As restaurant aggregators compete to stand out in the crowded space, and with supermarkets pouring resources into setting their digital grocery offerings apart, Walmart is cutting out the middleman and heading straight for the top. The retailer is making a play to be consumers’ one-stop shop in the connected “Eat” category, meeting both their restaurant and grocery needs.
This as Walmart just expanded its Canadian partnership with virtual kitchen solution Ghost Kitchen Brands to the United States. The first domestic in-Walmart ghost kitchen is in Rochester, New York, with 28 more locations in the pipeline. In a single shot, the move brings an array of a dozen cuisines and restaurant brands inside the retailer’s stores, while for Ghost Kitchen Brands, the pairing gives it access to Walmart’s unmatched foot traffic which averages about 3,000 in-store shoppers per day.
“We are in the food business, but we’re in the convenience business as well,” Marc Choy, president of Ghost Kitchen Brands, told Karen Webster in an interview. “We want to offer consumers the freedom to use technology to order to get whatever they want. when they want it, where they want it. That could mean at home, while working, while shopping.”
A Grocer’s-Eye View
For Walmart, the partnership allows the retailer to retain its audience as, on a macro level, consumers’ food spending shifts away from raw ingredients for home-cooked meals toward ready-to-eat options.
“The dynamic of the 1950s where somebody would cook six square meals a week and maybe go out once a week is going to be totally the opposite,” said Choy. “This is how people are going to know how to get their food — by ordering.”
For Walmart, grocery accounts for 56% of its revenue. Additionally, 2019 data from PYMNTS’ Whole Paycheck Report find that Walmart captures about a fifth of all consumer food and beverage spending in the United States, meaning that any shift in spending away from grocery, on the whole, will have a significant impact on the retailer’s bottom line.
On the other hand, by partnering with Ghost Kitchen Brands, which brings up to 25 restaurant brands into Walmart stores, including crowd-pleasers such as Cinnabon and Quiznos, the retailer can continue to attract restaurant customers. Choy noted that, in many of Walmart’s markets, the in-store ghost kitchens will be the only place in the area where consumers can access those restaurant brands. Customers are coming into stores for pickup, creating a sales opportunity for Walmart.
The growing Ghost Kitchen venture also comes just five months after McDonald’s announced that it was closing hundreds of Walmart locations.
The In-Store Journey
“The idea for Walmart is, we’re going to use not only the ability to put all these brands in one place, but we’re going to use technology as our main gateway and point of contact with consumers,” said Choy. He explained that, rather than being greeted by a human associate, customers interface with ordering kiosks.
Additionally, he noted that most customers purchasing from these ghost kitchens on site are ordering at the end of their shopping trip on their way out the door. At the start of their trip, they may be goal-oriented, eager to get their shopping over and done with, but as they leave, they may have more time on their hands, and they may have worked up an appetite as they shopped.
Ghost Kitchen Brands’ goal is to create ways for shoppers to order ahead when they enter or as they move through the store, picking up their meal as they leave.
“We have talked to Walmart, about … either [putting] a kiosk up throughout the store, or we’ve talked about putting QR codes on the shopping carts,” he said, adding that the more advance notice the kitchens have, the smoother the workflow will be, and the less likely it is that consumers will have to deal with late orders.
Beyond the Aggregator
For now, consumers’ off-premise orders at these in-Walmart kitchens are fielded through third-party aggregators such as Uber Eats and DoorDash. However, just as consumers can get their restaurant meal in the same trip in which they purchase groceries at physical stores, Ghost Kitchen Brands and Walmart would Walmart.com.
Ghost Kitchen Brands began in part as a result of the rise of Uber Eats, with founder and CEO George Kottas noting that demand for delivery at odd hours, which emerged as a result of the digital marketplace, could be fulfilled in a restaurant with no consumer-facing presence. This change opened up the opportunity for a multi-brand kitchen.
Now, as the company has grown its sales and established its following, Ghost Kitchen Brands is eyeing ways to shake its reliance on third-party delivery marketplaces.
“We’re working on our own Ghost Kitchen Brands app,” he said. “We would love to have customers … use that as their primary ordering portal. If they’re in Walmart, if they’re at home, if they’re shopping, if they’re an office down the street, I would love to funnel them all through our app and have all the ordering and all the payments go through that one space.”