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How I Built This - Advice Line with Jonathan Neiman of Sweetgreen
Episode Overview In this episode of How I Built This, host Guy Raz is joined by Jonathan Neiman, co-founder of Sweetgreen, on the Advice Line segment. The focus is on addressing the questions of three early-stage founders, offering insights on scaling and maintaining brand integrity in the food industry.
Key Themes
- Introduction to Sweetgreen
- History: Founded in 2007 by Jonathan Neiman, Nathaniel Rue, and Nicolas Jammet, Sweetgreen started as a salad shop in Georgetown, Washington D.C.
- Growth: Transitioned from a small local business to a national chain with around 250 stores and a valuation of approximately $3 billion after going public.
- Current Innovations: Introduction of an “infinite kitchen” technology that automates salad assembly while ensuring food quality.
- Advice for Founders
The episode features three founders who seek advice on their respective businesses:
- Dini from Dini's Divine Pies: Struggles with maintaining product quality as she scales her handmade pie business.
- Matt from Underground Mushroom Co.: Focuses on gourmet mushroom production and seeks to navigate growth without compromising quality.
- Joey from Dak Dak Wings: Evaluates whether to expand his menu beyond chicken wings to include sandwiches and other items.
Insights from Jonathan Neiman
A. Dini's Inquiry on Scaling
- Maintaining Brand Integrity: Jonathan emphasizes the importance of knowing the core values and vision of the business. He suggests that Dini should consider what aspects of her brand are crucial to her identity and how they can be preserved during growth.
- Market Presence: He encourages Dini to seek partnerships with local developments to enhance visibility and maintain authenticity.
B. Matt's Focus on Trends
- Product Expansion: Jonathan advises Matt to stay focused on his core product (gourmet mushrooms) but also to explore limited time offerings (LTOs) as a way to test new menu items without overwhelming operations.
- Customer Interaction: He underscores the importance of engaging directly with customers to understand their preferences and perceptions, which can guide product development.
C. Joey's Query on Menu Diversification
- Menu Strategy: Jonathan suggests maintaining a tight menu focused on wings for now, as expanding too quickly can dilute brand identity.
- Incremental Innovation: He recommends testing new items through LTOs rather than full integration initially. This allows for experimentation without disrupting operational efficiency.
Key Takeaways
- Know Your Brand: It’s crucial for founders to understand what makes their brand unique and to retain that essence as they scale.
- Engage with Customers: Direct communication with customers offers invaluable insights into product development and brand perception.
- Experiment Gradually: Testing new ideas through limited offerings can provide a pathway for innovation without jeopardizing the core business.
Conclusion This episode serves as a reminder of the complexities founders face in scaling their businesses while staying true to their original vision. Through thoughtful advice and real-world experiences, Jonathan Neiman provides actionable insights for current and aspiring entrepreneurs navigating similar challenges in the food industry.
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For those interested in more from Jonathan Neiman, the episode links back to his founding story, available in prior episodes of "How I Built This."
Additional Resources
- Sweetgreen's Infinite Kitchen: More information on their automated assembly technology.
- Previous Episode: [Jonathan Neiman's original appearance on How I Built This](https://wondery.com/shows/how-i-built-this/episode/10386-sweetgreen-nicolas-jammet-and-jonathan-neman/?queryID=cdb88c1452b402f676734a973a3a9a43)
- Contact for Future Episodes: Interested founders can submit questions to be featured in upcoming Advice Line segments via voice memo or call.
Follow Guy Raz
- Social Media: Follow Guy Raz on X & Instagram.
- Newsletter: Sign up for insights and updates at [guyraz.com](http://guyraz.com).
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This summary captures the essence of the episode while providing thoughtful insights for aspiring entrepreneurs.
Written by AI. May contain mistakes. Listen to the episode to check what was said.
Transcript
Automatic transcript. May contain errors.0:00Wondery Plus subscribers can listen to how I built this early and ad free right now. Join Wondery Plus in the Wondery app or on Apple Podcast. Is your AI built to work with your business's data? IBM helps you integrate and govern unstructured data wherever it lives, so your business can have more accurate AI instead of just more of it. Get your data ready for AI at IBM.com. The AI built for business. IBM. I love traveling with my family. We did an awesome trip this summer, and one of the things that made the trip so special were the Airbnb experiences we did. immersive tours, cooking classes, a chance to get coffee with a world-class barista.
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2:16Hello and welcome to the advice line on how I built this lab. I'm Guy Raz. This is the place where we help try to solve your business challenges. And each week, I'm joined by a legendary founder, a former guest on the show who will help me try to help you. And so if you are building something and you need advice, go ahead and give us a call and you might just be the next guest on the show. Our number is 1-800-433-1298. Send us a one-minute message with your name, a bit about your business, and the issues or questions that you'd like help with. or you can send us a voice memo at hibt and id.wondery.com.
2:58And make sure to tell us how to reach you. Also, don't forget to sign up for my newsletter. It's filled with insights and ideas from the world's greatest entrepreneurs. You can sign up for free at gyros.com or on Substack, and we'll put all this info in the podcast description. All right, let's go. Joining me this week is Jonathan Neiman. He's the co-founder of Sweetgreen. Jonathan, it's great to have you back on the show. Guy, it's great to be here with you. So you were first on the show back in 2020. I think you were my last in-person interview before COVID. And it was crazy. It was like a week later.
3:29And for anyone listening, if you haven't heard that story, we will put a link in the episode description of this episode. And it's well worth going back and listening to it. It is such a cool story. You guys started Suikering in 2007. You started with your friends Nicholas Jemay and Nathaniel Rue. And you guys opened it, a salad shack in Georgetown in Washington, D.C. You guys were students there. I know the location well. I used to live there. Since then, you guys have grown into a huge national chain of almost 250 stores all over the U.S. And I think just about a year, Jonathan, after your episode aired, this is in November of 2021, you guys went public.
4:09And you are now the CEO of a publicly traded company valued at around$3 billion, which is just incredible. What a ride. Well, thank you. First of all, I'll never forget that day recording with you because it must have been exactly five years ago, almost to the day. Because when we flew up in the morning, everything was fine. And I remember landing in San Francisco and getting a call from a board member, Steve Case. And he's like, are you ready for what's about to happen? I'm like, is this really that big of a deal? We recorded, we left. And within hours, the news started coming out. And so it's been quite a wild ride the past five years.
4:43And so much was happening. Like you guys were going through all kinds of changes with the business. I think your entire like corporate team turned over and you had to kind of start again and amazing things that have happened and amazing innovations, which I want to ask you about. But before I do, I want to ask you some, first of all, give me a quick update of where we are now. I mean, a lot of people have heard your episode of How I Built This. A lot of people have eaten a sweet green. I know it well. I have my go-to. I love the lemon juice, olive oil, salt and pepper. That's my thing. I love it.
5:16Very healthy. Tell me a little bit about where you guys are right now and just kind of a taste of where you're headed. Absolutely. So today's sweet green has 250 locations around the country. We're now in 22 states. And since we last spoke, a few things we've been focused on. One has been a broadening of our menu. So while we started as more of a salad shop, our vision was always more around connecting people to real food and leveraging the supply chain we had built and the scratch cooking and more the ethos and the brand to go beyond just salads. So over the past couple of years, we've introduced protein plates.
5:51We've introduced caramelized garlic steak. We had a huge launch introducing ripple fries. Ripple fries? Yeah. These are air fried French fries. Exactly. Sweet greens to take on the classic French fry. Only five ingredients, air fried, no seed oils, cooked in avocado oil, just about transparent ingredients, great quality food cooked simply. And the vision is to redefine fast food. It's kind of this idea of you can have your cake and eat it too. There's a permissible indulgence. So one has been this menu expansion and broadening. Obviously, we've been opening a lot of restaurants. And then there's been a new innovation that we've been working on, which is called our infinite kitchen.
6:30We've always been huge innovators in technology, thinking about ways to leverage technology to improve the experience for customers and team members. And the infinite kitchen is our newest way of doing that. It is an automated assembly line. So the way it works is you still put in your order. We still scratch cook and prep and cook, make everything from scratch. But the actual bowl is now assembled by a machine. By robot? By hands? It's not a hand. It looks more like a giant kind of mainframe, like giant refrigerators. They're clear tubes where you can see the food and there's a track underneath it.
7:06Oh, wow. And it shoots out like lettuce or shoots out the cabbage? That's exactly right. And every single dispenser had to be engineered for that ingredient. I bet. Yeah. So to get the perfect dispense, thinking about the different viscosity levels of different dressings and different items. And you got to make sure it doesn't get blocked up. Yeah. Like kale. Exactly. If everything was as easy as almonds, this would have been an easy exercise. Right. But you have to make it so that it plates perfectly. It doesn't all sit on top of each other. So the bowl spins around. And customers are loving it.
7:42We can do 500 bowls an hour. perfect consistency. The food quality is better. We're seeing great results from a business perspective as well as, you know, we're able to run the stores with significantly less labor and I think a better quality job for our team members. So how many of these locations do you have now? We have 12 open today, and this year we'll open at least 20 to 25 new ones. So is the experience, essentially, because we had Steve Ells of Chipotle on a year or so ago, and he talked about trying to do an automated concept to New York, which I think they are doing. I don't know where it is now, but when you go into one of these stores, are you ordering from a human or do you order from a screen?
8:20So you have the option of ordering from a human that has kind of a mobile tablet where they can take your order. Okay. And they're walking around and they can go up to you. That's exactly right. So the idea, the vision for this is actually to give more hospitality and more service. So we save some labor on the menial task so we can lean into the to more of the service side of the business. We also do have kiosks and you can order on your phone. So we have those options available for you. But again, the idea is how do we make it feel more human, more theater, more soul, and the technology just be an enabler to that experience.
8:55Compared to a, let's say a non-automated store, how many people do you need to run the automated store? So like all of our stores, it depends on the time of day. You know, peak lunch in a New York store is much more than an average store, for example. But on average, 30 to 50 % less labor at the store level. So you're running it with far fewer people. But what's interesting is our turnover, our employee turnover is a really critical metric for us because the more we can hold our team, the more productive they are, the more they know their customers, everything kind of starts from there. The turnover in the stores with the infinite kitchen is significantly less than our classic stores.
9:35Because there's less stress. It's less stress. It's a little bit, it's an easier job to work in. Jonathan, before we get to our callers, I'm curious, when you started Sweetgreen, you had that location in Georgetown, it was the three of you running it, and then you had a couple more people in, but you had a really clear vision. Like the dorm food sucked, you wanted really great healthy food. And I remember going to, you know, those restaurants in the early days, but they've evolved over time, 250 locations, even though they're corporate owned and managed. It does become harder to maintain the culture, maintain the quality, maintain the commitment by the staff.
10:09It's very, very rare when you go to a chain of restaurants and they are all entirely consistent. I think In-N-Out is an example of a brand that does it very well. I don't know how they do it. How do you make sure that they are all operating at the same level? So you're asking the billion or maybe the trillion dollar question because that is the business of restaurants. I think the way we think about it is a balance of art and science. The science is all of the tools. How do we make it really easy for you to do your job? Whether it be software in the back of house or AI to help you order the right amount of food or we're now leveraging AI to schedule labor.
10:57kind of make some of the routine things easy for you. But the art is really, really important. The art is leadership. And the most important position at Sweetgreen is the general manager of a restaurant. We call them the head coach. And one of the critical metrics we track is our stability at the head coach level. We know if we can get a head coach to stay in their store for a few years, everything gets more consistent and all the numbers get better. So really figuring out what's the right profile for a sweet green employee. And the amazing thing about the restaurant industry is it's one of those places that with not a lot of experience or education, you can start here as a, you know, work in the line.
11:36And if you work hard, you can be a manager making over$100 ,000 a year in less than three years. And for us, those are our best managers. Our best managers were promoted from within. They're the ones that preserve the culture and understood the business kind of from the front line. Yeah. Jonathan, why don't we take some calls? because I know people are super excited to have you on and to get your advice. So why don't we go ahead and take our first call. Welcome to the advice line. You're on with me and Jonathan Neiman from Sweetgreen. Please tell us your name, where you're calling from, and just a little bit about your business.
12:10Hello, Guy. Hello, Jonathan. My name is Dini Makala Amosurrutia. I own a small pie company called Dini's Divine Pies in Rockville, Maryland. And we make all of our pies in small batches, handmade, using simple ingredients, all butter crusts, and a whole lot of love. So that's the ethos of this company. Cool. And is it like, tell me, I mean, what kind of pies? I really like to draw on my own background. I'm half Mexican, half Irish American. And so right now we're working on some Irish-inspired recipes. Other times I'm putting together, you know, I have like a mixed berry made with mezcal, for example.
12:52So I really like to play with my background, but also to be very creative with the recipes. And how long has the business been around? So it started during the pandemic. I was actually recently divorced. I was dating my former yoga teacher and he really liked key lime pies. So I made him one for his birthday that year. That was October of 2021. and you do crazy things for love. So I just busted out the best key lime pie I could imagine. I had never made, I'm not a baker. I didn't grow up baking or anything like that. So anyway, he said, this is the best key lime pie I've ever had in my life. There's a market for this.
13:30I'm going to prove it to you. So he took it to work the next day. And then that fall, basically fall and winter, people were asking me to make not only the key lime pie, but then they'd say, well, that was so great. Can you make a strawberry? pie? Can you make whatever? So I, having never been a chef or anything like that, I learned a lot on YouTube. I read a lot and figured it out. And lo and behold, now three years later, I have a really thriving small business. I quit my job. I'm a lawyer. I'm a public interest attorney. I resigned last spring and I'm all in. So I'm reluctant to ask this because I'm imagining the Andy McDowell, Hugh Grant movie version of this story.
14:14What happened to the yoga instructor boyfriend? That's a great question, actually. You know, he moved away. He made some choices and it's okay. But he inspired the business. He did. And I had this amazing thing and, you know, it's all good. It's all good. We can still make a movie out of it. We can. He just had a small role in the end. He did. Yeah. Yes. Good part. Okay. Okay. Jonathan Neiman, first of all, questions for Deeney? Where are you selling the pies? I have a small little brick and mortar that's not a really great strip mall. And I'm doing all of my production out of a gorgeous, huge commercial kitchen where I am right now.
14:57But I see that I need to pivot and really think about if I'm going to scale up the way that I am, I have to diversify, I think, my revenue streams. And so I'm pivoting away from the retail and focusing more on wholesale and pop-ups. And I'm on DoorDash as of last week. Part of what happened in the beginning was that I was baking out of my house. So I approached a winery and they said, hey, you know, bring us five pies of your favorites and, you know, we'll try them and no promises. So I did that. And they said, you're on the schedule for Mother's Day. That was 2022. And they said, you're going to need to be licensed, insured and be prepared to, you know, serve pie to 500 people.
15:43So having, you know, again, I figured it out. I found a shared commercial kitchen space and squeezed a lot of key limes and rolled out a lot of dough by hand and peeled apples by hand and was incredible. Before we forget, you brought a question for us. What do you need help with? So, well, I mean, what's very important to me in all of this is that the company retains its heart and soul. I think part of why it has taken on a life of its own is because there's something about these pies that make people joyful. I've made so many friends. I've gotten to know customers who have now become very good friends.
16:21It's kind of like a little neighborhood hub in a big city. Assuming that I can scale this up, and I have some conversations actually this week that are happening with a major national food chain, and they're already asking me questions about, well, are you willing to change a name? Are you willing to change a logo? And things like that. Jonathan, I want to bring you in here because you have 250 locations and we talked about maintaining, you know, brand and quality. And I think that Sweetgreen's done a great job at it. Obviously, Dini's in a different spot. But as she thinks about growing and expanding, how can she keep the ethos, that kind of homespun feeling with a brand that might, you know, sell in a dozen or two dozen different places?
17:05You know, I really think it starts with the ultimate vision you have and what your goals are and what's going to make you happy. Because from the way I hear about it, so much of it is about the love you put into it and the connection to your customers. And scale will change that. Your business will change. You won't, you know, I mean, I'm in restaurants a lot and I meet my customers, but it's not the same as when I was working in the first store and I knew all the customers. And I remember, you know, my CFO tells this story. He joined us almost exactly 10 years ago. And he's like, you know, these guys had a really beautiful business.
17:42They almost owned all of it. And they could have slowly opened a store a year and owned all of it and had full control of this high quality experience. But that wasn't the vision. The vision was we want to be the next version of McDonald's. So we built it to be that. It was never built to get to$250. It was built to get to$3 ,000. And I think you have to kind of think about what is, like, is that what you want? Or do you really want to have known for the best pies that are really high priced with great margins and you're sold in the best restaurants in the world and you're on Gold Belly and your key lime pie is known to be better than Joe's Stone Crab.
18:28and that's what's going to bring you joy. You're still actually baking the food. So I think where some people get stuck is they think bigger is better. And it's not always better because you're going to actually, to get big, you have to go through years and years of less profit. I have friends today that have really nice businesses that they own 100 % of, don't have investors, do what they love, and make really, really good money. Right.
19:21And it's an important question to ask yourself because you could charge a premium price for what you're making. You're using high-quality ingredients. It's all handmade. It's really special and local. I mean, there's a pizza place I used to go to in Berkeley, and the guy only opened from 5 p.m. to 8 p.m., and you had to order it and Venmo the guy. It's a well-known place. I think it's called Amelia's Pizza, and it is amazing pizza, and he sells out every single day. and he's only open four days a week, you know, and he controls his schedule, he controls his lifestyle. You're probably spending a lot of your time now baking, right?
19:58I imagine. I mean, I spend my time doing all of it. So it's, you know, I'm doing the social media, everything right now. And that's something as I'm growing, I have to figure out how to, you know, manage, but I do bake, but I do have, you know, my, I have two chefs who are part-time And that's made a huge difference because I can just give them the recipes and they're off and running and I can, you know, go try to, you know, talk with people about wholesale opportunities or work on the social media stuff. Yeah, I mean, Jonathan, I mean, I think it's a natural human instinct, right, to want to expand, right?
20:35And as you did, as our show has, everybody wants to do that. And I think there are good arguments to be made to do it. If you are in Dini's position here and you're thinking about, okay, how do we take this from the shop in Rockville, farmer's markets to at least a bigger regional presence? What do you think are interesting options for her? I am actually very bullish on brick and mortar right now. I think that in this world, and you said of kind of everything digitized, we're seeing a lot of energy around the analog experience again and the power of building community in a physical space. you know i'll give you an example in our business when delivery became a thing we're like oh maybe we don't need restaurants because people know the brand we can open these kind of ghost kitchens and we can just deliver to people through either our app or all these other uh all the all the marketplaces well what's interesting is i can have delivery coverage in an area and then i can open a restaurant there and the whole thing lifts so the physical presence of an actual a place actually can help lift your wholesale and the rest of the business you have to make sure you can afford it and build it out and all of that um and with real estate i'll say real estate markets are relatively efficient when rent is really really cheap there might be a reason it's really cheap and that the old adage of location location location it's means something it's real like even today a brand like We can market.
22:15We have all of these capabilities. If we take a bad location, it doesn't work. Right. You know, I just had an idea, Dini, which is, you know, especially in where you are, it's all over the country, right? There are often incentives to bring local businesses to a new development, right? I think here in the Bay Area, there's a famous fried chicken place in Oakland called Bake Sale Betty's. And then when the Chase Center, where the Golden State Warriors play, opened up, they invited them to open a location there because it's local. You go to San Francisco Airport, and there are all these local restaurants there with locations there.
22:53And I imagine that, to Jonathan's point, this idea of authenticity, of analog experience, I think that's so true. true. I'm seeing it anecdotally, and I'm sure the data is going to back this up soon, which is a brand like yours, which is it's rooted in Rockville, it's rooted in the Maryland, Virginia area. I bet that there might be opportunities to partner with, you know, somebody who's building some kind of, you know, new development or maybe a food hall or something where your presence will be really welcome because you are local. And I don't know exactly what's available, but there might be something out there.
23:33I love that idea, Guy. You've probably been to Union Market. Yeah, exactly. Like Union Market. Union Market would be like a perfect place for that. And then you have the people that go there are looking for those sorts of things. It can also function as your bakery. So instead of the space you're renting there, but then you have a physical presence for discovery. So I really like that idea. Yeah, I think there's a lot of cool opportunities. Dini, good luck. Thank you. The company is called Dini's Divine Pies. We are cheering you on. Thank you. And we'll keep tabs on you. Thank you very much. It's so nice to meet you both.
24:09Thank you. Best of luck, Dini. Great to meet you. Yeah, I mean, I feel like, especially with a business like this, where people are willing to pay more for, like when you're seeing the people actually made it, and you can talk to them, and it's a sense, it's like wine, it's like a terroir, like you're tasting a sense of the place. In this case, Rockville, Maryland. Yeah. And you know what I mean? So I feel like there's something there about a willingness to pay more for something that you can really connect with. Absolutely. And I also think you've probably heard of the Japanese term ikigai. Yeah.
24:46It also matters. You know, what are you uniquely good at? What do you love to do? What can you be best in the world at and make money? And you've got to find that intersection. So from what I heard from Dini, she loved that the actual hands-on piece of it and that connection and scale may come at odds with that. And there's a way to have a very successful business and brand and keep it tight still and do the things you love. We're going to take a quick break. But when we come back, another caller, another question and another round of advice. I'm Guy Raz and we're answering your questions right here on the advice line on how I built this lab.
25:29If you've been listening to the show these last couple of episodes, you've probably heard me mention the Airbnb original experience that I'm hosting. I'm so excited to have a chance to connect with listeners in a completely new way. It's called the Reinvention Lab, and it's designed to help you think about how to unlock your next big move in your career or even in your life. I'll help you discover your own story in ways I do on this show with my guests. And attendees will get a chance to take a deeper dive with me on so many lessons I've learned from this show. Lessons that have transformed how I work and think about the future.
26:08All proceeds from the event will go to support the Ronald McDonald houses that helps families stay near their children who are being treated at nearby hospitals. It's going to be really fun and I can't wait to meet you. So come join me in San Francisco and take your idea to the next level. To grab your spot, visit Airbnb.com slash Guy. It's going to be great. Now a quick break switching topics to one of our favorite sponsors, Vital Proteins. Vital Proteins is the number one brand of collagen peptides in the U.S. By taking collagen peptides every day, you can help support your hair, skin, nail, bone, and joint health.
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28:37Welcome back to The Advice Line on how I built this lab. I'm Guy Raz, and my guest today is Sweetgreen co-founder Jonathan Neiman. Jonathan, let's take another call. Let's do it. All right, let's bring in our next caller. Welcome to The Advice Line. You are on with Jonathan Neiman, co-founder of Sweetgreen. Welcome. Please tell us your name, where you're calling from, and a little bit about your business. Yeah, how's it going, guys? Well, Guy and Jonathan. My name is Matt Pinstein. I'm calling from Gloucester, Massachusetts. And I am the founder of Underground Mushroom Co. I produce gourmet mushrooms for local farmers markets, at-home deliveries, and restaurants in the area.
29:16Nice. Well, welcome to the show. Thank you for calling in. So you've got a business. You're growing mushrooms. Where are you growing the mushrooms? Because Gloucester is a—I don't know enough about mushroom cultivation. I mean, I eat them. But I think Gloucester is pretty cold for a big part of the year. So I'm assuming it's like indoors, like heat lamps, kind of like, I sound like you're growing something dodgy, but is that right? Yeah. So the name Underground Mushroom Co., my intention was to start in a basement just for that very reason. Less fluctuation of temperature and consistency is really the name of the game when you're growing mushrooms.
29:52They like about 63 degrees. And I figured that heating and cooling throughout the year would be more advantageous in a basement. So that's where I started. You are growing in a basement. I am, yeah. And as far as retail space is concerned, you get cheap rent. Right, yeah. I rent 2 ,000 square feet of commercial basement space. It used to be a lobster pound, so they used to wholesale lobsters out of there. And I took one of the lobster pools and converted it into a mushroom grow room. Oh, wow. So it's a 12 by 20 foot space, and it allows me to grow anywhere between 150 to 300 pounds of mushrooms a week.
30:29Wow. What's your rent like there? Oh, it's like$1 ,600 a month. Oh, so it's nothing. It's super cheap, yeah. I mean, one of the things is during king tides, I've been told that it floods. I mean, there was flood damage in the space. But I saw that and I'm like, what a great place to get my feet wet. Yeah, exactly. And so how do you make sure that the mushrooms don't get flooded out if there's king tides? Well, I haven't run into that problem yet. I mean, that's probably the impetus to move to my next space. This space right now is kind of a proof of concept, but I've already become profitable.
31:05And I love what I do. So I just want to take this to the next level. What are you doing in sales right now? So the cost of production is actually pretty cheap. I can produce one of these substrate blocks for only$6, and I'm getting about a$40 return on that investment. How many mushrooms in a block? It's about two and a half pounds of mushrooms per block. And not only is it the cultivation of mushrooms, but I actually sell at-home grow kits that I can ship anywhere throughout the country. I also do tinctures that I sell at farmer's markets. And yeah. What's the final product? Are you turning it into, is it more functional mushrooms like the lion's mane, ashwagandha, those sorts of things?
31:50Or is it, tell me a little bit more how it shows up for the consumer. Yeah, less of that, more of just the gourmet angle. Oh, gourmet. Okay, gourmet mushrooms. Yeah, yeah. I studied sustainable food systems in college and worked on farms. And I got into mushrooms primarily because it's the most sustainable food out there. I mean, because they're decomposers, they take sawdust, which otherwise would be wasted, and creates a viable, healthy food source. Wow. So you're selling to restaurants mainly? Yeah, yeah. High-end restaurants in the area. Yeah. That's awesome. So the idea is to create a, I'm thinking here in LA, for example, we have a famous farmer named Alex Weiser.
32:32It's like, you want to be that, the guy known where the best restaurants are serving your mushrooms and they're putting your name on the mushroom, on the menu. They're putting your mushroom name on the menu as a selling point. Yeah, you got it. I mean, I get a real thrill from seeing my name on a menu and the way that I go about selling these mushrooms, I really just knock on the back door of restaurants and I get a real kick out of talking with chefs and explaining different recipes that they can incorporate my ingredients into. And you said you're at the farmer's markets as well? Yeah, I am.
33:07And I'm a one man show right now. So I haven't hired anybody, but I'm able to hold it down all the spinning plates I can do myself. Before I forget, what question do you need help with? What's your question for us? Yeah. So the question has to do with scaling, but not just scaling to scale. I think one of the ways that a lot of people fail in this industry is that they grow too big, too quickly. Mushrooms have a limited shelf life. And yeah, as a result, I would rather people start finding me through virtuous food choices. So I was wondering, you know, since Sweetgreen really prides themselves on people making healthy food choices.
33:52How do you go about that? How do you shift people's perception of choices they make and what you're putting out? You know, it's interesting because, you know, Sweetgreen, when we started the business, was very much positioned around healthy, you know, around the fact that it's healthy. And that's still a core part of the brand. what we've learned is while a lot of people say they care about health when it comes down to making a decision about what they're going to eat it's taste convenience and value health is kind of there right you know right in the number four range and so where we've shifted a lot of what we talk about and i think this is going to be very true for you is all the things that we do around our supply chain and are made from scratch is really to make it taste better and yes it happens to be really good for you and good for the environment.
34:43But in terms of like what we're trying to kind of position more so is we do this because it creates better flavor. And I think for you, that's super true. And I think that's why, for example, we do these partnerships with these chefs. Sounds like you're already on it to kind of be the mushroom farmer to the greatest chefs. Yeah. And I think if you do that for a little while, you will build an amazing brand. And the Second thing I would do is figure out how to build a little bit of a brand around yourself. You know, how do you become kind of like what Joel Salatin was or what Al Weiser is? Kind of you become a little bit of a famous farmer.
35:21I don't know if you've seen Farmer TikTok. There's a lot of cool stuff going on. And I think I haven't yet. If you could go just really authentic, here's how we do it on, you know, and kind of honestly, you know, there's a lot of people that talk that there's no brands anymore. It's just really people. Right. And it sounds like, you know, given your education background and what you're doing, if you can take people behind the scenes on how you do these things, kind of show them your personality. I think that plus the positioning with chefs and then being at the farmer's market, I think is a really kind of cool winning combination.
35:52Yeah. Thanks, Jonathan. What are your constraints, Matt? I mean, it seems like the business is you don't need a whole lot of money to grow. It seems that the cash flow can kind of help you fuel the growth of the business. Is that true? Do you have any, are there any resource constraints? Yeah. I mean, I raised$50 ,000 initially through a company called Mainvest. Oh, wow. It's like a crowdfunding, not like a GoFundMe, but there is a rate of return that my investors are expecting. I got 106 investors. Mainvest, I think, went out of a business, right? That's correct. Yeah. So now it's on me to allocate those funds back to my investors and I'm not to the point - The platform was doing it for you, but now they're not doing it.
36:34Correct. So I have to find another platform when I get to that point. But between all my expenses and trying to keep myself afloat, I've yet to be able to pay back my investors. But I mean, that's the next hurdle. That's the next goal. And I don't know if it would be foolish for me to go out and do a second round of investing, having not started paying back my initial investors. But that would certainly speed things up getting into a second location. Are you supply constrained or is it like if you had more supply, you'd be selling? Oh, yeah. Certainly. I mean, I'm selling out everything I produce.
37:21Wow. Well, that's a great sign. Yes. Absolutely. Yeah. So here I've survived the winter. We're coming into the spring. Tourism's coming back to Gloucester, Salem, Beverly, the whole area. And I just bought a second sterilizer, so I'm going to be doubling my output. And that'll free up some cash, and hopefully I'll be able to hire someone to help me. But money helps everything, right? So yeah, I could certainly expand with added capital. Well, it seems like you have some really interesting opportunities, especially now that you're selling everything you can grow, which is a good sign. It means that you have to figure it out, right?
38:02You've got to figure out a way to expand your footprint. And whether you can do that through cash flow or whether you're going to take a loan out, I mean, it's possible you might be able to get an SBA loan. And that could be another interesting way to go. But, I mean, it's a great sign. It means that you're producing something that people want. You might have some pricing power. Yes. Yeah. I do sell my product for$3,$4 over what distributors are selling theirs for, but it's because the quality of my product, my chefs want to purchase something local. And I'm nervous right now. I can hear it in my own voice.
38:38But when I'm face-to-face with a chef, they trust me and want what I have to sell. So not only can I grow them, I can sell them, and I take that as a point of pride. Yeah. It's awesome. Matt, good luck, man. The business is called Underground Mushroom Co., Company Co. Congrats. Good luck. Congrats, Matt. Can't wait to try it. Thanks so much, guys. Yeah, pleasure chatting with you. Best of luck. Take care. Thank you. Yep. Bye-bye. Now I'm going to do grilled mushrooms tonight. I'm going to do some sautéed mushrooms. You could take a portobello. You can turn it. It's like a burger. It's so meaty and delicious.
39:10It's so good. It's so good for you. I mean, it's an amazing, amazing plan. All right. We're going to take another quick break, but we'll be right back with one more caller. Stay with us. I'm Guy Raz, and you're listening to The Advice Line right here on How I Built This Lab.
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41:47Welcome back to the advice line on how I built this lab. I'm Guy Raz. And today I'm taking your calls with Jonathan Neiman, co-founder of Sweetgreen. So Jonathan, let's get back into it and take another call. Awesome. Hello, welcome to the advice line. You're on with Jonathan Neiman of Sweetgreen. Welcome to the show. Please tell us your name, where you're calling from, and a little bit about your business. Hi, Guy. Hi, Jonathan. My name's Joey Cornell. I'm calling from Villa Park, Illinois. My business is Dak Dak Wings, and we specialize in crispy double fried wings, fresh cut fries, and unique house-made sauces.
42:23Yum. Awesome. Welcome to the show, Joey. And where is Dak Dak Wings located? Yeah. So we currently have one brick and mortar location about 10 miles outside of Chicago in Villa Park, Illinois. And it's a late night place, open like super late night or what are your hours? Yeah, so we're lunch and dinner mostly and we're open for the suburbs fairly late, 10 p.m. on weekdays and Fridays and Saturdays till 11 p.m. And you've got a brick and mortar and tell me a little bit about how you give me some background. Are you a chef or is that your background? Are you a cook? Did you work in restaurants?
42:59How did you start this? So I got super involved with our high school's culinary program when I was about 15 years old, and I just dove into it. And so on top of spending all the time I could in the culinary department, I was working at a local restaurant and kind of in tandem was doing cooking competitions and, you know, some illegal catering perhaps for people in my community. but quickly decided to go to culinary slash hospitality school. So I briefly attended Johnston, Wales in Providence, Rhode Island. There's culinary school there. Yeah. Yeah. Yeah. I thought to meet like-minded people is a good place to go.
43:42So I was working full time and I tried Korean style wings for the first time and was blown away with the texture. It's uniquely crispy, sticky. The chicken is mildly flavored versus being heavily seasoned. And it's just an amazing experience. And then when the pandemic hit, I came back home to the Villa Park area and was upset that we didn't have anything close to it for Wings. So yeah, started writing a business plan and looking at spaces to lease. Finally, after about touring 70 locations, I was trying to keep it small, takeout only, almost a COVID proof concept. And I found a former Little Caesars that I was able to retrofit into what I envisioned.
44:34And yeah, just with my own cash and I was able to get a small SBA loan and that's what started our restaurant. Wow. How did you get the cash to do it? I'm asking for a friend, people listening. How'd you get the cash? No, for sure. Believe it or not, guy, when I wasn't recipe testing or working on the business plan, I was driving Uber Eats and DoorDash. Nice. Nice. That's how you save the money? Yeah. When people were at home, the roads were clear. I was driving a little fast, trying to go from order to order. That's how I saved most of the money. It's a great story. And you probably learned a little bit about part of your business.
45:13Thank you, Jonathan. Yeah. How much did you save from Uber and DoorDash? It ended up being close to 50 ,000. Wow. Amazing. Yeah. So I was able to then get a SBA loan for a little more than that. And when I say, you know, opening a restaurant on a shoestring, just plus building out everything, you know, website, online ordering, that's about as tight as you can do a restaurant for most people I talk to say, you know, a restaurant of similar size is three to 500 ,000. I can, I can attest to that. That is, yeah, I, uh, we made it work and came close to running out of cash, but here we stand today, almost, uh, three years, a little over three years later.
45:55So, wow. And tell, tell us about what's your challenge. What's your question for us? Uh, yeah. So the question that I had, um, with future restaurant expansion in mind, how much should I focus on our primary product of crispy wings and fresh cut fries? And how much should I lean into potentially leaning into trends, whether that's frying and beef tallow, offering a chicken sandwich, chicken tenders, etc. Interesting. Interesting, Jonathan. I think it starts where I was going to ask you is understanding who your customer is and a little bit on where the brand is positioned. Is it positioned kind of trying to compete with Wingstop, trying to be a healthier, more premium version?
46:42Because I think a lot of the way I'd answer some of those questions depends on which part of the market you're trying to capture. Yeah, definitely not healthier. Sorry, Jonathan, with, you know, it's chicken wings and fried food in general is indulgent. So I kind of take the Todd Graves approach is that the day someone wants a salad, they're going to get a salad. If someone wants, you know, fried chicken, they're going to get that either way. But with that said, the product is definitely premium. We use all natural, you know, antibiotic-free chicken, our coleslaw, our pickles, our sauces, everything we're making in-house.
47:19So we're definitely chef driven, especially with one restaurant. It's definitely easier. I know that gets tougher as you grow. So yes, we are slightly premium, but really with the focus on just a better chicken wing experience in general. The question to me is like, could you offer a chicken sandwich? Could you offer a salad? And what I wonder is, is whether, because I think the answer is yes, but I don't think it's a yes, and this is the way it is. To me, it's more like a pop-up kind of approach. Like, hey, you know, there's a great pizza place that I go to in Sonoma County and they do Roman style pizza.
47:58Right. But now and again, on their on their Instagram, they're like, hey, we're doing New York style pizzas just today. But it's the place is a Roman style pizza. It's, you know, the big square dishes of pizza. But on those days, people get psyched because it's like something else that is just new and different. And I wonder whether you could just try that pop up approach. Like we're doing Korean like boneless wing chicken, Korean chicken sandwiches. Definitely guys. So we've, uh, we've had really good success with LTOs, you know, limited time offerings that we've done, uh, now with a decent sized email list, uh, we've done in the past chicken and waffles, chicken sandwiches.
48:39We even did a funnel cake and fried chicken special last summer. And just like you say, you send out an email, put it on Instagram, and those always go over incredibly well. But again, those are one time you have to get it now or it's gone. Of course, those work well, but I guess to take a step to fully integrate a new trend, like Jonathan knows, if you add one menu item, it completely changes the flow of your line, your prep schedule, walk-in storage. These are things that I like to have as tight of a menu as possible. We do one thing very well, but sometimes in the back of my head, I get the constant people saying, oh, you should add a chicken sandwich.
49:21You should add tender. So we offer those as LTOs when we can, but something like frying in beef tallow and eliminating seed oils, we are actively trying to switch over to that. So I guess just how do you know when to make those decisions? Do you trust your gut? Do you trust industry data? Yeah, it's an interesting one because we've been going through this transition ourselves and evaluating the cost benefit of it. My gut is to stay focused and stay focused on wings and be known for the best wings in the world. Eventually, as you grow, you'll want other growth levers. And so keeping that for another day, I think is a good thing.
50:03I wouldn't go into it yet. wing stop didn't introduce sandwiches until like two years ago and by the way the reason they did it was not from a customer perspective it was from a supply chain perspective because they realized that if they introduce sandwiches now they can buy whole birds instead of just buying the wings because there was such demand for the wings and now they bought the whole birds and brought their cost of overall of all of their chicken down so i will say that a lot of it you know i keep going back to who's your target customer and where you're positioning the brand. My view on health is health is less about calories.
50:41It's more about the underlying ingredients, not having processed stuff and crap in it. So I think the way you're doing it, handmade, no preservatives, no processing and potentially removing seed oils could have a very cool positioning of a better for you wing. But if you do that, make sure the whole brand is aligned towards that. And in terms of the moving to beef tallow, I think it's really interesting. I'd evaluate what's the additional cost? How much more would you have to sell to fund it? What I can tell you, and we've spoken about this publicly, is we did start a journey of removing seed oils about two years ago out of our restaurant, just introduced fries, cooked in avocado oil.
51:20And generally, I'd say it's been worth it. The response has been really good for our customer. People did care and we saw a noticeable shift. However, I will say that we saw it very different by market. So places like LA or New York reacted much more positively to it than certain other cities. Again, this was about two years ago. I think the awareness has shifted a bit around seed oil. So, you know, speak to your customers. I think that even today at our scale with millions of customers, I spend a lot of time talking directly to customers. And I think at your scale, I would just talk to them. That's the beauty of kind of start being small.
51:57Do you care about this? Would it make you want to come more? Is it something that you would tell your friends about? And that'll help you get a kind of sharpen your gut feeling on what the right decision is. Agreed. Agreed. Joey Cornell, the business is called Dak Dak Korean Wings. Good luck. Keep at it, man. Thank you, guys. Jonathan, guys, it was a pleasure to be here. Thank you very much. Great to meet you, Joey. Good luck. Thanks for calling in. Jonathan, before I let you go, just a quick question. Now that you have all this experience, I mean, 2007, man, you were a baby. And I still think of you as a baby, but you're a grown up, obviously, today.
52:32And running a really significant national business. If you could go back to you in 2007 and just give you some encouragement or advice, what do you think you would say to him? I'd probably say enjoy the journey, that it will be more challenging than you expect, but more rewarding. And the key is not giving up and don't take anything too seriously. This too shall pass. You know, you think back on all those existential moments, you know, and I still, we still have them today. I think I talked about this on your podcast, You know, one day you think you're on the verge of world domination, the next on the verge of bankruptcy.
53:17You know, you still feel that and you just got to do your best to kind of maintain that equanimity. You know, what's crazy when you think it's been 18 years, it's been half my life pretty much. So if you're not having fun while you're doing it, it may not be worth doing. That's Sweetgreen co-founder and CEO, Jonathan Neiman. Jonathan, thanks. Guy, thanks so much for having me on. This was fun. And by the way, if you haven't heard Jonathan's original How I Built This episode, you've got to go back and check it out. We'll put a link to it in the podcast description. And here's one of my favorite moments from that interview.
53:49You went to your executive team and you present this plan. And within a year, they all left. Basically, your entire top level execs are gone. Yeah. I remember like the last one where we thought it couldn't get any worse. and I get the text from someone and it's always like the worst text when someone says, hey, can you talk? And then so the last person quits and we're just like, oh God, what are we going to do? Hey, thanks so much for listening to the show this week. And by the way, please make sure to check out my newsletter. You can sign up for it for free at gyros.com or on Substack. And of course, if you're working on a business and you'd like to be on this show, send us a one-minute message that tells us a little bit about your business and the questions or issues you are currently facing, because we would love to try and help you solve them.
54:43You can send us a voice memo at hibt at id.wondery.com or call us at 1-800-433-1298. You can leave a message there and make sure to tell us how to reach you. And by the way, we'll put all of this in the podcast description as well. This episode was produced by Iman Ma 'ani with music composed by Ramtin Arablui. It was edited by Casey Herman. Our audio engineer was Neil Rauch. Our production team also includes Alex Chung, John Isabella, Elaine Coates, Chris Messini, Catherine Seifer, Kerry Thompson, Sam Paulson, JC Howard, and Neva Grant. I'm Guy Raz, and you've been listening to The Advice Line on How I Built This Lab.
55:26If you like How I Built This, you can listen early and ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts. Prime members can listen ad-free on Amazon Music. Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey. Wix. It's where website creation meets AI and where your boldest ideas become real. It just takes one platform to build a site that looks great and does everything you need it to. And it just takes one person, you, to start taking care of business like a 10-person team. With AI tools for creating an entire website from scratch or testing new ways to make money, Wix is there with you from day one.
56:10Try it out now at Wix.com.
From the publisher
Sweetgreen’s co-founder Jonathan Neman joins Guy on the Advice Line to answer questions from three early-stage founders. Plus, Sweetgreen’s plans to automate salad assembly in the coming years.
First, we meet Dini from Maryland, who's learning how to maintain her brand’s character and product quality as her pie company scales. Next we hear from Matt in Massachusetts, who’s leaning into success growing premium mushrooms for local chefs without getting too big, too fast. Then Joey in Chicago, owner of a restaurant specializing in fried chicken wings and fresh-cut fries, who’s deciding whether to introduce new products or double down on what’s already working.
Thank you to the founders of Dini’s Divine Pies, Underground Mushroom Co. and Dak Dak Korean Wings for being part of the show.
If you’d like to be featured on a future Advice Line episode, leave us a one-minute message that tells us about your business and a specific question you’d like answered. Send a voice memo to hibt@id.wondery.com or call 1-800-433-1298.
And to hear the founding story of Sweetgreen, check out Jonathan’s first appearance on the show in 2020.
This episode was produced by Iman Maani. It was edited by Casey Herman. Our audio engineer was Neal Rauch.
You can follow HIBT on X & Instagram and sign up for Guy's free newsletter at guyraz.com and on Substack.
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