Sweetgreen Stock Jumps After Launch Of New Loyalty Perk

The new Sweetpass relaunches the chain's salad subscription.

Over the last year, numerous restaurant chains have been experimenting with the food subscription model. 

The Taco Pass, which the Yum! Brands  (YUM) - Get Free Report-owned Taco Bell made available twice in 2022, let customers order one of seven tacos a day throughout the course of a month. In the fall of that year, privately-held salad chain Subway also ran a promotion giving holders of its "footlong pass" 50% off full-size sandwiches for $15.

DON'T MISS: Sweetgreen Wants You To Subscribe To Its Salads

Since going public in November 2021, fast-casual salad chain Sweetgreen  (SG) - Get Free Report has also played around with the subscription model.

The Sweetgreen Salad Subscription Makes (Another) Return

In January 2022, Sweetgreen launched a program in which frequent customers could pay $10 a month and get $3 off every purchase of $9.99 or more. The program lasted the month and disappeared before being brought back for another month in June 2022.

Nearly a year later, Sweetgreen is once again launching an expanded version of the Sweetpass — along with the $10-a-month promotion, there is also a new loyalty program that gives members early access to menu drops and lets them earn points both regularly and by participating in daily promotions and "challenges."

"This next phase of loyalty is an exciting result from years of testing, iterating and listening to our customers, leading to a personalized program that further enhances their Sweetgreen experience," Jonathan Neman, Sweetgreen co-founder and chief executive, said in a statement. "With Sweetpass, customers can more frequently access delicious, craveable food that feels good and fuels a healthy lifestyle."

The Sweetpass is also the first customer loyalty program since Sweetgreen scrapped giving customers a free bowl after every 10 meals following the covid-19 outbreak in 2020. 

The updated membership program and subscription came, Sweetgreen said in its release, after seeing customers ask for "new ways to earn menu discounts" and "lifestyle-driven experiences."

Sweetgreen Stock Sees Brief Surge After Announcement

While Sweetgreen brought in a record $470.1 million in 2022, it has also had lower-than-expected sales in the last quarter and opened fewer new locations than it had initially planned.

After news of the new Sweetpass first went public on April 24, company stock saw a brief jump of 2.1% to $7.66 before falling again to $7.31 by the afternoon.

Shares are down more than 74% from a year ago and 15.14% since the start of 2023. While sales have benefitted from a pandemic-related return of activity in some urban centers, the return to the office has not been widespread enough to maintain a model that had formerly leaned heavily into the daytime lunch run.

Amid a looming recession, the chain's $15-a-salad prices caused by locally-sourced ingredients also pose a risk as many tighten belts and trim extra spending. Between 2022 and 2023, fast food restaurant visits fell by 13.4% even as competitors like Chipotle  (CMG) - Get Free Report managed to buck the trend.

"We continue to believe Sweetgreen successfully marries the two industry mega-themes of the last decade of guest facing technology & transparent food sourcing that presents a long-term moat for the business," Cowen analysts wrote in a report downgrading the price target to $12 in February 2023. "However, the external environment has changed significantly since the November 2021 IPO that we believe will present continued challenges to the business for the foreseeable future."