Sweetgreen hoping mobile payment app will hit guests' sweet spot

Feb. 12, 2013

Starbucks may be the best known fast casual restaurant to have embraced mobile payments so far, but D.C.-based sweetgreen, a chain of 16 trendy eateries located on the East Coast, is hoping to see similar success. The company has launched its own custom-branded mobile payment app called sweetgreen rewards, built by Boston-based mobile payment startup LevelUp. It's the first white-label solution LevelUp has built and offers users a mobile payment tool, integrating LevelUp's "zero interchange" platform, as well as a loyalty and payment program. It even helps sweetgreen's customers donate to charities.

When customers use the app instead of a credit card, sweetgreen doesn’t have to pay a processing fee, so it’s donating 1 percent of all sales from the app to charity, said Jonathan Neman, co-founder of Sweetgreens.

"We are asking 'What if we didn’t all have these fees,'" he said. “And this technology, with the 0 percent interchange, puts that money to a good cause. We are taking that money back and giving it to charity, and our customers are going to love that.”

How the sweetgreen app works

To use the sweetgreen app, a customer downloads the free app to either his iOS or Android device and links his credit or debit card. Like LevelUp's own branded app, the sweetgreen app uses QR codes scanned at the point of sale using LevelUp's scanner to process payments.

“It’s really easy,” said LevelUp CEO Seth Priebatsch. “The app also replaces your sweetgreen loyalty card, because for every $100 you spend, you’ll unlock $10 to sweetgreen. You can unlock even more perks for your loyalty, too, like free birthday salads and donations to charity. The more you pay with the app, the faster you’ll unlock more rewards.”

It's the
simplicity of LevelUp that caught Neman’s attention. He had looked at partnering with other developers, and even spent money developing a similar solution, but to no avail.

“We spent months of time and a good amount of money, and it didn’t work,” Neman said. "The simplicity of this solution is great. It really works.”

Priebatsch agreed, saying that outside of LevelUp White-Label, there are two extreme options for restaurants interested in offering customers a mobile payment experience, and neither are very good.

On one hand, restaurants can join an existing mobile payment network.

“The plus is the restaurant avoids all the time and effort it takes to build a payment network, but as a trade-off, they can’t brand the app, and they lose total control of their data, information around who customers are, what they’re buying, how much they’re spending,” he said.

The other option is for a restaurant to build its own mobile payment network from scratch.

“This option isn’t good either, because even though the restaurant can custom-brand their app and keep all the data, they have to spend an outrageous amount of money and time building a payment network, and then they have to get their users to sign up for it," Priebatsch said.

What makes LevelUp White-Label different, Priebatsch said, is that restaurants can create a custom-branded app that’s powered by the company’s best-in-class mobile payments infrastructure, and they also get to keep full control of their data.

“Restaurants also get all the benefits of LevelUp’s back-end, too, including zero interchange fees, loyalty tracking, customer analytics, engagement tools and security and access to the company’s 500,000+ strong community of active users," he said. "Our middle-of-the-road approach is exactly what most restaurants with multiple locations are looking for."

The cost

LevelUp licenses the SDK/API for $15,000 per platform, which offers a core code-base of all the standard functionality needed to build and operate a mobile payment app on LevelUp's infrastructure. It's another $20,000 per app platform to hire LevelUp to build, test and deploy the white-label app.

That may sound pricey but not comapred to the cost of buidling from scratch a mobile payment, loyalty and security infrastructure, which can run between $750,000 to $3 million, Priebatsch said.

The credit card diet

To kick off the app launch, sweetgreen is going on a credit card diet; the restaurants will only accept cash or LevelUp payments for a couple of days, varying by location.

“While we’d love all restaurants to go on a credit card diet forever, before this can happen, more consumers need to transition from credit cards to mobile payments," Preibatsch said. "The credit card diet is intended to encourage this shift. We’re confident that when consumers start paying with the sweetgreen rewards app, they’ll keep paying with it."

Getting customers on board 

Neman is confident his customers, which he describes as very tech-savvy and loyal, will embrace the app. He also has a marketing strategy to help them learn about it.

“We sent out emails to our regular customers and they are so excited,” he said. “All our employees will be there to help walk guests through it and we have some really cool signage in stores and have info up on our sites and on our social media (sites.)"

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Topics: Online / Mobile / Social , Systems / Technology

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