Restaurants have long had a home in Walmart’s huge super centers. But the epidemic and changing consumer preferences are bringing some notable changes to the retailer’s restaurant game plan. While McDonald’s and Subway closed the in-store locations, other national chains such as Domino’s and Taco Bell have also moved. Walmart is also testing the latest digital food craze, ghost kitchens and increasing access to community restaurants.
This mealtime replacement features Darryl Spinks, Walmart’s head of retail services. As a 15-year veteran of the company, he leads the retailer’s restaurant partnerships, along with the technology services business that handles product assembly and appliance repairs, and the automated services business, which includes the Red Box, Coinstar, and other in-store kiosks.
In a recent interview, Spinks said that demand from restaurants to open stores in Walmart stores is higher than ever. At the same time, he said Walmart’s plan is to be more “deliberate” when choosing tenants who can rent space within their location, while also staying on the cutting edge of digital.
FOOD DIVE: Tell me a little about your position and how long you’ve been at Walmart.
DARRYL ROTATIONS: I came here from law school in 2006, and for the first 13 years I was a real estate agent building and locating stores across the country. I really cut my teeth here at Walmart. I came to this team a few years ago and have been in this role for about a year.
Walmart’s move to ghost kitchens has caught the attention of many readers lately. What opportunity does Walmart see in these properties right now?
RETURNS: I think it is consistent with our overall message of how they tell us that they want to be served to the customer. Their lives are busy. A one-time trip to Walmart traditionally meant coming to the store and sometimes now meant to be brought to you or picked up from the store. We must innovate over time and make sure we can get our customers what they need, when they need it, and how they want it.
What does this say about the digital demand among your shoppers not only for food but also for food?
ROTATIONS: I know people tell us they want options. It’s not just about getting them one way and one way. It’s about getting them what they want in a variety of ways. There will still be in-store diners and ghost kitchen diners in our stores, but there are customers who want it brought to them and we want to make sure. It can serve the customer as well.
What are the plans to expand ghost kitchens at this point?
SPINKS: We’re excited to unlock the first few and we’ll continue from there, but there’s not much to comment on future expansion at this time. We have many partners in space like La Madeleine and Charleys. [Philly Steaks]. My restaurateur is too busy offering customers new options these days, and ghost kitchens are one of those options.
Is Walmart planning to bring ghost kitchens and other restaurants to a common digital platform with grocery sales?
SPINKS: It would be great if we get to that point. But from now on, they’ll likely continue to use the same delivery and pickup partners that they currently use.
Can you tell if it’s something Walmart is working on by bringing these two sides together on a single platform?
SPINKS: I am not in the field of technology. We have all kinds of technology road maps and these are outside of my domain. I guess it’s obvious that this could be something down the road someone has looked at, but that’s not in my understanding at the moment.
You mentioned La Madeleine that will be moving to several stores in Texas this summer. Could you say that Walmart focuses on bringing in more local and regional restaurant players?
ROTATIONS: We have always made ourselves open to local tenants and they don’t always know how to reach us, and we try to make a collective effort to make sure these local brands know how to start the process, how to ask. for the field and put their names in the hat. We’re working on a lot of what you’ll see from us to make sure these tenants know more about the space we have in their community. Instead of trying to figure out how to contact us, they will have a place to go and see what we have and start the process.
There are many restaurants with tremendous community support that I have seen in my travels in real estate over the years. You won’t find them anywhere else, they really are like the pillars of their community, and we would love to have some of them wherever possible.
Walmart has traditionally worked with national restaurant chains. Are there any local establishments inside the stores today?
SPINKS: Today, there are many local restaurants, salons and hairdressers in our stores. We have local barber shops – this has been pretty successful. We have local nail salon owners. And we’re looking at how to grow it more organically and be more conscious about it.
When evaluating a potential restaurant tenant, what would you need to see from them for this opportunity to make sense?
ROTATIONS: I always say that customers vote with their wallets because they want to see it in store. Looking at the numbers, there are four or five types of restaurants that resonate with customers, and these are pizza, burger, chicken, taco. There is no real magic there. And I think for us, it’s about finding the right fit, the right fit, in the communities we serve. I think you will see us more consciously. Will we add a fifth burger restaurant inside the store when there are four of them in the parking lot? Probably not.
Will a store have multiple restaurant properties or only one restaurant property per store?
RETURNS: My philosophy is never to say never, but as of now, we have a few stores with an in-store restaurant and a catering tenant that would be like a cracker business or a smoothie maker. However, most of our stores only have one offer.
Do you see an increase in sales and foot traffic in restaurants along with store traffic?
RETURNS: Due to agreements with restaurants, we cannot comment on their sales. I will tell you that unlike many landlords, we give all our tenants several months of free rent and try to help them for the rest of the year by offering rent discounts to help these people. in those difficult times. We are quite proud of that.
How does Walmart view its restaurants based on the overall retail experience? How do these two sides of the business work together?
RETURNS: Most of the customers expect there to be a food offer when they come to Walmart. And so we see restaurants the same as our deli. It’s about giving customers choices and [grocery and restaurants] play beautifully together. We even opened a group of Domino’s and of course we sell pizza, ready-to-eat, frozen and al-bake, and it’s been a good partnership.
Why would a restaurateur want to open inside a Walmart store right now?
RETURNS: Taking advantage of the traffic in the box makes it more attractive to be in a Walmart, especially for a smaller regional restaurant chain trying to grow their business. Being at Walmart should be appealing to restaurant owners, too, unlike building four walls and trying to completely outfit a brand new building on expensive real estate that’s becoming increasingly expensive around the country.
What else can we see in this space other than Walmart in the near future?
SPINKS: We haven’t finished yet. I can’t talk right now, you will see more exciting things from us. Our customers continue to guide us and guide our decision-making process. Even our store managers in the community help us here. They say, “Darryl, have you seen this restaurant across town? These guys would be great in the store.”