Sweetgreen CEO Neman Talks Cyclospora Outbreak

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, podcasts, radio, news.

**Bloomberg** (0:07)
All right, we're gonna stay in the restaurant sector. Share the sweetgreen, actually rebound today, after a multi-day sell-off, after the chain cut its outlook last week over reduced demand, that it did tie to some of the concerns about cyclospora. I had a chance to catch up with the CEO and co-founder, Jonathan Neman, to talk about the impact, and well, how he thinks he can turn things around.

**Jonathan Neman** (0:31)
Obviously, cyclospora has had an impact on our business as it has had an impact on really anyone selling fresh produce. The good news is, just over the last week, the FDA has announced that it is safe to eat iceberg lettuce. So as we mentioned on our earnings call, we had a really big initial impact. We have seen some recovery since, but it has been a significant impact given the fear customers have about having leafy greens. The important thing for Sweetgreen, though, is that none of our customers or our supply chain has been implicated in the outbreak. We do not serve iceberg lettuce. The outbreak has been isolated to iceberg lettuce from Mexico, resource all of our greens from the United States. And in a lot of ways, this is a moment where the Sweetgreen supply chain and the direct relationships with farmers is so critically important.

**Bloomberg** (1:18)
Well, before we get deeper into that, have you had any sort of contact or any of your folks there with the government? We had the former acting deputy director, excuse me, for the CDC's National Center for Infectious Diseases. And he seemed to suggest that, at least based on his data, that the outbreak overall of cyclospora was actually starting to sort of plateau and taper off and basically saying that a lot of controls that the government had either put in place or alerts they had put out there, at least for right now, seems to have curbed the issue. What contact have you had at all with government health officials?

**Jonathan Neman** (1:53)
They've been wonderful in direct communications with them, and I think they've done a good job of explaining what's going on and that it's now safe. I think it's now the responsibility of everyone who said, excuse me, everyone who said that it's not safe to eat a produce to really correct the record, because I think there has been a bit of a mass panic hysteria. And most people, I was at a barbecue this weekend, nobody was touching the greens, people weren't eating blueberries, was at a supermarket a few days ago, and you're seeing people, instead of grabbing a bag of greens or a head of lettuce, picking up some processed food in a bag, and you've seen some of the impact, not just the restaurants have been severe, but the impact to farmers. We've seen about a 40% impact to farmers that are growing produce. So, to answer your question, yes, we have been in touch.
Again, they've said that they believe that the outbreak is under control. I think it's now more about that message getting out to consumers and them getting back into their habits.

**Bloomberg** (2:52)
I do want to be clear, though, I mean, because there are two separate events. Obviously, the cyclospora outbreak associated with lettuce, which, as you've stated, Sweetgreen does not actually use that type of lettuce that was known to be infected. There was a separate issue with regarding a recall of jalapenos, I believe, related to salmonella. And my understanding was you do use those jalapenos in your dressing. Has that issue been addressed?

**Jonathan Neman** (3:16)
That issue has also been addressed. We, out of abundance of caution, removed jalapenos from 23 restaurants that source from that supplier. We have no indication of any illness from that or any trace of salmonella anywhere in our supply chain.
We do only source that jalapeno only goes in two of our 16 dressings. So it's a very small bit of jalapeno we use in our restaurant. And out of abundance of caution, we removed jalapenos entirely from those restaurants.

**Bloomberg** (3:47)
Yeah, I am curious what steps you are going to take next. I mean, you were giving this anecdote about people kind of being afraid of raw produce. And let's face it, I mean, your primary business traffic's primarily in raw produce here. So how do you convince people to not only come back to Sweetgreen, but overall just to trust what you're selling? Have you sort of planned any sort of marketing campaigns, any more maybe greater disclosures about the farms and other sources of your food?

**Jonathan Neman** (4:16)
Yeah, absolutely. So going back 19 years ago when we started Sweetgreen, we had this pretty bold idea that we were going to list every single farm that we source our food from on the wall, and it to be fully transparent for every single restaurant in every single city. And we still do that today. So if you go into any of our restaurants today, you will see a chalkboard listed with dozens and dozens of ingredients and where those ingredients come from. What we do differently than most restaurants versus going directly to a distributor to source our food, for the vast majority of our products, we source directly with farmers. We spend a lot of time with them in making sure they are, how they're taking care of their soil, the conditions on the ground there are delivering food that is not only safe, but delicious and nutritious.