Climate change could threaten Sweetgreen’s customer promise
In the 10+ years since Sweetgreen first opened, it has grown to over 70 locations nationwide, with a mission to become the “Starbucks of salads” . However, Sweetgreen is not just any fast-casual salad chain. It promotes sustainability and local sourcing as key components of its customer promise . These elements are apparent throughout Sweetgreen’s locations – from chalkboards listing the sources of each ingredient to fully compostable packaging .
Sweetgreen’s sourcing philosophy, focused on local, sustainable farms, has many benefits for the environment. Research shows that “organic farms can emit as little as half the carbon dioxide generated by industrial farms” per acre, and use less fossil-fuel energy . Local sourcing also reduces greenhouse gas (GHG) emissions by decreasing food transportation, which averages 1,500 miles from farm to table in the U.S. .
However, agriculture-based businesses like Sweetgreen are among the most exposed to climate change risk, due to the sensitivity of plants, livestock and fisheries to changes including temperature, precipitation and CO2 levels. Farms are also highly susceptible to more abrupt weather changes like droughts and floods, that can cause crop shortages, price volatility, and inconsistent quality . Sweetgreen’s local sourcing model further exacerbates their supply chain risk from climate change. If a single farm or metro area experiences disruption causing a shortage or price fluctuation, Sweetgreen will have limited availability to mitigate the immediate impact on their supply chain.
Therefore, climate change is and should be a key consideration for Sweetgreen’s leadership as they continue to grow and execute on their customer promise.
Sweetgreen plans for sustainable growth
Sweetgreen plans to tackle the challenge of sustainable growth by scaling slowly, developing local supply chains in each market, creating menus based on availability, and using centrally-sourced produce when necessary. In each new market, Sweetgreen spends ~1 year building the local supply chain – selecting sustainable suppliers, building relationships and developing menus– before opening stores. Menus change seasonally and are designed to accommodate local crops. Furthermore, Sweetgreen does not promise that all ingredients will be local. When products are not in season locally, they are typically sourced from “a big supplier in California.” This hands-on supply chain development is a very time- and resource-intensive approach to new markets. Therefore, Sweetgreen is only targeting markets with the potential for 5-10+ locations, to gain some economies of scale from the local supply chains .
Sweetgreen appears focused on long-term sustainability. One of their core values states, “make decisions that last longer than you will” . However, there is no clear long-term plan for how Sweetgreen will handle the worsening effects of climate change in their supply chain.
As the impact of climate change becomes an increasingly pressing reality, Sweetgreen needs to do more to mitigate related risks to their supply chain.
- Help farmers adapt: Sweetgreen should work with their suppliers to modify farming practices to reduce GHG emissions and adapt to the long-term impact of climate change. Agriculture is estimated to contribute up to 33% of all GHG emissions . Sweetgreen can play a role in reducing that contribution by ensuring their suppliers are at the forefront of sustainable farming methods. Also, since the impact of climate change is expected to vary regionally, Sweetgreen can tailor its support to the needs of each market’s suppliers. For example, in the Midwest and South, farms are expected to have 10-20% lower yields in the next 5-25 years unless they adapt new farming practices, making it a ripe market to prioritize for near-term support .
- Develop back-up suppliers: Sweetgreen should develop a robust system of back-up suppliers for key ingredients to mitigate risk of stock outages and price fluctuations. While Sweetgreen does already have some alternative suppliers when local produce is not available, even those alternative suppliers, primarily in California, are exposed to climate events such as droughts. As climate change-related events become more frequent and disruptive, having multiple suppliers for key ingredients will become increasingly important.
- Communicate: Sweetgreen has not articulated a long-term goal tied to sustainability in their supply chain, nor have they published the criteria by which they select their local farm suppliers. Sweetgreen should publicize a clear goal and clear supplier selection criteria to guide internal decision-making and build external credibility.
As the healthy fast-casual market gets more crowded, Sweetgreen will likely need to increase their speed to market, and reduce their 1+ year lead time in developing the local supply chain in new markets. Going forward, it remains to be seen if and how Sweetgreen can accelerate launch timelines while maintaining their customer promise of a local, sustainable supply chain.
 Mickey Rapkin, “The Founders Of Sweetgreen Are Building A Farm-To-Counter Empire, One Bowl At A Time,” Fast Company, November 21, 2016, https://www.fastcompany.com/3065372/the-founders-of-sweetgreen-are-building-a-farm-to-counter-empire-o.
 “Our food ethos,” Sweetgreen, http://www.sweetgreen.com/food-ethos/
 Denise Yohn, “Sweetgreen serves society with more than salads,” Conscious Connection, November 19, 2015, https://www.consciousconnectionmagazine.com/2015/11/sweetgreen-serves-society/.
 “Agriculture, Energy and Climate Change,” GRACE Communications Foundation Sustainable Table Food Program, http://www.sustainabletable.org/982/agriculture-energy-climate-change.
 “How far does your food travel to get to your plate?” Center for Urban Education about Sustainable Agriculture, https://cuesa.org/learn/how-far-does-your-food-travel-get-your-plate.
 “Geo-5 for Business: Impacts of a Changing Environment on the Corporate Sector,” United Nations Environment Programme, 2013.
 Lindsay Blakely, “How Sweetgreen Hopes to Turn Sustainable Salad Into a National Movement”, Inc Magazine, October 2017, https://www.inc.com/magazine/201710/lindsay-blakely/sweetgreen-supply-chain.html.
 “Risky Business: The Economic Risks of Climate Change in the United States,” Risky Business Project, June 2014.