Coming soon to Sweetgreen: A test of lower prices
Sweetgreen tests lower pricing to improve value perception amid declining sales.
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Sweetgreen plans to test a new pricing structure aimed at improving customer perception of value. The fast-casual chain has seen significant declines in same-store sales and traffic, pushing the brand to reevaluate its menu pricing and item attachments, particularly for its popular Create Your Bowl option. New lower-priced wraps have been introduced as part of this strategy to drive customer returns.
Why It Matters
This pricing initiative may influence Sweetgreen's unit economics by attracting a broader customer base, potentially impacting territory dynamics in the fast-casual space.
Sweetgreen, a fast-casual restaurant chain, is set to test a new pricing strategy this month as it seeks to improve its value perception among consumers. Chief Commercial Officer Zipporah Allen disclosed this at the TD Cowen Future of the Consumer Conference, highlighting that the brand's biggest challenge is how customers perceive its pricing. The testing will involve new entry price points on the menu and will focus particularly on the "Create Your Bowl" option, which comprises about 25% of transactions. Allen noted that customers currently feel overwhelmed by extra charges for additional ingredients, stating, "It’s not as great of an experience as it could be for the customer."
This strategic shift comes on the heels of a challenging year for Sweetgreen, with a nearly 13% drop in same-store sales and an 11.2% decline in traffic during the first quarter of the year. To address its performance, the chain is implementing a "One Best Way" plan to enhance store operations. Allen emphasized that improving the perception of value is a gradual process but indicated that the brand is making strides.
Sweetgreen has introduced lower-priced wrap sandwiches starting at $10.95, which have been well-received as providing better value. These wraps have also encouraged additional purchases such as beverages and sides. Additionally, the launch of the Cravings of the Month promotion through the brand’s loyalty program has successfully attracted lapsed customers, featuring bowls priced at $12.
