Salt and Straw - Value Proposition

For products and brands I enjoy, I analyze it. It's my way of rationalizing my world and decisions. Here is a piece on my latest guilty pleasure - Salt and Straw.

In a way, this is me justifying my weekly decision of spending 10$ on a single scoop of Sea Salt w/ Caramel Ribbons.

Last night (12/13), I had a strong craving for some Sea Salt w/ Caramel Ribbons. Giving in on the urge, I called up my buddy (who is also my financial advisor) Ser Remington and went to a nearby S&S in Hayes Valley. To my surprise, the line went outside of the store and stretched down the block. I counted at least 50 people in front of me. This was 10:00pm at night on a Wednesday. I wasn't the only one looking for a treat to end the day. Big props to S&S for creating such a strong product and brand.

We had time to kill in the line. With my newfound obsession with product and adherent to the genchi gembutsu philosophy ¹, instinctually my brain started diving down the rabbithole. It's a good thing Remington was there. We were buddies since the Corporate Finance days ².

Value proposition

They sell premium Icecream. I paid 10$, tip included, for a single scoop on a waffle cone (and I didn't even blink!). I would have otherwise paid ~$3.95 at Baskin-Robbins. Premium is justified by value. Luxury is more about perception, desirability, and status. In my book, S&S is premium. I was coming back to S&S weekly.

Questions immediately started erupting in my mind. What is the percieved value here? Is it just better ice cream? It does taste better to my pallet. But that doesn't justify the price. I've had better tasting ice cream ³. Is it their brand? What is Salt and Straw known for? Oh yes. It's their innovative flavors. There are classic flavors available year round. There are also monthly flavors with a time limit.

According to my friend Kathy, S&S had a Cricket and Mealworm flavor a while back. Sounds crazy right! But was it popular? I can't imagine it being a big hit. Kathy said the bucket looked very full at the end of the day. Some brave ones tasted it, very few actually purchased a scoop. Interesting. If it doesn't sell, why do they do it? It's not just a one time thing being tried out at a local store. It's likely for some flavors, they are doing R&D, and conducting market research.

Every year, the come out with a new bug flavor and it's available in all of their stores. As much as I'm intrigued by the alternative protein segment, I don't think the average American consumer have accepted bugs in icecream yet (and won't any time soon).

Customer segment

Looking around me, most folks seem like in their 20s and early 30s. Dressed nicely, well educated. What other icecream store opens till 11:00pm on a Wednesday? The Ice Cream bar in Cole Valley closed at 9pm. The Ben & Jerry's in Haight closes at 8pm.

The Product Hypothesis

Salt and Straw began as food cart in Portland and first brick-and-mortar location started in 2011. Today in 2023, they have 36 brick-and-mortar stores in the United States. There are 2 stores in San Francisco. One in Hayes Valley and another in Pac Heights. There's 5 other stores in the Bay Area, located in Burlingam, Palo Alto, San Jose, and Los Gatos.

At Salt and Straw, a single scoop with waffle cone is ~9$ while Baskin Robins sells it for ~4$. It's a premium product. Where does its percieved value come from?

The Bay area stores have average 4.6/5 rating over 6330 Google Reviews. Customers love it. Why?

⭐⭐⭐⭐⭐ Highly recommend. The flavors are of large variety—some are standard, some are pretty unique/quirky. I got the coffee w love nuts and chocolate chumparaddo w sesame toffee flavor in a split scoop. Both flavors were really amazing and go super well together! - Sarah Lu

⭐⭐⭐⭐⭐ Salt and straw is my absolute favorite place for dessert. Their split scoop is basically a double scoop. I wish I could give this place 20 out of 5 stars. I'm addicted. I love trying the monthly flavors!!! But the lavender is such a classic! - Camille Guenard

It sounds like ice cream flavors, but I would argue that it's more than just the ice cream. It's the whole tasting experience. You go there to taste test their flavors. The tasting experience is intentionally designed and that's what I believe contributes to it's premium pricing power. It's a core strategy for differentiation in an otherwise crowded market.

Anything customers experience from their interaction with a company should be considered part of that company’s product. - Eric Ries

What is the tasting experience?

1. Rotation of new monthly flavors provides novelty. There is always something new and different. Classic flavors like Sea Salt w/ Caramel Ribbons, Honey Lavender, Toasted White Chocolate & Peppermint Almond have the most predictable demand and make up the bread and butter of sales. Niche seasonal flavors are produced at a loss, but it's a small price to pay for the differentiation strategy.
2. Well-staffed and metal tasting spoons improves the tasting experience. Customers don't feel guitly for tasting multiple flavors (average 4) and holding up the line. Metal tasting spoons feel better on the tongue and can be reused.
3. Out of all of the icecream stores in SF, it one of the few tha operates late night hours 10pm+. All of the Bay S&S stores open to 11:00pm.
4. Clean and modern interior design.

References