You want fries with that store? California Whole Foods says yes.
A Whole Foods Market in San Jose, California, will co-locate next week with mission-driven fast-food outlet LocoL, according to The Mercury News. LocoL is owned by two renowned Los Angeles chefs and has a reputation for serving healthier items at reasonable prices. This includes $5 cheeseburgers and chopped salads, plus $2 "foldies," which are similar to quesadillas and filled with cheese, beans and meat.
LocoL will hire its own employees but use the market's kitchen facilities, the newspaper reported. Food and beverages will be served from a dedicated space near the store's prepared foods area and also from a pass-through window near the market's onsite brewery.
Whole Foods has partnered with restaurants and foodservice operators in the past and continues to add local establishments to its 365 stores as part of its "Friends of 365" program. The grocer has added Next Level Burger locations to three of its West Coast stores, and it offers Genji Sushi locations in nearly 200 locations.
The partnership mirrors tie-ups Whole Foods has embarked on lately with Next Level Burger, Urban Remedy and others at the grocer's smaller 365 stores. Whole Foods also co-locates with close to 200 Genji Sushi locations in 24 states and the District of Columbia.
The Amazon-owned grocer has a history of experimenting with foodservice concepts. Last summer, Whole Foods opened its first standalone restaurant in Atlanta — a Brazilian fast-casual concept called The Roast. The restaurant lets customers order from digital kiosks and features a rotating lineup of seasonal dishes and ingredients.
Grocers across the country have followed suit by adding restaurants and bars inside their stores as part of an effort to draw customers and build a reputation for meal offerings. Hy-Vee has had notable success with its Market Grille restaurants, which serve up all-American fare along with wine and beer. The Des Moines, Iowa, chain has also become the largest franchisee of Wahlburger's, with 26 locations planned in the Midwest.
These projects draw coveted millennial consumers with flavor-forward dishes, craft beer and wine, according to NPR. As a study by Bankrate.com reported, 54% of millennials say they eat out three or more times each week.
But while restaurants can provide a much-needed revenue stream for grocers, experts caution that the venture can be difficult for retailers to manage. Staffing, designing the space, meeting regulatory standards and crafting a menu that resonates with customers are all challenging. Retailers that, like Whole Foods, choose to co-locate with restaurants can spare themselves this extra legwork, but analysts warn of difficulties integrating these locations into stores.
"Some of the biggest challenges have to do with the amount of real estate they're giving up in-store," Erik Thoresen, principal at foodservice consulting firm Technomic, recently told Food Dive. "If you're able to generate a profit out of a restaurant in that space, then it's a matter of finding the right folks in terms of design and execution and operations to make that work."
While Whole Foods' local restaurant partnerships are growing, its relations with local and niche product suppliers are souring. As the chain increases its focus on driving down costs, the grocer attempts to balance its need for efficiency with its legacy as a friend of the little guy.
- The Mercury News LocoL partners with Whole Foods, will open in-store San Jose eatery