplaces and the competition for delivery customers reaches new heights.
The program, called Outpost and introduced in 2018, lets workers at participating employers pick up orders at locations in office buildings without paying a delivery fee. It had grown to more than 1,000 locations when the Covid-19 pandemic abruptly drove many workers to set up shop at home.
Most of Sweetgreen’s Outpost locations paused service or pivoted to providing meals to people in apartments, hospitals and other locations. Sweetgreen began gradually rebuilding its network with some new and existing partners in the summer of 2020, reaching 250 delivery stations at the end of the third quarter of 2021 and more than 500 today, according to the company.
Sweetgreen in the past two weeks restarted Outpost operations at 10 delivery stations and opened 18 new ones, it said.
Sweetgreen hopes the return of office workers will improve the company’s business, Chief Executive Jonathan Neman said this month during a call to discuss the company’s first quarterly earnings report since it went public in November. The company reported revenue of $96.4 million in the fourth quarter of 2021, up from $59.2 million in the prior-year period.
Companies such as American Express Co. , Wells Fargo & Co. and Verizon Communications Inc. have asked employees to return this month or at the start of April.
The rise of hybrid work, in which employees come to the office on some days but clock in from home on others, presents a new opportunity for Sweetgreen because the company believes many corporations will move away from providing cafeterias, Mr. Neman said in an interview.
“That’s where we’re seeing a lot of growth today—more and more employers looking to use Outpost and subsidize it as a benefit in replacement of what they used to have as a chef and a full staff,” Mr. Neman added.
Although consumers can order items from Sweetgreen through delivery apps, a service such as Outpost that is only available on the company’s app and website encourages a direct relationship with customers, Mr. Neman said.
Outpost more broadly is part of a strategy to encourage repeat business, the company said.
“The Outpost customer is even more frequent than a digital customer that maybe doesn’t have access to an Outpost,” said Daniel Shlossman, chief digital officer at Sweetgreen.
But the return to offices remains a slow trickle, with office occupancy only at 40.6% across 10 major U.S. cities, according to data from Kastle Systems, a nationwide security company that monitors building access swipes. In Houston, one of the country’s leading cities for bringing employees back to the workplace, office floors are barely half full.
And Outpost’s revival will face challenges including rising food costs and a crowded market for food deliveries.
Outpost still has no delivery fee, but in October 2020 it added a service fee of 7%, Sweetgreen said. The company has also raised its menu prices by 6%.
Restaurants that can develop specialized offerings such as Outpost may see the most growth as the competition for delivery customers continues to heighten, restaurant analysts say.
“Being able to have more customized offers is another way to avoid just general discounting and winning that price game, because you know consumers are more price sensitive,” said Philip Daus, head of the U.S. restaurants practice at Simon-Kucher & Partners, a global consulting firm.
Write to Ann-Marie Alcántara at [email protected]
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