Discover more from Margins by Ranjan Roy and Can Duruk
The Sweetgreen-ification of Society
Segmentation, Signaling and Stratification
Ranjan here. Today I’m talking salads and segmentation-driven stratification.
In 2002, when I started working on a trading floor, I would get lunch for everyone on the desk. It’s like you might imagine: About 10 guys would bark really specific orders at you, and yell if you got something wrong.
I would walk over to 56th street, where there were a number of delis, and go through the daily routine, usually at a place called D&S Deli (RIP).
Standing in line, you had pretty much every variety of midtown-weekday-daytime New Yorker. Construction workers, people in suits, people in business casual, and a handful of tourists, all standing side by side waiting for a sandwich of some sort. The people I worked for were all making inordinate sums of money, and for the most part, had very expensive tastes, yet the lunch routine was the lunch routine, even for the top ~0.5%.
Fast forward to 2019. My lunch routine is a rotating cast of fast casual concepts, with lost vowel names like GRK and SKWR, names that sound like branding agencies like Maison Kayser and Ole & Steen, or farm-to-table joints like Sweetgreen. On average, lunch rings in at about $15-17.
When I do go to a nearby deli, it’s impossible to ignore just how stark the socioeconomic contrast is to the Sweetgreen line. While the latter appears filled with people who stepped away from their WeWork desks, the former feels packed with the contractors underpaid to maintain that same WeWork.
Every stage of my life and learning (econ undergrad, finance, MBA, personalized news, marketing) has drilled into me the idea that price discovery and customer segmentation are intrinsically good things. It could be the central thing that ties them all together. Dividing up your customers and charging them according to their means and needs is how business and a highly functioning capitalist society works.
That was one of the promises of technology and data. The more information you have on your customer, the better you can target them with a specific product and price to maximize your profits while meeting their demands. Win-Win! It’s why airlines charge you differently based on your IP location. When Amazon does it, it’s called “dynamic pricing”. The free marketeer in me should be celebrating the rise of the $15-17 fancy fast casual tier. There was clearly a pent-up demand waiting to be unleashed. If a customer demands a $14.50 bacon, egg and cheese, shouldn't the market celebrate its ability to meet that demand?
A Technologist, a Humanist and a Capitalist walk into a bar….
This is yet another one of those times where we’ve pursued unadulterated progress with no regard for the external social implications. I used to get annoyed when I'd hear someone say "Sweetgreen isn't a restaurant....it's a technology company". But maybe it is, the good and bad.
There has always been prevalent class stratification and social signaling. But we're in this weird space where a confluence of user data, targeted marketing, labor trends and even supply chain innovation all work together to create an almost weaponized quinoa bowl. A company with the technical chops, branding resources, and a low interest rate influx of private capital can simply steamroll us with any retail concept. We're no longer constrained to the Banana Republic-Gap-Old Navy trichotomy. Every facet of our daily consumer lives can now be hyper-segmented.
Technology optimizes how we discover a place, how we’re nudged to go there, and how we’re encouraged to go back. And our masters of startup retail have certainly understood the power of social signaling in optimizing every step of that funnel. Creating Instagrammable food is your earned media strategy, while beautiful packaging is your built-in brand ambassador strategy.
It's yet another area where technological know-how amplifies existing behaviors and practices. We've always signaled status with things like the little horse on your shirt or the expensive watch on your wrist (can you tell I worked in finance?) or the bag you carry or the shoes you wear. Those were social signaling table stakes.
But now it's our lunch too. It's all around us, in everything we do. While the colorful grain bowl you bought makes for a great Instagram post, that paper bag holding your local goat cheese salad now also proudly displays a WeWorkian word salad. It’s like the physical manifestation of that Instagram post. It’s how you tell the world how good you are.
Digital, meet Physical
Taking things that happened in small and localized doses and amplifying them in hyper-efficient ways is what a good technology company does. The same forces that allow us to be micro-targeted into perfectly personalized content and commerce feeds in the digital realm are also functioning to help economically segregate us in more and more daily situations in the physical realm.
We’re now used to it in the digital sphere. Search is personalized. Feeds are algorithmic. There aren’t really true common spaces. But now you’re living in Facebook-like filtering for the duration of your lunch break.
I started noticing the Sweetgreen vs. deli line a few months after Trump became President, when we were all going through our own personal J.D. Vance explorations. At the time I didn’t even realize Sweetgreen was going cashless. That product decision, along with the blog post from the founders explaining it, captures the entire debate better than anything I could ever write. The gains in efficiency made this a seemingly undebatable decision (from the founders):
We believe going cashless is a win-win-win:
A win for the customer: 75% of consumers prefer to pay with credit or debit cards (only 11% prefer cash)
"Welcome to the Future" the post title reads. The language of win-win-win is used (it’s a 3rd win!) But how we all collectively arrive at that future was something that was never thought to be the responsibility of a venture-funded restaurant. The societal implications of explicitly leaving out those 11% who prefer cash was a question that was just not asked. 89%! But they are finally being asked, and that’s a good thing. The recent announcement that Sweetgreen will be allowing cash payments make it seem like we're all starting to talk about the what the road to that future looks like.
I am writing this entire piece as someone who enjoys eating at Sweetgreen. I certainly hope this newsletter doesn't kale their vibe. I strongly buy into their values of local sourcing, sustainability and supply chain transparency for improving the way we eat. And I certainly hate dealing with cash. This post is about Sweetgreen doing what they’re supposed to be doing, and doing it well, and us, collectively, not questioning that framework of progress for so long.
Just next time you get lunch, take a good look around you.
We are losing the spaces we share across socioeconomic strata. Slowly, but surely, we are building the means for an everyday urbanite to exist solely in their physical and digital class lanes. It used to be the rich, and then everyone else. Now in every realm of daily consumer life, we are able to efficiently separate ourselves into a publicly visible delineation of who belongs where.
We lost the lunch line. We lost the coffee cart. We’re losing the commute. Innovation has bestowed upon us an entire homescreen worth of transportation options that allow us to congest the roads and never brush elbows with those taking the subway. Meanwhile, the crumbling of the subways aren’t felt by an ever growing number of the somewhat well-to-do.
We're losing our kid’s schools. And on and on it goes. One by one, we dismantle any semblance of public shared experiences thanks to the magic of segmenting out a society of consumers by their willingness-to-pay. It's like our entire daily routine slowly becomes an airplane boarding process. Understanding your consumer preferences, and delivering products that match those needs at a price point optimal for both parties is how it’s supposed to work. And it’s certainly working.
But like in so many other areas of consumer life, we're slowly learning that mutually beneficial success at the micro-level just might have adverse effects in the macro. It’s reassuring to see, in situations like the cashless payments drama, we’re at least starting to ask what is the price of progress.
What I’m Reading
Perfect prams for perfect parents: the rise of the bougie buggy. Finally, as a NYC parent, I'm probably a bit hyperaware of retail-oriented status signaling. Holy crap, the baby industrial complex is strong. If anyone is interested in the origins of the $1200 stroller market, read this Guardian piece on the rise of Bugaboo:
But her real coup was getting one into the hands of Miranda Hobbes, the red-headed lawyer played by Cynthia Nixon on Sex and the City. It was, Boiler said, “the biggest, most iconic show” on television, so when one of the key characters got pregnant, Boiler called up the props department. On 25 August 2002, a Bugaboo Frog, purple with a cream interior, appeared in episode six of season five, parked in the hallway of Miranda’s apartment while she frantically prepared for work after a sleepless night with the baby.
I’ll finish with this incredibly well-produced promotional video from Sweetgreen. It’s almost jarring how the language of all big startups now, whether you rent office space, or sell salads, or host social profiles, involve a stream of words like passion, purpose, community, etc.: