Walmart Canada steps into the ghost kitchens space

Date : 10 March 2021

Stewart Samuel

Program Director - Canada

Walmart Canada is partnering with Ghost Kitchen Brands to open ghost kitchens in its stores.

Five kitchens planned initially

Ghost Kitchen Brands has partnered with over 20 restaurant brands to operate ghost kitchens across Canada. Its operating model and technology-led solution enables it to produce meals from all of its partners within a single kitchen. Through this partnership, it will open kitchens in five Walmart stores, starting with its St. Catherines, Ontario Supercentre. Customers will be able to order freshly made meals in-store and online for contactless pickup or delivery.

Source: IGD Canada

Supporting online and pickup models

Restaurant brands have increasingly turned towards ghost kitchens during the pandemic. Most companies experienced in-dining restrictions and temporary closures, driving significant growth in pickup and delivery orders. For many, this represents a more economic model until full dining can be resumed, while some companies are likely to move to a ghost kitchen operation on a more permanent basis. For retailers, these types of partnerships can support a more profitable and sustainable foodservice operation, given the better utilisation of the kitchens. They also enable retailers to repurpose excess in-store space.

Competing for share of stomach

This deal echoes Kroger’s partnership with ClusterTruck in the US. The retailer has opened two ghost kitchens within its stores in Indianapolis and Columbus. This aligns with consumers seeking more varied and convenient meal solutions, a key trend driven by the pandemic. As the crisis eases, retailers will be looking to consolidate the gains made over the last year and retain the increased share of food spend seen in 2020. Tapping into consumers’ broader food needs increases the addressable market opportunity for Walmart, while also creating a more complete food proposition, supporting Walmart's one-stop shopping model. The beauty of this model is that it enables shoppers to pick up all their core food needs in one trip; groceries and ingredients for meal planning, convenience foods and food-for-now. These types of partnerships can support a more profitable and sustainable foodservice operation for retailers, given the better utilisation of the kitchens. They also enable retailers to repurpose excess in-store space.

The ghost kitchen model

Ghost kitchens have grown in popularity, enabling existing restaurant operators and new companies to operate without the costs associated with physical locations. They can also be opened in industrial units, where the leasing costs are lower compared to street-facing outlets. In part, this has been enabled by the emergence of on-demand delivery platforms such as Uber Eats, Postmates and DoorDash. UberEats has also been able to optimise its data capabilities to suggest new concepts to existing restaurant operators, helping them to tap into unmet demand within specific catchments. Ghost kitchens also enable companies easily experiment with different cuisines and move quickly to close or scale-up as appropriate.

Retail Analysis subscribers: get the detail on 10 of the latest foodservice concepts set to be developed this year, including new formats from Sweetgreen, Starbucks and Chipotle and  in our report, The food-to-go store of the future

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