Walmart has made its supermarket frozen food aisle a bit like the Las Vegas Strip.
If a celebrity chef opens an eatery in a Caesars property, they almost never also have a restaurant in an MGM Resorts International hotel or a Wynn Resorts property. In some cases, those deals may be contractual and, in others, they are just good business sense.
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Gordon Ramsay, Bobby Flay, and Guy Fieri all have multiple restaurants across the various Caesars properties. That's not just true in Vegas, but also in the company's regional properties where Fieri has a massive presence, but Ramsay and Flay also have a footprint.
MGM has gone a little more upscale with its partnerships leaning heavily on two old-school celebrity chefs Emeril Lagasse and Wolfgang Puck. Those chefs are not the only famous names on the Strip, but the competition is fierce and having a name like Fieri might be the difference between a visitor walking into your property instead of your rival's.
Walmart is taking that same battle into the frozen food aisle. The chain recently launched a line of Gordon Ramsay frozen meals and it has chosen to follow that up with a new lineup of some of Guy Fieri's favorite dishes.
Image source: Ethan Miller/Getty Images for Caesars Entertainment
Guy Fieri comes to Walmart
Exclusivity is hardly a new thing in the department store business. Target (TGT) -) has a lot of brand and celebrity partnerships that are exclusive, but it has been rare in the grocery space. Generally, a wholesaler wants to sell to as many stores as possible to give its products the widest reach possible.
Frozen food from Ramsay and Fieri may turn Walmart's frozen food section into a destination. That's something Target, Kroger, and Costco can't match (although there are plenty of big-name chefs out there who don't have a frozen food line).
The new Guy Fieri "Flavortown" line, like the Ramsay products, is exclusive to Walmart. Snackolator, a popular Instagram, was the first to break news of both product lines.
"You can now get a Sweet & Sour Pork bowl, Pepperoni Pizza Lasagna, Chicken Enchilada bowl, or Sloppy Guy Mac & Cheese at Walmarts around the country," the website reported.
The Ramsay line has eight dishes including his famed fish and chips as well as a shepherd's pie, and the chef's four-cheese risotto.
Walmart wants to drive store visits
With many people around the world worried about the economy, Walmart, like Target and Costco, has seen discretionary sales while grocery sales are climbing. That's something CEO Doug McMillon talked about during the chain's first-quarter earnings call.
"As expected, a higher mix of sales in the food and consumables categories negatively affected gross profit, but strong expense management and progress with our newer, mutually reinforcing businesses helped us grow profit ahead of sales at 17.3%," he shared.
Walmart also had some good news when it came to inflation and higher prices in its home market.
"In Walmart U.S., general merchandise costs are now lower than a year ago, which is great, but they're still higher than two years ago on like items. In the dry grocery and consumables categories like paper goods, we continue to see high single-digit to low double-digit cost inflation. We all need those prices to come down," the CEO shared.
Ultimately, Walmart wants its grocery business to drive people to its stores and website so they purchase higher-margin items.
"And while we make attractive margins in food and consumables, they have a lower margin than general merchandise," CFO John David Rainey said during the call. "We expect category mix to remain a gross margin headwind for the balance of fiscal year 2024."
