Hy-Vee Inc. announced two strategic partnerships Wednesday — one to fill you up and the other to work you out.
The Iowa-based grocery chain that is quickly expanding in the Twin Cities said it will build, own and operate 26 Wahlburgers restaurants, a burger chain popularized in a reality TV show. Hy-Vee also said it would partner with Orangetheory Fitness to add workout centers in or near its stores.
“These unprecedented collaborations reinforce our company’s long-standing commitment to health and wellness, culinary expertise and customer experience,” Hy-Vee Chief Executive Randy Edeker said 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.”
Hy-Vee will add select Wahlburgers menu items in its 84 Market Grille restaurants in stores and build new restaurants. Several locations are planned for the Twin Cities, but the first Hy-Vee-owned location will open in West Des Moines next year.
Wahlburgers was founded by executive chef Paul Wahlberg, his actor brothers Mark and Donnie and other investors. There are currently 17 locations in nine states and Canada.
The casual menu includes burgers, fish, chicken and vegetarian options along with a full-service bar. A reality show on A&E also featured the Wahlberg brothers as they dove into the restaurant biz. Earlier this year, Hy-Vee started carrying an exclusive line of Mark Wahlberg’s sports nutrition products called Performance Inspired.
Orangetheory Fitness, which already has nearly a dozen locations in the Twin Cities, will be part of the new Hy-Vee in Shakopee that’s expected to open in November. A proposed location in White Bear Lake was going to include a fitness center, but the store and center were scrapped for cost reasons.
Orangetheory, based in Boca Raton, Fla., is a franchiser with 750 studios open now and plans for 1,500 more in the next two years.
Edeker said the two new partnerships demonstrate Hy-Vee’s search for growth.
George John, a professor of marketing at the University of Minnesota’s Carlson School of Management, said the company’s deal with OrangeTheory fits with the growth trend of branding within grocery stores. “The store within a store is not a new concept, but it’s new to most grocery stores,” he said.
In the Twin Cities grocery market, the trend began in the 1980s when Byerly’s introduced banks and delis in its stores. Now both are common.
But John said HyVee’s investment into restaurants could be an overreach. “It makes sense if they’re near their stores, but if they’re not near their stores, that’s pure diversification,” he said. “Running disparate businesses for pure diversification has a checkered history at best.”
Hy-Vee has opened seven locations in the Twin Cities since 2015. More stores are planned in Shakopee, Maple Grove, Robbinsdale, Farmington, Columbia Heights, Chaska and Lakeville.