Roughly 15 years ago, the country was awash with fast-casual concepts hoping to be the next McDonald’s, but healthy.
Fast-food burgers and fries were killing us, or so they argued. American consumers wanted better options—fresh produce, clean ingredients, made to order.
So a new category emerged around mostly salads and bowls, with potential chain contenders coming fast and furious: Tender Greens, Silvergreens, Mixt Greens, Lemonade, Freshii, Chopt, Just Salad, Salata, Mad Greens, Sweetgreen and Cava. Later there was Little Beet, Dig, Salad and Go, Flower Child.
The fundamental challenge at the time was scaling a limited-service brand based on fresh, thoughtfully sourced ingredients and scratch-made, customizable meals offered at an accessible price point.
It’s a struggle that many of those chains grapple with still.
Some of these brands took off but remained regional, while others floundered. But clear leaders have emerged, with other contenders in the race for national presence threatening to give chase.
Sweetgreen and Cava are setting the pace, though both have yet to demonstrate the profitability that will prove their models as public companies.
Behind them, concepts like Salad and Go and Everytable hope to disrupt the category as more value-positioned brands. The Cheesecake Factory plans to put its considerable muscle behind the Sam Fox-designed Flower Child brand, which has a more upscale feel at its 31 locations, with three more planned for this year.
And New York-based Just Salad—which has more than 70 units across eight states, mostly on the East Coast—is known for pioneering the reusable bowl and building its health angle around a sustainability message.
Here’s a look at what’s working and the challenges ahead for these contenders.
Made from scratch
“Healthful” brands are difficult to define because consumers have different ideas about what constitutes healthy eating. But a common thread among these concepts is the vast amount of fresh produce on menus that promise fresh, “unprocessed” food.
That makes for a complex operation. And for that reason, few of these healthful fast casuals are considering franchising.
Sweetgreen, for example, is doing much of its buying directly from growers and producers, which makes the supply chain inherently more difficult to manage, but also arguably results in fresher lettuce and other ingredients.
Walk into a Sweetgreen, and you will likely see some kind of signage touting that just about everything on the menu is prepared from scratch in stores.
It’s a model that has worked well for the brand, which stands out in the healthful fast-casual space for quality. But it also contributes to its higher price tag.
Earlier this year, however, Sweetgreen began making a very small shift in operations: Some salad dressings will be made in regional central kitchens, rather than in each store.
The chain calls it “upstreaming,” and it’s something the brand plans to do more of.
It’s not about cutting food costs, said CEO Jonathan Neman in Sweetgreen’s second-quarter earnings call. It’s about labor and eliminating tasks that workers don’t particularly like doing, like stemming and washing kale.
“Sweetgreen really prides itself on sourcing as well as our scratch-cooking model,” he said. “However, we do see opportunities to simplify the labor model inside restaurants by taking certain items that we think we can improve the quality and consistency of, and upstreaming them.”
Outsourcing certain ingredients or prep work, or using a central kitchen or commissary is nothing new. But for fresh-food concepts, finding the right balance is tricky.
Erik Oberholtzer founded and designed the now 26-unit Tender Greens concept in 2006 with everything made from scratch in house.
At the time, competitors like Lemonade and Mendocino Farms were able to outmaneuver Tender Greens on real estate because they used a central commissary model, so they could operate with smaller kitchens and lower labor costs, he said.
“The flip side, of course, was that they couldn’t touch us on freshness,” he said. “Our strength was that everything came in raw and fresh, and we made it daily. And it was hard, and it required a lot of people and talent and infrastructure.”
And, he added, “It’s very, very hard to do at scale.”
Sweetgreen, which ended the second quarter with 220 restaurants, has yet to make a profit, though officials with the Los Angeles-based chain say this will be the year. In the second quarter, the chain narrowed its net loss to $27.3 million, compared with a loss of $40.5 million a year ago. And it reported a profit based on adjusted earnings for the first time as a public company.
With an average unit volume of $2.9 million, the chain says it has a number of levers to pull to boost restaurant profitability: better deployment of general managers, the new two-tiered Sweetpass loyalty program and growing more in the suburbs, to name a few.
But perhaps the most watched will be Sweetgreen’s test of fully automated restaurants that can produce between 400 and 500 bowls an hour and cut labor costs by about 30%.
The first Infinite Kitchen, as it has been dubbed, opened in Naperville, Ill., earlier this year with an automated makeline that produces bowls faster and more consistently than traditional units.
And though it’s early, company officials are very, very keen on the automated format, saying it could be transformational, not only for the concept, but for the industry. But they have yet to offer details on the cost of the technology and potential return on investment.
A second converted unit with the automated makeline is scheduled to open later this year, but Sweetgreen is already looking to include more Infinite Kitchens in the development pipeline, starting next year.
Cultural cuisine
Bowls are on the menu at Cava, but don’t call it a salad chain.
Cava was born as a fast-casual variation of a full-service Mediterranean concept that was founded by three partners of Greek heritage.
CEO Brett Schulman said the healthful position of Mediterranean cuisine has helped the chain appeal to a broad set of consumers who want to eat better without sacrificing taste.
“We’re not necessarily trying to own the healthy food category,” said Schulman in an interview. “We’re trying to define the Mediterranean category, which is inherently healthful food.”
And among “cultural cuisine,” as Schulman likes to call it, Cava is a clear leader. The chain has 279 units in 24 states, and no other Mediterranean concept comes close.
In fact, Cava competes more directly with fast-casual brands like Chipotle Mexican Grill, another cultural cuisine player. Over the years, many brands have been dubbed “the next Chipotle,” (including Sweetgreen), but Cava currently wears that mantle. The Washington, D.C.-based Cava Group went public earlier this year, and swung to a profit in its first earnings report for the second quarter.
Like Sweetgreen, Cava is also directly sourcing the vast majority of its ingredients from growers, ranchers and producers, and much of the chain’s food is prepared in-house.
But Oberholtzer points to a unique aspect that has served the brand well: Early on, Cava’s founders saw potential in the dips and sauces that help give its menu its bold flavors, like the signature Crazy Feta, harissa, hummus and tzatziki. Seeing an opportunity to sell those sauces in grocery stores, the company invested in a production facility in Maryland.
Now, that facility supplies the chain’s nearly 300 restaurants, as well as the more than 650 grocery stores that carry the products. A second production facility is scheduled to open in Virginia early next year, which will help support the chain’s drive to 1,000-plus units by 2032.
Not only did the move ensure the sauces and dips are made consistently in-house, but it also removed a tremendous amount of complexity from restaurant operations, Oberholtzer said. “That’s unique. If you’re going to go omnichannel and do more, and really invest in a true commissary, then, yes, it makes sense. But it’s a big investment.”
Schulman said Cava also uses some co-packer partners to prepare dishes like the braised lamb that also goes into its spicy lamb meatballs, which is cooked sous vide and finished in-house.
Cava also has kept its menu tight with 38 ingredients on the line. If something new is brought in, like a seasonal offering, then something must come off, even if temporarily, he said.
“I think a lot of brands over the course of history have gotten into challenges with menu creep,” said Schulman. “We’ve all seen it, where you want to add more items to address more customers’ needs or attract different customers, but then you start to overcomplicate the kitchen, and then leads to bad guest experiences for your core guests, which creates a negative feedback loop. So we’re really mindful of that.”
Schulman said Cava also enjoys the advantage of a brisk dinner business. Sales are split about 55% lunch and 45% dinner systemwide, but in the suburbs, the split is more 50/50.
“If you’re trying to delivery more healthful food at scale, you want to be relevant in multiple dayparts, not just lunch, but at dinner, too,” he said.
Like Sweetgreen, Cava is building systems that will make it easier to grow and operate restaurant profitably, and fundamentally, that is the puzzle to solve.
“Restaurants don’t scale like SaaS software,” he said.
The affordability issue
A huge challenge among healthful fast casuals is affordability.
Sweetgreen and Cava offer quality, but for many, a $15-plus price tag is out of reach, at least on a regular basis.
That’s where concepts like the 115-unit Salad and Go and 50-unit Everytable come in.
Both are rapidly growing around a commissary-based hub-and-spoke model, with prep work handled in regional kitchens that supply the restaurant outlets.
Tempe, Ariz.-based Salad and Go, for example, is a drive-thru concept offering 48-ounce signature salads, from a classic Caesar to antipasto, along with wraps and soups, all assembled to order. Everything can be customized, or guests can build their own salad.
The salads are about $7—almost half the price of a typical Sweetgreen entree—which compares favorably to much of the fast-food world. There’s also a breakfast menu, with burritos on offer for the morning drive-thru crowd—with many also purchasing their lunch salad for later.
CEO Charlie Morrison, who left the chain Wingstop to join Salad and Go in 2022, has pledged to reach 135 Salad and Go units before the end of 2023. The brand operates in Arizona, Texas, Oklahoma and Nevada.
Morrison calls it the “democratization” of healthful food.
“Now, salads are for everybody. They’re for all, instead of just being relegated to the few,” Morrison told Jonathan Maze in the Deeper Dive podcast last year.
Salad and Go has a very simple operating model that can be replicated at scale, he contended.
Out of two production facilities, all the produce for Salad and Go is cleaned, cut, prepped and portioned. Meats are marinated and cooked. Corn is hand-cut from the cob. And the chain even makes its own beverages, so syrups for the lemonade, for example, are also made in the central kitchens.
“The benefit of that is you’re taking pieces and parts of the supply chain out of the equation where there’s a lot of margin loss,” said Morrison.
A third production facility was scheduled to open this year, which Morrison said would serve up to 400 more units, which can operate in a space as small as 700 square feet.
The production facilities are capital intensive, he noted, and Salad and Go does not plan to franchise. But he believes there will be a return on that investment as the brand benefits from buying at volume and offering customers a great value.
However, that model has yet to be proven at scale, contends Erica Holland-Toll, culinary director for food-and-beverage innovation company The Culinary Edge.
“I’ve heard Salad and Go is struggling with [the] commissary model and it’s not as successful as they would like it to be,” she said.
“A commissary is great when you have a high-density urban location, or high-density suburban location, where you can put a lot of units within one driving range,” Holland-Toll added. “There’s a whole level of cost that goes along with a commissary, whether it’s trucks and liability, delivery routes and all that. It’s a tricky balance.”
And others are also seeing an opportunity with drive-thru-only salads without using a commissary, she noted. The Culinary Edge has worked with the new Greenlane, for example, with two units in Florida that opened earlier this year.
Franchising?
Everytable, meanwhile, is striving to make healthy food more accessible by varying the price point by location. And it’s a brand with a social justice mission.
With more than 50 units in Southern California and New York, the chain offers healthful grab-and-go meals that are priced higher in higher-income neighborhoods to bring prices down in underserved neighborhoods, sometimes called “food deserts,” where healthful options are often unavailable.
The brand is also making a push into healthcare settings. An Everytable outlet is scheduled to open in October in the New York City Health + Hospitals system’s Metropolitan Hospital.
Founded by Sam Polk in 2016, Everytable is also built around central kitchens that supply the restaurants, where there is no food prep at all.
The commissaries also stock swipe-and-go Everytable vending machines in places like college campuses.
Built in is a unique franchising program. Everytable’s goal is to cultivate franchises from the neighborhoods they serve to help bring more people from marginalized communities into store ownership.
Wild card
Yet to enter the fray is the new Kernel concept being created by Chipotle founder Steve Ells.
This new plant-based concept will reportedly be largely automated, with tiny units operated by as few as three workers and served by a central kitchen. Ells has raised $36 million in Series A financing to launch the concept, which is scheduled for debut in New York City this fall.
Ells, a pioneer of the fast-casual segment, plans to have 15 Kernel units open within two years. He also plans to license the technology to other chains, which will likely draw considerable attention.
Oberholtzer said no one model is likely to work for every brand. But winning in this segment will largely depend on simplicity of operations, he said.
“It does come down to, does it remove complexity from the four walls, so that the things that need to be done can get the attention they deserve?” he said. “There’s healthy, there’s fresh, and there’s good. And good is probably the most important one.”