How Hy-Vee turned sports nutrition into a restaurant deal

As Hy-Vee explored an expansion to the standalone restaurant business, it was the success of an in-store offering that showed it where to look.

Specifically, it was the association with actor Mark Wahlberg’s Performance Inspired sports nutrition products line that led to this week’s announcement that the chain would build and operate 26 Wahlburgers restaurants, becoming the largest franchisee of the chain founded by the Wahlberg family, said Jeremy Gosch, EVP and chief merchandising officer for Hy-Vee.

“We have had a partnership with Mark’s sports nutrition products, and that’s been a perfect partnership,” Gosch said. “And as have had the opportunity to really get to know Mark and Tom Dowd, who runs Performance Inspired. We really have been impressed.”

Mark Wahlberg appeared at a Hy-Vee fundraiser earlier this year.

Hy-Vee earlier this year became the exclusive retailer of the Performance Inspired line in its markets, rolling out the products in all 244 of its supermarkets and 140 convenience stores. In January, Mark Wahlberg toured a Hy-Vee store as part of a fundraiser for Hy-Vee’s Homefront initiative and to promote the launch of the Performance Inspired products.

“Mark is an astute businessman, very sharp and had a lot of great ideas, and the values of the Wahlberg family and their restaurants really fit very well to Hy-Vee and our values,” Gosh added. “They are forged around family and great food. Mark’s brother Paul is a chef and he’s built a menu that has really awesome food, which is what we’re all about, so it really fits everything we are: Great food at a great price, family focused, fun, unique and different, and that offers you a great food experience.”

Gosch said the opportunity to expand its restaurant footprint through Wahlburgers – a deal that will also allow Hy-Vee to offer signature items from the chain at its Market Grille in-store restaurants – made more sense to Hy-Vee than expanding Market Grille outside of stores. But responding to the change in consumer eating habits – particularly among younger consumers who increasingly look for meals away from home – was critical, he said.

“Food away from home has surpassed food at home [in total sales] so we continue to work on our culinary expertise and how we become more and more astute at connecting with that consumer,” Gosch (left) said. “And as the consumer continues to drive change, we continue to adapt and change with them. It really made sense to extend our brand and do freestanding restaurants, and we found a partner that made a lot of sense to us.”

He said Market Grille locations – there are currently 84 – are doing “awesome” as a business, and that foodservice continues to expand in stores as illustrated by Hy-Vee’s newest locations in the Minneapolis area, which include Cocina Mexicana burrito bar, New York-style delis and a Thai inspired Hibachi Grill, concepts Gosch said the company plans to expand to other locations in coming years.

“In Minneapolis, foodservice is in Aisle 1 and taking over a big part of the store: That’s a good indication of how well its doing,” he said. Hy-Vee earlier this year added about 20 new employees to support restaurant development as part of a restructuring around areas of the business projected to grow. The company also added workers in IT and in health and wellness.

“It’s hard to call us traditional grocery industry anymore,” Gosch confessed. “We have pulled a number of people from the restaurant industry and we continue to pull people from all industries as we continue to diversify. We are a restaurant, we’re a health market, we have medical facilities, we have dietitians and more than 300 chefs in our stores.”