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After more than a year of a bear market in innovation stocks that are not part of broad-based public equity benchmarks, we believe Instacart’s move marks the first major publicly announced valuation cut by a private startup. One of its public competitors, DoorDash, DASH on the NYSE, also has dropped roughly 40% since March 2021. Instacart still could be overvalued relative to DASH, however, as its revenue growth, last year was less than a third of DoorDash’s, 21% versus 69%, while its
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price-to-sales ratio is more than 50% higher at 13x compared to DASH’s 7.5x.
Meanwhile, data from private secondary markets also suggest that startup valuations are responding to the drawdown in public markets. Secondary marketplace Forge reported that prices for companies that traded on its platform both in the fourth quarter and in February declined roughly 10%, and that the percent of indications of interest (IOI’s) on the sell side was 60%, the highest level since the depths of the coronavirus crisis during the first quarter of 2020 and a stark reversal from the 60% of buyer IOI’s in 2021.
Fast Casual Drive-Thru?
Sweetgreen will open its first drive-thru pickup window, or "Sweetlane," in Schaumburg, Illinois, within the next year, the chain announced Wednesday. The unit's opening date and hours of operation have yet to be determined.
Sweetgreen has been eyeing drive-thrus for several years, but the pandemic helped accelerate its plans. The chain's urban locations largely struggled during the pandemic, pushing Sweetgreen to build out its presence in suburban markets, where drive-thrus are a natural fit. In 2021, the fast casual chain opened 31 units, with 18 in suburban and residential communities, Neman said. Sweetgreen ended 2021 with 150 locations. Will this move continue to help the stock price?
Foodable Labs Sentiment: 78.64 Down 3.12 Points in the past 90 days
Wage Wars
Nusr-et Miami — an upscale steakhouse in Miami owned by celebrity chef Nusret Gokce, also known as "Salt Bae" — did not violate the Fair Labor Standards Act by using an 18% "service charge" added to customers' bills to help meet its minimum and overtime wage obligations, the 11th Circuit Court of Appeals ruled March 18 in Compere v. Nusret Miami (No. 20-12422 (11th Cir. March 18, 2022)).
Filed by a total of 24 tipped employees at Nusr-et, the class-action lawsuit alleged that from Nov. 1, 2017, through Jan. 18, 2019, the restaurant "paid them less than the required federal minimum and overtime wages and forced them to participate in an illegal tip pool with non-tipped employees." The plaintiffs' case argued that the 18% service charge should be treated as a tip.
The 11th Circuit determined that the service charge was not a tip because it was mandatory; the payment was not a "gift" and the amount was not, as the legal definition of "tip" states, "determined solely by the customer."
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