Dive Brief:
- Hy-Vee is set to open two more Wahlburgers restaurants after its initial launch in the spring, according to Supermarket News. The new locations will be 7,100 and 5,200 square feet and will be located in Hy-Vee's hometown of West Des Moines, Iowa.
- The grocer signed on with Wahlburgers last year to own and operate 26 restaurants, making Hy-Vee the restaurant chain's largest franchisee. Hy-Vee's first Wahlburgers restaurant opened in Minnessota's Mall of America in May.
- Wahlburgers restaurants serve gourmet burgers, french fries, homestyle sides, home-made condiments and fish, chicken and vegetarian options.
Dive Insight:
Hy-Vee joins many other grocers that have partnered with restaurants and even started their own dining concepts. Whole Foods has quickly expanded its partnership with vegetarian burger joint Next Level Burger while H-E-B has opened everything from taco shops to barbecue restaurants in its stores. Across the country, grocers are building bars, eateries and seating options that invite customers to relax and stay awhile.
Hy-Vee seems to be making a savvy bet with Wahlburgers. Euromonitor reported burger sales in the U.S. increased by 14% from 2010 to $103 million in 2015. A Midwestern classic, Wahlburgers is now available in nine states and Canada. The restaurant has grasped onto the gourmet burger trend that has performed so well at restaurants like Shake Shack, Five Guys and Smashburger.
The jump in restaurants corresponds with current dining out trends and a higher demand for gourmet, plant-based burgers than fast food. In 2015, for the first time, people spent more money dining out than buying groceries, and grocers like Hy-Vee want a cut of those profits, too.
A few of its menu items are making its way into Hy-Vee’s in-store restaurant, Market Grille. Wahlburgers is also selling a line of beef products including, beef sliders, brick pads, patties and ground beef. The line is available at more than 1,300 grocery stores including Hy-Vee but also Jewel-Osco, Safeway, Shaws and Winn-Dixie.
Unfortunately for Hy-Vee, its partnership with Wahlburgers isn’t an exclusive one. Late last year, Meijer announced it will add Wahlburgers restaurants next to some of its grocery stores. The company hasn't released further details on the rollout, though reports out of Indianapolis say the burger joint could open near a Meijer there.
Hy-Vee’s partnership with Wahlburgers also underscores the creative new revenue opportunities grocers are establishing. Most notably, Kroger has branched out in all sorts of directions, from licensing its technology to selling private label products in China. In addition to its Wahlburgers, partnership, Hy-Vee has linked up with Orangetheory Fitness to offer discounts on classes at gyms located near its stores. The grocer also recently opened a health-focused store and is testing out new convenience store formats.
The grocery industry is more competitive than ever and margins are slimming, so offering alternative and unique options can give grocers an edge. At the same time, they have to make sure they're executing on their core promise to fill up shoppers' fridges and pantries with new and relevant products.
