Dive Brief:

• Hy-Vee is partnering with Smokey Row Coffee Co. to open a coffee shop and restaurant on the lower level of the Hotel Charitone in Chariton, Iowa, the Chariton Herald-Patriot reported. The city is also home to Hy-Vee's largest distribution center.
• The coffee shop will replace the Hy-Vee Market Grille that currently operates in the space. Hy-Vee plans to open several more Smokey Row locations in partnership with the company throughout Iowa.​
• The new Smokey Row, which will open in mid-September, will offer a menu including coffee, breakfast foods, salads, sandwiches, ice cream and more.    

Dive Insight:

Smokey Row adds a new concept to Hy-Vee's grocerant mix with a casual menu and a comfortable, coffeehouse feel that could serve as a stop along the way for customers doing their shopping. It's a better-for-you concept than Wahlburgers and a more low-key dining experience than Market Grille, which could appeal to certain sets of shoppers.  

Hy-Vee has been one of the most aggressive players in the grocerant space, partnering with Wahlburgers to add 26 total restaurant locations next to its Hy-Vee supermarkets. It’s also in the midst of expanding its Market Grille restaurant and Market Grille Express concepts. 

While it's not clear if future Smokey Row locations will be operated in Hy-Vee stores or near them, Hy-Vee's choice to partner with a small, local favorite gives the grocer a closer connection to its community in that particular region. Tapping a homegrown business is a useful way for Hy-Vee to distinguish itself from competing supermarkets. The industry could begin seeing more of these grocery-coffee shop combos, with Tops recently announcing plans to add Spot Express coffee cafes in upstate New York. 

This marks Smokey Row’s fifth restaurant in Iowa, and the company can certainly benefit from expanding with Hy-Vee. Smokey Row will gain wider visibility and an opportunity to explore new customer demographics without the risk of entering new markets on its own.