The US may be best known as the land of ultra-processed food and supersized servings. But Americans, it turns out, like their salads — a lot.
Chains that sell customised salad bowls had a breakout year in 2024 as workers returned to offices in droves. Shares in Sweetgreen, which helped popularise the trend, and Mediterranean-inspired chain Cava nearly tripled last year. A third purveyor, Just Salad, is a “unicorn” after securing a $1bn valuation in its latest funding round.
But for companies with high valuations, remaining crisp like a romaine lettuce — rather than floppy like a lollo rosso — is a growing challenge. The dynamics that kept salad chains firm last year cannot be counted on to do the same in 2025.
Sweetgreen and Cava’s coup was to win customers from fast food and casual dining rivals who had pushed up prices. While not cheap, as such — their salads and bowls cost around $13 to $20 — they present as healthy and affordable. But fast food operators are fighting back. McDonald’s is luring inflation-weary diners with $5 meals. Burger King is trying similar tactics.
Both Sweetgreen and Cava also made a big play for dinner dollars last summer. Adding steak to their menus boosted traffic, but the two will face tougher comparatives this year.
Cava expects same-store sales to expand between 6 to 8 per cent this year, a sharp slowdown from the 13.4 per cent growth it recorded last year. Sweetgreen has also warned like-for-like sales growth will slow to between 1 to 3 per cent for 2025, after delivering a 6 per cent increase last year. It said first quarter sales have been hit by the wildfires in Los Angeles, a city that generates 15 per cent of the company’s revenue.
Despite a 18 per cent drop in its share price this year, Cava still trades at 176 times forward earnings. That’s quadruple the valuation of Chipotle, generally seen as the king of fast-casual dining, which pulls in 10 times more sales and profit. Sweetgreen, which has seen its shares cut down by nearly a third since January, remains lossmaking for now.
These valuations are hard to swallow. True, customers are loyal and numerous, but national scale will be hard to achieve, even with investments in automation and savvy mobile apps. Supplying a salad chain with ingredients is far more difficult than supplying a fast-food joint, especially when the main selling point is freshness and local sourcing.
Moreover, it remains to be seen whether chains like these can thrive outside areas populated by well-off professionals and yoga-going city slickers. McDonald’s is a guilty pleasure for the rich and an affordable option for the rest. Salad chains are trying to achieve similar success with neither advantage.
pan.yuk@ft.com
