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Starbucks may be the best known fast casual restaurant to have embraced mobile payments so far, but Washington D.C.-based sweetgreen, a chain of 16 trendy eateries located on the East Coast, is hoping to have similar success.
Sweetgreen has launched its own custom-branded mobile payment app — sweetgreen rewards — built by Boston-based mobile payment startup LevelUp. It's the first white-label solution from LevelUp. It's built on top of LevelUp's "zero interchange" platform, meaning sweetgreen doesn't pay processing fees but pays a small percentage on incremental sales brought in by the app. It also incorporates LevelUp's loyalty and rewards features and 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 sweetgreen.
"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.”
LevelUp to the core
While the sweetgreen app has the restaurant's distinctive branding, its core functionality is LevelUp's, meaning it's still intuitive to set up and use. To make purchases, users link a debit or credit card to the app which generates a QR code. The code is then scanned at the point of sale using LevelUp's scanner to process payments. LevelUp is also providing sweetgreen with customer tracking, loyalty and engagement tools as well. The app is available for both iOS and Android devices.
“It’s really easy,” said LevelUp CEO and "Chief Ninja" 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.”
According to Priebatsch, LevelUp's white-label approach gives restaurants a better way to develop a mobile payment option.
"Outside of LevelUp White-Label, there are pretty much two extreme options for restaurants interested in offering customers a mobile payment experience, and neither are very good," Priebatsch said.
One option is to join an existing mobile payment network. Taking that route avoids all the time and effort it takes to build a payment network, but as a trade-off restaurants then lose the ability to brand the app as well as lose control of customer data, he said.
Another option is for restaurants to build their 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.
With LevelUp White-Label, Priebatsch said, restaurants can create a custom-branded app that’s powered by LevelUp's mobile payments infrastructure and 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-plus strong community of active users," Priebatsch said. "Our middle-of-the-road approach is exactly what most restaurants with multiple locations are looking for."
That's not to say the LevelUp white label approach is necessarily cheap. Licenses for the API and software development kit are $15,000 per platform, which offers the core code-base of all the standard functionality needed to build and operate a mobile payment app on LevelUp's infrastructure. For another $20,000 per platform, LevelUp will build, test and deploy the white-label app.
That may sound pricey, but not when compared to the $750,000 to $3 million it costs to build — from scratch — a mobile payment, loyalty and security infrastructure, Priebatsch said.
The credit card diet
To kick off the app launch and encourage use, sweetgreen, which offers locally grown and organic fare, is looking to put its customers on a diet, or in this case a credit card diet. And it's a pretty bold move, one that could potentially mean some sweetgreen customers scrambling to downloand and set up their sweetgreen app in order to pay for their lunches. For a limited time, the restaurants will only accept cash or LevelUp payments.
“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."
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)."
For more stories on this topic, visit the restaurant research center.
Cherryh Butler contributed to this article.