On November 6, Sweetgreen introduced that it was selling Spyce, its division that developed and made its Infinite Kitchen technology to automate the meeting of its bowls and salads. The acquirer is Surprise, the “restaurant and mealtime superapp,” as Quick Firm dubbed it earlier this 12 months.
With that, it’s time to eulogize Sweetgreen’s star-crossed life as a tech firm. No extra dreams of AI, blockchain, or robots.
Sweetgreen is to obtain $100 million in money and $86.4 million in Surprise inventory—a constructive return, on condition that it acquired Spyce in 2021 for a complete price of $70 million. Surprise, which is privately held, was valued north of $7 billion in Might after it raised one other $600 million. Sweetgreen, which went public 4 years in the past, has a market capitalization of beneath $750 million.
After Sweetgreen’s disastrous Q2 2025 earnings report, I wrote that Infinite Kitchen represented “the primary effort by the corporate to make use of know-how to unravel its largest drawback—operations—moderately than mere magic mud sprinkles to make the corporate appear like one thing it’s not.”
Now the corporate’s newest earnings are worse, and it doesn’t personal what had felt like a aggressive benefit.
“Plenty of different firms are attempting to determine tips on how to add automation to their expertise and aren’t prepared to start out over,” Sweetgreen CEO Jonathan Neman advised The Wall Street Journal in 2023 whereas exhibiting off his first restaurant geared up with an Infinite Kitchen. “I’m prepared to blow the entire thing up.”
The query, although, is when did Neman mild the fuse that blew up Sweetgreen? Was it two years in the past? Was it simply November 6? Or was the bomb planted within the firm’s earliest days, and it’s lastly detonated? Sweetgreen’s inventory is down one other 12.5% as of Friday afternoon. (In response to queries, Sweetgreen directed me to Neman’s public statements.)
On this piece, we’ll discover:
- What we nonetheless don’t know in regards to the sale of Infinite Kitchen
- Whether or not Neman might have taken a web page from Pixar or Tesla to change Sweetgreen’s course
- Why Neman has even more durable selections forward to make Sweetgreen worthwhile
- How Sweetgreen’s positioning as a tech firm finally failed it
Infinite Kitchen has been working
Sweetgreen stays dedicated to deploying Infinite Kitchen; it opened eight eating places in Q3, and 6 included the tech. Extra are deliberate for 2026.
Fairly than be accountable for growing and making the techniques, Sweetgreen will purchase them from Surprise at price plus 5%, which Neman mentioned was about $25,000, placing the Infinite Kitchen’s price at $500,000.
In flip, Sweetgreen promised traders that the sale would shave $8 million yearly from its common and administrative bills. These G&A prices are excessive. Because the veteran restaurant operator and guide Rick Vanzura famous on LinkedIn, Sweetgreen’s overhead was 17.9% of gross sales in contrast with Cava’s 10.8%.
However $8 million is simply over 1% of anticipated 2025 revenues, meager financial savings for proprietary know-how that Neman lauded once more this week as having:
“persistently confirmed its capability to ship sooner throughput, improved accuracy and consistency, and elevated meals high quality.”
In Q3, eating places with an Infinite Kitchen “proceed to comprehend roughly 700 foundation factors of labor financial savings and almost 100 foundation factors of [cost of goods sold] enchancment in comparison with eating places of comparable age and quantity.”
Why hand over management of the tech driving 7% labor financial savings per quarter and 1% in meals prices whereas it’s bettering the product itself?
Why Sweetgreen offered its huge tech wager
The Occam’s razor clarification seems to be that Sweetgreen actually wanted the cash. Take a look at its money readily available:
Q3 2025: $130M
Q2 2025: $168M
This fall 2021: $472M
In August, I anticipated that Sweetgreen would quickly require recent capital. I puzzled whether or not the events offering it might demand firm management from Neman and his two cofounders in alternate.
This transfer cleverly sidestepped that risk (for now) by promoting essentially the most useful factor Sweetgreen owned that it might half with to a personal firm, shopping for Neman and firm time to show issues round.
Neman nonetheless possible must do a extra wrenching company restructuring that vastly reduces its overhead (learn: main layoffs). The corporate’s new CFO reported that she’s launched a full assessment of the corporate’s restaurant bills in addition to its G&A. We’ll see if Neman could make some exhausting selections to reinvent Sweetgreen.
The logic underpinning the Spyce sale could also be irrefutable, however there’s nonetheless quite a bit we don’t know. To wit:
- Whether or not Surprise may license the Infinite Kitchen tech
- How lengthy Sweetgreen’s cost-plus deal lasts
- Whether or not these phrases additionally apply to future Spyce improvements
I don’t anticipate we’ll get direct solutions, however that is what traders specifically ought to be eager about and monitoring.
Sweetgreen’s “Sliding Doorways” second No. 1: The Pixar path
In 1989, Pixar, six years earlier than the debut of Toy Story, determined to promote its RenderMan know-how to different firms. Pixar wanted money, particularly if it was going to satisfy its imaginative and prescient of creating feature-length computer-generated animated motion pictures. The gambit labored. Pixar retained management of the tech, has enhanced it repeatedly over time, and main movement photos from different studios nonetheless depend on RenderMan.
Might Sweetgreen have determined to license the Infinite Kitchen know-how to its rivals moderately than promote the tech to one among them after which develop into a licensee? Doing so might have helped carry down the prices of Infinite Kitchen and spurred additional innovation, as Surprise now hopes to do.
Given how scorching the non-public markets are for robotics tech, might Sweetgreen have engineered some complicated monetary deal to get funding for Spyce to scale it with out having to promote it? I don’t assume that’s too outlandish an concept.
Alas, public market traders haven’t been affected person with Neman (the inventory is down nearly 90% because it went public).
This may have been daring and visionary in 2021 after Sweetgreen acquired Spyce, or in 2023 when Neman talked of his willingness to “blow the entire thing up” and energized traders with the Infinite Kitchen’s potential.
Making that decision in late 2025, when shoppers seem like cooling to bowl-based meals (the “slopcession,” or “slopapocalypse,” because it had been), would have been dangerous. However the siren name of these labor and price financial savings might have gained it some prospects and allowed it to manage its future.
Sweetgreen’s “Sliding Doorways” second No. 2: The Tesla manner
In 2014, Elon Musk open-sourced Tesla’s electric vehicle patents. This, too, was a daring transfer for a nonetheless shaky, unprofitable firm. Musk did it to speed up the auto trade’s adoption of EVs, which it did.
On the time, Tesla’s market cap was roughly $28 billion.
In the present day it’s $1.4 trillion.
What if Sweetgreen had open-sourced Spyce’s patents? Would it not have sparked a wave of innovation in automated restaurant tech? That is much less possible than if it merely licensed techniques to rivals, because the restaurant trade is way extra atomized than the automotive enterprise.
However the transfer would have been a bravura stroke that, at least, would have bolstered Neman’s narrative that Sweetgreen is a unique form of firm.
Dwell by the tech narrative, die by the tech narrative
Not lengthy after Sweetgreen went public in November 2021, Kristen Hawley, a Quick Firm contributor, wrote in her meals and tech e-newsletter, Expedite, the uncomfortable fact that “salad doesn’t scale like software.”
Now we are able to affirm that restaurant automation {hardware} to make salads and bowls doesn’t scale like software program both.
Corporations want a narrative, a imaginative and prescient to promote to traders, media, and prospects. It’s why Tesla backers voted to present Elon Musk his potential $1 trillion pay package deal this previous week. For Sweetgreen, its story has lengthy been that this was a tech firm—no, a platform—that offered wholesome salads and bowls moderately than a restaurant firm that used tech like, um, each different restaurant chain.
I needed to seek out the primary occasion of Sweetgreen publicly presenting itself as a tech firm, and I consider it initially did so on the event of its 2011 Sweetlife competition, due to a deliberate integration with a then-buzzy social app:
“We take a look at ourselves much less as a restaurant group than a assume tank,” cofounder Nathaniel Ru advised Mashable. “We’re extra of tech startup than a restaurant enterprise.”
Fourteen years later, Sweetgreen is a restaurant enterprise. Its future success shall be decided by persevering with to enhance its operations, growing new menu gadgets, and marketing itself as a “way of life model,” as Neman advised traders, that’s “centered on creating tradition by distinct model moments.” Once more, like each different restaurant chain. As I perceive it, the corporate nonetheless has a tech staff, however so does everybody else. The tech dream could die exhausting at Sweetgreen HQ, however die it ought to.
In different phrases, the troubled firm’s tech Cinderella story is over. Sweetgreen’s enchanted digital coach has develop into a garden-variety analog pumpkin.
