Franchise Fallout: Wahlburgers Closes 79 Locations Amid Grocery Deal Failure
Wahlburgers, the popular burger chain started by chef Paul Wahlberg and his celebrity brothers Donnie and Mark, has hit one of its biggest roadblocks to date.
In July, the company confirmed the closure of 79 food court kiosk locations nationwide after its largest franchise partner, grocery giant Hy-Vee, pulled out of its years-long partnership. The move effectively halved the chain’s footprint and left the future of its ambitious expansion strategy in question.
A High-Profile Exit
The closures mark the end of a unique experiment that aimed to blend fast-casual dining with grocery shopping. Wahlburgers and Hy-Vee once touted the partnership as a way to bring star power and restaurant-quality burgers to supermarket aisles. But as consumer habits shifted, the business model faltered, and Hy-Vee ultimately chose to walk away.
Hy-Vee Pulls the Plug
Hy-Vee confirmed in July that it would shutter all in-store Wahlburgers locations and revert the spaces to its Market Grille restaurants. The grocer framed the move as part of a broader streamlining strategy, but the impact on Wahlburgers was severe. Losing its largest franchisee meant losing nearly half of its locations at once.
How the Deal Started
The partnership began in 2017, when Hy-Vee announced it would open Wahlburgers outlets inside its stores across the Midwest. By 2021, the grocery chain operated more than 60 Wahlburgers, making it the brand’s largest operator and a crucial partner in its growth plan.
Why the Partnership Failed
While initially promising, the grocery-based model struggled to resonate with customers. In-store restaurants faced declining traffic, operational challenges, and higher costs than expected. Industry analysts point to the difficulty of merging a celebrity-driven fast-casual brand with the day-to-day realities of supermarket dining.
Wahlburgers’ Shrinking Footprint
At its peak, Wahlburgers operated over 90 locations worldwide. With 79 closures tied to the Hy-Vee exit, the brand now finds itself with just a few dozen outlets left, mostly in airports, stadiums, and select standalone sites. For a chain that once aimed to rival Five Guys or Shake Shack, the sudden contraction is a dramatic setback (USA Today).
The CEO Responds
Wahlburgers CEO Randy Sharpe pushed back on concerns that the closures signal the brand’s decline. In an interview, he emphasized that the end of the Hy-Vee deal reflects a strategic shift, not a collapse, and that Wahlburgers remains committed to growth in standalone and nontraditional locations.
“It’s not 79 restaurants closing,” Sharpe clarified. “If you saw what was being shuttered, it’s a food court kiosk. It’s not a full-service restaurant, and it wasn’t a significant revenue driver for either side.” (RetailWire)
What’s Next for Hy-Vee
Hy-Vee, meanwhile, has transitioned many shuttered Wahlburgers back into Market Grille restaurants. The grocer says the move allows it to better align with customer demand for affordable, convenient dining options while keeping operations in-house. The shift reflects a broader industry trend of supermarkets scaling back ambitious dining ventures in favor of simpler, store-branded offerings.
Industry Takeaways
The breakdown highlights the risks of grocery chains partnering with outside restaurant brands. While celebrity power can draw attention, execution proved difficult in a supermarket setting. Analysts say the failure underscores that grocery-restaurant hybrids remain a niche concept that’s hard to scale sustainably.
A Bruised but Not Broken Brand
For Wahlburgers, the Hy-Vee collapse is a major blow, but not the end. The chain retains its visibility through its presence in airports, sports arenas, and a smaller network of traditional restaurants. Though its path to becoming a fast-casual heavyweight is now in doubt, Wahlburgers is betting that a tighter, more focused footprint will keep the brand alive.
