Walmart Just Changed the Food Game: It Understands Food Customers Better Than Fast-Food Retailers Do

Steven Johnson, The Grocerant Guru® at Tacoma, WA based Foodservice Solutions® says Walmart’s next big food opportunity isn’t simply selling more groceries—it is capturing more of the consumer’s eating occasions.

There is a significant change underway in the American food marketplace, and Walmart deserves credit for recognizing it.

Walmart is moving beyond traditional grocery delivery and into something much bigger: bringing groceries, fresh prepared food, restaurant meals, snacks and beverages together in one delivery experience.

In June 2026, Walmart began allowing eligible customers to order Subway directly through Walmart’s app or Walmart.com, including the ability to combine Subway with a Walmart Express grocery delivery. Walmart subsequently announced an expansion with Dunkin', beginning with approximately 150 Dunkin' locations inside Walmart stores and ultimately expanding to thousands of standalone locations.

The significance isn't simply that Walmart is delivering restaurant food.

Walmart is recognizing how consumers increasingly want to eat.

The consumer doesn't necessarily care whether dinner came from a supermarket deli, a restaurant kitchen, a convenience store or their own oven.

They care about taste, freshness, convenience, speed, value and choice.

That shift is creating a much larger opportunity for Ready-to-Eat and Heat-N-Eat food.

 

Consumers Are Eating at Home—But Increasingly They're Not Cooking From Scratch

For decades, the food industry largely divided meals into two categories:

Grocery = food you prepare.

Restaurants = food somebody else prepares.

That distinction is becoming outdated.

A growing portion of the market is now food prepared somewhere else and consumed at home.

That includes:

·       Ready-to-Eat meals

·       Heat-N-Eat entrées

·       Prepared deli foods

·       Restaurant takeout and delivery

·       Fresh sandwiches

·       Rotisserie chicken

·       Prepared salads

·       Pizza

·       Breakfast sandwiches

·       Fresh snacks

·       Bakery products

·       Coffee and other beverages

This is the expanding Grocerant economy.

And the consumer data increasingly supports it.

 

2024: Convenience Became Part of “Value”

FMI research conducted with Circana and Oliver Wyman in 2024 found that consumers were redefining value beyond price, with convenience, health and ease of preparation becoming increasingly important.

FMI reported that 87% of morning eating occasions and 76% of midday eating occasions were sourced from home, while 65% of morning eating occasions were prepared in less than five minutes.

That is an important distinction:

Eating at home does not mean cooking from scratch.

FMI also reported in 2024 that shoppers were using semi-prepared and fully prepared retail foods to supplement—or replace—meals prepared from scratch. A growing number were using a hybrid approach, combining prepared foods with foods they prepared themselves.

That is exactly where grocery foodservice and restaurant delivery begin to overlap.

 

2025: Grocery Stores Became More Serious Restaurant Competitors

The trend became even clearer in 2025.

FMI's Power of Foodservice at Retail 2025 found that the percentage of consumers choosing deli-prepared food instead of restaurant meals had more than doubled—from 12% in 2017 to 28% in 2025.

FMI also found that 53% of Americans were using a hybrid approach to create meals, combining deli-prepared foods with items from their own kitchens.

Retail foodservice dollar sales reached $52.1 billion, according to FMI.

The implication is important:

The grocery store is no longer competing only for the grocery budget. It is competing for the meal.

That makes Walmart's strategy especially interesting.

Walmart already has the grocery customer.

Now it can increasingly offer that customer restaurant food without requiring a separate restaurant transaction.

 

Restaurant Customers Are Asking for More Convenience, Too

The restaurant industry is sending the same signal from the other direction.

The National Restaurant Association reported in its 2025 Off-Premises Restaurant Trends research that nearly 75% of restaurant traffic occurred off-premises, including takeout, delivery and drive-thru.

Among adults:

·       47% picked up takeout at least weekly.

·       42% used the drive-thru weekly.

·       37% ordered delivery weekly.

The same research found that 66% of consumers wanted more choices from restaurants offering takeout, while 61% wanted more delivery choices.

Consumers are clearly comfortable with restaurant food coming to them.

Walmart's opportunity is to add that restaurant choice to a shopping ecosystem consumers already use.

 

Walmart's Real Advantage: The One-Basket Food Customer

Consider a typical evening order:

Milk.

Eggs.

Bananas.

Dog food.

Paper towels.

A prepared salad.

Dinner.

A snack.

Coffee for tomorrow morning.

Historically, those purchases might require multiple decisions and potentially multiple transactions.

Walmart can potentially combine them.

One customer. One digital basket. Multiple food occasions.

That is where Walmart's strategy becomes strategically different from traditional restaurant delivery.

A restaurant delivery platform typically begins with:

“What restaurant do you want?”

Walmart can begin with:

“What do you need?”

That difference matters because Walmart already has a broad grocery and household shopping relationship with millions of consumers.

Walmart also says its stores are within 10 miles of approximately 90% of the U.S. population, giving the company an extensive physical footprint for its delivery strategy.

 

2026: Grocery Foodservice Is Moving Forward

The opportunity isn't limited to Walmart.

FMI's 2026 industry research reports that 77% of food retailers plan to increase the space allocated to foodservice, including fresh-prepared grab-and-go offerings.

FMI also reported that 94% of shoppers purchased groceries both online and in-store during 2025, reinforcing how thoroughly food shopping has become omnichannel.

Meanwhile, Circana continues to identify convenience and delivery as important components of the evolving foodservice marketplace.

Put those trends together and the direction is clear:

Consumers want more food prepared for them, more convenient ways to get it and more choices about where it comes from.

That creates an enormous opportunity for Ready-to-Eat and Heat-N-Eat food across grocery, restaurants and convenience stores.

 

Walmart Isn't Becoming a Restaurant—It's Becoming a Food Occasion Aggregator

This is where I believe Walmart deserves real credit.

Walmart doesn't have to become McDonald's, Subway or Dunkin'.

It can let those brands remain what they are.

Instead, Walmart can potentially become the platform through which consumers access multiple food choices while simultaneously buying their groceries and household necessities.

Dinner can come from a restaurant.

Breakfast can come from Dunkin'.

Lunch can come from the grocery deli.

Snacks can come from the supermarket aisle.

Tomorrow's ingredients can come from the same order.

That is food-channel convergence.

And it changes the competitive equation.

The question isn't simply whether Walmart can deliver restaurant food.

The more important question is whether Walmart can capture more of the consumer's food spending by making the entire food-shopping experience easier.

 

The Fast-Food Industry Should Be Paying Attention

Traditional restaurant operators have historically measured competition primarily against other restaurants.

That isn't enough anymore.

A consumer deciding what to eat has increasingly more alternatives:

Cook it.

Heat it.

Grab it from the deli.

Pick it up at a restaurant.

Order it for delivery.

Buy it from a convenience store.

The winning operator will be the one that best answers the consumer's fundamental question:

“What can I eat right now with the least amount of effort?”

Walmart's emerging strategy is built around answering that question with a very broad assortment.

 

Three Insights From the Grocerant Guru®

1. The real competitor isn't always another restaurant.

It may be the consumer's kitchen.

Every restaurant should be asking:

What makes our food easier, faster, better or more desirable than preparing something at home?

The answer has to go beyond price.

2. Walmart is turning convenience into an ecosystem.

Restaurants generally sell convenience one meal at a time.

Walmart has the opportunity to combine groceries, prepared foods, restaurant meals, snacks and beverages into one digital basket.

That can increase both convenience for the consumer and the number of food occasions Walmart participates in.

3. The future of food competition is about owning the occasion—not the channel.

Consumers don't think:

“I need a grocery-store meal.”

They think:

“I'm hungry.”

They don't think:

“I need a restaurant.”

They think:

“What's for dinner?”

That is why Walmart's strategy matters.

The Grocerant Guru® bottom line:

Walmart isn't just delivering restaurant food. It is removing the traditional walls between grocery, restaurant, convenience and foodservice.

The retailers and restaurant operators that understand this shift—and make Ready-to-Eat and Heat-N-Eat food easier to discover, purchase and consume—will be positioned to capture more of the consumer's most valuable asset:

Their next eating occasion.

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With deep experience in restaurant operations, brand positioning, and strategic consulting, Steven provides valuable takeaways that inspire and drive results.

Visit GrocerantGuru.com or FoodserviceSolutions.US Call 1-253-759-7869

 

The New Foodservice Rent Equation: How Much Can a Restaurant or C-Store Afford to Pay for Real Estate?

 

There is one fact about foodservice real estate that has remained true for decades:

If you pay too much for the location, you eventually pay for it with your profits according to Steven Johnson, Grocerant Guru® at Tacoma, WA based Foodservice Solutions®.

But today's foodservice business is considerably more complicated than simply saying, “Keep rent between 6% and 10% of sales.”

That old rule of thumb can be useful as a starting point, but it is not a universal profitability formula. In 2026, foodservice operators have to look at occupancy cost, labor, food costs, sales productivity, off-premise sales, technology, delivery economics and gross-margin mix together.

And there is another important distinction: rent is not the same thing as occupancy cost.

Occupancy can include rent, property taxes, insurance, common-area charges and other location-related expenses. The National Restaurant Association's latest operating data shows just how important this distinction has become.

The Real Number: Occupancy Cost as a Percentage of Sales

According to the National Restaurant Association's 2025 Restaurant Operations Data Abstract, based on data from more than 900 restaurant operators, median occupancy costs in 2024 were 5.7% of sales for full-service restaurants and 5.2% for limited-service restaurants.

Location matters.

For full-service restaurants, median occupancy costs were approximately 6.0% in urban/city-center locations, 5.5% in suburban locations and 5.4% in small communities or rural areas.

For limited-service restaurants, the difference was even larger: 6.0% in urban/city-center locations, 5.0% in suburban locations and just 3.2% in small communities or rural areas.

That is an important food marketing lesson.

The best location is not necessarily the location with the most traffic. It is the location capable of producing enough profitable sales to justify its occupancy cost.

A $20,000 monthly rent may be expensive for one restaurant and a bargain for another.

It all depends on the sales the location can generate.

Foodservice Has Become a Cost-Battle Between Labor, Food and Real Estate

Rent does not operate in a vacuum.

The restaurant operator is fighting several cost battles simultaneously.

The National Restaurant Association reports that in 2024, median salaries and wages including benefits represented 36.5% of sales for full-service restaurants and 31.7% for limited-service restaurants.

Food and non-alcohol beverage costs represented another 32.0% of sales for full-service restaurants and 32.4% for limited-service restaurants.

Put those three numbers together and the challenge becomes obvious.

A restaurant can already have approximately:

32% food + 32%–37% labor + approximately 5%–6% occupancy

before paying for utilities, insurance, technology, repairs, supplies, credit-card processing, marketing, administrative expenses, depreciation and everything else required to operate the business.

And the pressure has not disappeared.

In July 2026, the National Restaurant Association reported that restaurant expenses remained substantially above pre-pandemic levels. Compared with 2019, average restaurant employee hourly earnings had increased 41%, while average wholesale food prices were up 35%.

That changes the rent conversation.

The New Rule: Don't Ask “What Percentage Is Rent?”

Ask:

“What percentage of sales can this location afford to spend on occupancy while still producing the return we require?”

That is a much better question.

A restaurant doing $2 million in annual sales with $120,000 of occupancy costs is at 6%.

A restaurant doing $1 million in sales with the same $120,000 occupancy cost is at 12%.

Same building.

Same rent.

Completely different economics.

And that is why percentage-of-sales analysis is so important.

 

Example #1: The High-Sales Restaurant

Imagine a restaurant generating:

$2.5 million in annual sales

Annual occupancy cost:

$150,000

Occupancy percentage:

6.0%

That location may be highly attractive because the real estate is consuming only six cents of every sales dollar.

But suppose the operator can increase sales to $2.75 million without materially increasing occupancy.

The same $150,000 occupancy cost now represents only:

5.45% of sales.

That is the power of sales productivity.

The operator did not negotiate a cheaper lease.

The operator made the lease cheaper by generating more sales.

This is one reason food marketing matters so much to real estate economics.

Menu innovation, takeout, catering, delivery, loyalty programs, digital ordering, daypart expansion and Ready-2-Eat/Heat-N-Eat offerings can all help increase sales productivity without adding another restaurant.

 

Example #2: The Restaurant With “Cheap” Rent That Isn't Cheap

Now consider a restaurant with:

$1.0 million in annual sales

and:

$60,000 in annual occupancy costs.

That is also 6%.

On paper, everything looks fine.

But what happens if traffic falls and annual sales decline to $800,000?

The occupancy cost suddenly becomes:

7.5% of sales.

If sales fall to $700,000, occupancy becomes:

8.6%.

Nothing changed about the lease.

The restaurant simply lost the sales volume necessary to support it.

This is why operators should not only monitor occupancy as a percentage of sales—they should monitor sales trends and occupancy dollars together.

A rising occupancy percentage can be an early warning signal that a location is losing economic productivity.

 

Example #3: The C-Store Foodservice Opportunity

Convenience stores demonstrate why the old restaurant-only way of thinking about real estate is changing.

Foodservice has become one of the most important profit engines in convenience retail.

According to NACS, foodservice accounted for approximately 28% of U.S. convenience-store in-store sales in 2025 and 38.9% of in-store gross profit dollars. Prepared food alone represented 73.9% of foodservice sales.

That is a remarkable transformation.

Twenty years ago, foodservice represented only about 11.9% of convenience-store in-store sales.

Today, prepared food is helping redefine what a convenience store actually is.

It is no longer simply:

Fuel + cigarettes + packaged snacks + beverages.

Increasingly it is:

Fuel + beverages + snacks + fresh prepared food + breakfast + lunch + dinner + snacks + beverages + meal solutions.

And that changes the real estate equation.

A convenience-store operator may be able to justify a higher occupancy cost if the location supports substantially higher foodservice sales and gross profit.

NACS reported that foodservice generated approximately 38.3% of in-store gross profit dollars in 2025, demonstrating that foodservice's contribution to profitability is considerably larger than its share of sales.

That is precisely why foodservice should be considered when evaluating a site's rent.

 

The Grocerant Effect: Rent Can Be Supported by More Than One Revenue Stream

Here is where the traditional restaurant real estate model becomes even more interesting.

A restaurant location may generate revenue from:

·       Dine-in

·       Takeout

·       Drive-thru

·       Delivery

·       Catering

·       Mobile ordering

·       Loyalty programs

·       Family meals

·       Meal components

·       Ready-2-Eat products

·       Heat-N-Eat products

The same principle applies to grocery stores and convenience stores.

The physical location can become a food production and fulfillment platform, not simply a place where customers sit down to eat.

That means operators should increasingly evaluate real estate based on total foodservice revenue productivity, not just traditional dining-room sales.

This is particularly important as consumers continue shifting food occasions between restaurants, grocery stores and convenience stores.

The lines between these channels continue to blur.

 

What About Starbucks, Darden and Other Major Operators?

The original version of this article used Starbucks, Darden and 7-Eleven as examples of companies supposedly maintaining specific rent percentages.

I would be careful with that comparison.

Public companies do not always report “rent” in a way that allows an apples-to-apples comparison with an independent restaurant's lease expense.

For example, Darden's fiscal 2026 results show $13.21 billion in sales, with $4.04 billion in food and beverage costs, $4.18 billion in restaurant labor and $2.13 billion in restaurant expenses.

Darden's scale gives it enormous purchasing, labor, marketing and operating advantages that a single-unit restaurant does not have.

Likewise, Starbucks reported approximately $37.2 billion in fiscal 2025 revenue, while store operating expenses represented 45.9% of total net revenues.

The lesson is not that Starbucks or Darden has discovered one magic rent percentage.

The lesson is that large operators manage the entire economic productivity of the location.

That includes sales volume, labor productivity, menu mix, occupancy, throughput, technology and customer frequency.

 

The New Foodservice Real Estate Scorecard

I believe foodservice operators should evaluate every location using at least five measurements:

1. Occupancy Cost Percentage

How much of every sales dollar goes toward rent and other occupancy expenses?

2. Sales Per Square Foot

How much revenue is the physical location generating?

This is particularly important when comparing expensive urban locations with lower-cost suburban or rural locations.

3. Gross Profit Per Square Foot

Sales alone can be misleading.

A $1 million location selling low-margin products may be less attractive than a $900,000 location with a much stronger gross-margin mix.

4. Labor Productivity

How much sales volume is being generated for every labor dollar?

With labor costs remaining elevated, this is increasingly important.

5. Foodservice Contribution

What percentage of the site's sales and gross profit is coming from higher-value foodservice?

This measurement is becoming especially important in convenience retail.

 

The Most Dangerous Rent Is Not Always the Highest Rent

There is another lesson I have learned over decades of watching foodservice operators.

A high rent location can be profitable.

A low-rent location can lose money.

The difference is sales productivity and margin productivity.

Suppose Location A costs $200,000 a year in occupancy and produces $4 million in sales.

Occupancy:

5%

Location B costs $100,000 and produces $1 million in sales.

Occupancy:

10%

Location B has half the rent dollars.

But Location A is actually carrying the lower occupancy burden relative to sales.

This is why foodservice real estate decisions should never be made simply by asking:

“What's the rent?”

The better question is:

“What sales and gross profit can this location realistically produce?”

 

Three New Food Marketing Insights From the Grocerant Guru®

Insight #1: The New Rent Number Is a Sales Productivity Number

I would stop thinking about rent as an isolated expense.

Instead, think about rent divided by productive sales capacity.

The operator who can increase transactions, average check, dayparts and off-premise occasions can potentially reduce occupancy as a percentage of sales without negotiating one dollar off the lease.

Food marketing can therefore become real estate cost management.

 

Insight #2: Foodservice Can Make Expensive Real Estate Work

A location that once depended almost entirely on lunch and dinner may now have opportunities for breakfast, coffee, snacks, takeout, delivery, catering, family meals and prepared food.

That creates more revenue opportunities from the same four walls.

The winning question isn't:

“Is this rent too high?”

It is:

“What additional food occasions can this location capture?”

That is a very different real estate strategy.

 

Insight #3: The Future Belongs to the Operator Who Measures Profit Per Customer, Not Just Sales Per Customer

The foodservice industry has spent decades obsessing over sales.

But in today's cost environment, sales without margin can be dangerous.

Operators need to know:

Who is the customer?

What did they buy?

What did it cost to make?

How much labor did the transaction require?

How much did delivery or payment processing cost?

How much gross profit remained after the transaction?

Then—and only then—can the operator determine how much occupancy cost that customer can actually support.

That is the new foodservice real estate equation.

 

The Bottom Line

The old 6%–10% rent rule is not dead.

But it needs to be put into context.

Current restaurant operating data suggests that median occupancy costs are closer to 5%–6% of sales for many restaurant operators, with meaningful differences by format and geography.

At the same time, restaurants are dealing with historically elevated labor and food costs and extremely thin bottom-line margins. The National Restaurant Association reported median 2024 pre-tax income of only 2.8% for full-service restaurants and 4.0% for limited-service restaurants.

That means a few percentage points can make a very big difference.

So my advice to foodservice operators is simple:

Don't lease a location because the rent looks cheap.

Don't reject a location because the rent looks expensive.

Instead, determine how much sales, gross profit and customer frequency the location can realistically generate—and then calculate the occupancy cost that those economics can support.

Because in the end, the best foodservice location isn't the one with the cheapest rent.

It is the location where the real estate, food, labor and marketing work together to produce the highest sustainable profit.

That is the real Grocerant Guru® rent rule.

Make the four walls earn their keep.

About Foodservice Solutions®

Looking for your own foodservice growth opportunities? Foodservice Solutions® specializes in outsourced food marketing, business-development ideation and identifying, quantifying and qualifying opportunities across restaurants, grocery stores, convenience stores and the growing Grocerant niche.

The objective is simple: find more food occasions, create more customer value and make every square foot work harder.