Will burger and fitness partnerships reinforce Hy-Vee’s mission?

Discussion
Photo: Wahlburgers
Sep 05, 2017
Tom Ryan

While many larger retailers are partnering with digital start-ups, Hy-Vee has formed separate partnerships with Wahlburgers Restaurants and Orangetheory Fitness.

The Midwestern grocer described the moves as ways to diversify its business model “while reinforcing its mission of making customers’ lives easier, healthier and happier.”

Hy-Vee plans to build, own and operate 26 Wahlburgers restaurants — nearly doubling the brand’s current locations. Wahlburgers menu items will also be introduced in all of Hy-Vee’s Market Grille in-store restaurants.

The burger-themed restaurant with 17 locations, which was co-founded by actor Mark Wahlberg and his brothers Paul and Donnie, has its own reality show on A&E. Hy-Vee already had a deal with Mark Wahlberg to sell his Performance Inspired line of protein powders and nutrition bars. Along with burgers, Wahlburgers serves haddock, chicken, sloppy joes, onion rings, tater tots and vegetarian entrées.

Hy-Vee noted that in 2016, eating meals outside the home surpassed meals consumed in the home. According to the Bureau of Labor Statistics, grocery spending trends began to shift in 2014, driven by Millennials. But overall spending in restaurants and on take-out meals has increased significantly over the four decades, Hy-Vee noted.

At the same time, Hy-Vee will partner to offer Orangetheory workout classes inside or adjacent to Hy-Vee stores. The high-intensity cardio and strength-training routines typically last 60 minutes. In addition, Hy-Vee dietitians will work with Orangetheory members to offer dietetic services, provide samples of nutritional products and lead store tours to showcase items that align with member needs.

Hy-Vee said the partnership creates an integrated fitness component to bolster Hy-Vee’s other health and wellness initiatives, which include in-store dietitians, HealthMarkets, chefs, fresh and organic produce and pharmacies.

“These unprecedented collaborations reinforce our company’s longstanding commitment to health and wellness, culinary expertise and customer experience,” said Randy Edeker, chairman, CEO and president of Hy-Vee, in a statement. “However, they also represent a bold step to deliberately evolve our business to meet the change in our customers’ lifestyles and spending habits. These partnerships keep us on the leading edge as the retail grocery industry evolves.”

DISCUSSION QUESTIONS: Do you see more potential benefits or risks from Hy-Vee’s collaborations with Wahlburgers Restaurants and Orangetheory Fitness? Should other grocers be forming similar partnerships to address changing shopping behaviors?

Braintrust
"For Hy-Vee, creating an immersive one-stop shopping experience centered on high-grade service is their winning strategy. "
"No retail segment is more innovative than grocery and this collaboration will generate a lot of interest."
"At a time when so many grocery retailers are satisfied with maintaining the status quo, Hy-Vee is re-writing the retail playbook."

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12 Comments on "Will burger and fitness partnerships reinforce Hy-Vee’s mission?"

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Kim Garretson
BrainTrust
18 days 20 hours ago

A fascinating side note to this news if Hy-Vee brings these concepts to the Twin Cities will be the microcosm of the burger and fitness concept startups wars, since the Twin Cities area is the epicenter of some of the fastest growing new concepts in both segments. MyBurger aims to become the In-N-Out burger brand in the Midwest, and we have several fitness concept businesses aimed at different demographics, including Boomers.

Scott Norris
Guest

The Wahlburger connection I don’t get: it’s an East Coast establishment. “Coastal Elites” don’t play too well in the putative Heartland – but we will go all-out for our home-grown chains. Why they didn’t go for MyBurger, Culver’s or even Runza (for a Nebraskan twist) is puzzling. Local ownership + local farmers + local recipes = the opposite of Walmart and something Midwesterners will wholeheartedly support.

Shawn Harris
BrainTrust

I am fortunate to spend time with Hy-Vee, and they get it. I often joke with them that they are an East Coast metropolitan grocer, just located in the Midwest. I believe these partnerships make sense, creating differentiation and thus competitive advantage. For Hy-Vee, creating an immersive one-stop shopping experience centered on high-grade service is their winning strategy. They already have a nutritional supplements partnership with Mark Wahlberg, which I am sure made establishing the Wahlburgers relationship that much easier, and at the same same time complements the Orangetheory partnership.

If you ever get a chance, you should visit the Hy-Vee in downtown Des Moines. It has a grocery store with exhaustive prepared foods, wine and spirits, a bank, dry cleaning, a high-end restaurant, urgent care, a pharmacy and, wait for it — apartments above the store; all owned and operated by Hy-Vee. This store is a lifestyle.

Brandon Boston
Guest

Hy-Vee gets it. An ecosystem built around food, fitness, health and wellness. This is the lifestyle future customers want and deserve. The Orangetheory partnership attracts daily guests, the restaurant provides a quality and quick food option, and the grocery helps prepare the customer for the week.

Lee Peterson
BrainTrust

Smart, smart, smart. Turning the physical space into something more appealing is the way of the future. As we have said for a while — you don’t have to go to stores, you have to want to go to stores. Burgers and workouts (although, probably not simultaneously) appeal to different segments, but both should work.

Hy-Vee already gets very high scores from their customers and this will only help. It should also help when the Amazon/Whole Foods machine cranks up in the Midwest.

Cathy Hotka
BrainTrust

No retail segment is more innovative than grocery and this collaboration will generate a lot of interest. Department stores might want to take a look at the inventiveness of this logic and seek out some strategic partnerships of their own.

Camille P. Schuster, PhD.
BrainTrust

This is an intriguing relationship with partners creating the potential for new and different ways of responding to consumer needs. This has the potential for creating new consumer experiences. I look forward to seeing what they do. It could be an effective way to compete with Amazon/Whole Foods.

James Tenser
BrainTrust

Is this the first known instance of a supermarket chain becoming a fast-food franchisee? (I don’t mean leasing space to fast-food tenants or bank branches. That’s been going on for decades.)

“Partnership” may be literally true, but the descriptor downplays the innovativeness of this new business arrangement. “Hy-Vee will build, own and operate 26 Wahlburgers in seven Midwestern states, becoming the brand’s largest single franchisee,” says the company’s press release.

In an era where thoughtful supermarket operators are confronting an excess of center-store square footage due to legacy real estate portfolios, converting some of the space into alternative revenue production sounds like a savvy move.

Hy-Vee is diversifying its business to maintain its productivity and relevance to an evolving shopper base. This may not be the right move for every retailer, but it’s one to watch closely.

Craig Sundstrom
Guest

I’m not familiar with Wahlburgers, so I can’t comment on the wisdom or lack of, specifically, but with any celebrity-centered partnership, my concern would always be with the staying power of the concept (once the celebrity’s own star dims). I’ll assume they did their homework and wish them well.

The fitness partnership seems like the type of thing that we seldom get much feedback on its success. I’m not sure if a typical retailer has the space to offer “workout classes” or the support facilities (lockers, showers, medical backup). And if the program is moved offsite (even adjacent), I would think much of the connection to the store would be lost.

Jeff Hall
BrainTrust

On the surface, burgers and fitness centers might seem odd, yet Hy-Vee is a solid example of the bold, sometimes counter-intuitive, yet innovative strategies an employee-owned company can pursue.

Top-down, this retailer is laser-focused on its mission, while continuously looking for creative ways to retain and grow market share, delight and exceed customer expectations, and offer new experiential environments for all customer segments.

At a time when so many grocery retailers are satisfied with maintaining the status quo, Hy-Vee is re-writing the retail playbook.

Ricardo Belmar
BrainTrust

This is a great idea by Hy-Vee to turn their stores into a destination by leveraging food and wellness/fitness in a different way than before. Although not too dissimilar from grocery stores signing up as a Starbucks franchisee, this is an innovative way for Hy-Vee to attract customers — and innovation is something very much needed in the grocery segment.

Michael La Kier
BrainTrust

In-store retail will benefit from experiential activities and making shopping more entertaining. While these two specific partnerships may or may not work, attracting interest and attention is in all retailers’ best interest.

wpDiscuz
Braintrust
"For Hy-Vee, creating an immersive one-stop shopping experience centered on high-grade service is their winning strategy. "
"No retail segment is more innovative than grocery and this collaboration will generate a lot of interest."
"At a time when so many grocery retailers are satisfied with maintaining the status quo, Hy-Vee is re-writing the retail playbook."

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