Dive Brief:
- Fast casual chain Wow Bao has partnered with Ghost Kitchen Brands to open 100 locations in the U.S. and Canada starting this month, many of which will be inside Walmart stores, according to QSR Magazine.
- The company, which offers buns, bowls and potstickers, started its dark kitchen initiative — in which Wow Bao partners with restaurants to operate host kitchens — in 2019 and has now grown from six units to 300.
- In addition to this latest partnership, the company previously teamed with Franklin Junction and will add 100 locations during the first half of the year through this deal. The brand is on its way of having 1,000 locations by the end of the year through its host kitchen program.
Dive Insight:
This partnership will bring Wow Bao into a growing revenue channel for restaurant chains: grocery stores.
The chain's main initiative has been to tap operators as quasi-franchisees to operate Wow Bao delivery-only kitchens, and some independent restaurants have already surpassed the $2,000 in weekly sales in this channel. Some operators have generated $5,000 in weekly sales, and one Minneapolis business made $10,000 during one week in October by serving as a Wow Bao host kitchen.
Though this model has been successful, Wow Bao's entrance into grocery stores will help expand its reach, boost brand awareness and drive sales growth.
Traffic inside Walmart locations and grocery stores is still growing. The addition of ghost restaurants give customers more one-stop shopping option by adding to-go meals alongside their weekly shopping trips and could add value to delivery and pickup grocery orders. Many supermarkets have turned their in-store restaurants into to-go operations during the pandemic. Grocery retail's growing interest in ghost kitchens shows a glimpse of what the future of grocerants might look like, and are providing an asset-light way for more chains to expand. In 2020, Kroger opened two in-store ghost kitchens through a partnership with ClusterTruck, for example.
Walmart has recently partnered with other restaurants brands as well, including Saladworks, Nathan's Famous and la Madeleine. Both Nathan's and Saladworks entered partnerships with Ghost Kitchen Brands over the last few months. Since Walmart is ending its long-term partnership with McDonald's, these brands could help fill the gap.
