Walmart, one of the largest retailers in the world, has chosen to partner with a fast food chain that, up until now, could only be found in one southern state.
This prompts the question of why such a known company would risk partnering with a lesser-known brand.
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Walmart is a huge player in the retail industry, known for partnering with popular American fast food chains that equally level its high status among value-focused customers, including Burger King (QSR) , McDonald's (MCD) , Domino's (DPZ) , Taco Bell (YUM) , and Wendy's (WEN) .
To expand its fast food partnership portfolio further, Walmart recently announced multiple partnerships with food chains, such as its dining benefit with Burger King and the nostalgic Texas-based chain Mr Gatti's Pizza.
Walmart loves a fast-food chain
To live up to its one-stop-shop title, Walmart (WMT) implemented fast food into its locations so customers can shop for necessities and affordably dine, all while making just one stop.
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Many of Walmart's previous fast food partnerships ended due to a growth in e-commerce sales and the popularity of drive-throughs, which Walmart does not offer for its fast food partners.
The efficiency of placing drive-through orders has grown in popularity, accounting for two-thirds of fast food purchases as of 2023.
Although Walmart's in-store purchases and traffic remain strong, e-commerce also grew significantly in 2024.
According to Walmart's Q2 earnings report for 2024, e-commerce sales grew by 21% globally and 22% in the U.S. compared to the year prior.
Walmart's risky fast-food move
In August, Walmart announced its partnership with Knuckies Hoagies, a small Georgia-based fast-food sandwich shop chain.
This local sandwich shop, founded in 2019, is just entering the fast food business. Yet, it quickly rose to popularity by gaining the love of many Georgians, which prompted it to open 40 locations since its inception.
The sandwich shop's quick success caught Walmart's eye, and Walmart reached a contract agreement with Knuckies Hoagies under which the fast food chain would be added to 14 Walmart leases across six prominent southern states: Georgia, South Carolina, North Carolina, Tennessee, Oklahoma, and Texas.
A fast-food sandwich betrayal
However, this is not the first time Walmart has partnered with a sandwich shop.
Walmart is popularly known for partnering with Subway, the world's most famous fast-food sandwich shop and largest global restaurant chain.
However, the almost two-decade-long partnership took a major step back in April 2021.
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According to a statement by Subway, the companies loosened their ties due to an increase in online orders and curb-side pick-up feed by the COVID-19 pandemic, which negatively affected Subway's revenue.
Walmart's latest partnership with Knuckies Hoagies is the complete opposite of its previous one with Subway since this local sandwich shop is just starting to get its foot into the fast food door, while Subway has been an established household name for multiple decades.
"We are excited to extend our reach to even more communities through this incredible partnership with Walmart," said Knuckies Hoagies' Founder and CEO, Todd Broaderick in the announcement.
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