Free Whopper? Walmart+ Offers Cheap Burger King as It Chases Amazon Prime

Walmart and other businesses with subscription models have struggled with retention in recent years amid stiff competition and higher prices for everyday necessities such as food. They face established services that have already entrenched themselves in consumers’ budgets, such as video streaming platform Netflix and e-commerce behemoth Amazon’s Prime membership, which has more than 200 million members.

Walmart+ membership plateaued early last year at around eight million people, including about a million Walmart workers who were offered a free membership as part of their employment, according to a person familiar with the matter. 

Membership stagnated at Walmart because some people didn’t pay to continue past their free trial period, but it has since grown steadily in recent quarters, according to people familiar with the matter. Over the past year, Walmart has worked to refocus its benefits and marketing to keep people from dropping out. Walmart+ membership income has grown by 10% or more in the last three quarters, executives have said on recent conference calls with analysts. 

A spokeswoman for Walmart declined to comment on membership numbers. Annualized retention during the first half of the current fiscal year is at its highest level since the program launched, she said.

“One of the things we have been really focused on is understanding not only what does it take to bring a member in, but also what helps them stay,” said Venessa Yates, who became head of Walmart+ about a year ago after years as a merchant.  

Over the past year, Walmart has added a discounted membership for people who receive government assistance such as the food stamps program, as well as a student discount in the back-to-school season. It also added a travel benefit through Expedia and worked to promote the membership program in more places in stores and online.

Starting this week, Walmart+ members will get 25% off all digital orders at Burger King, and beginning in September, a free Whopper once every three months with a Burger King purchase. Amazon Prime earlier this year introduced free delivery of many restaurant meals through Grubhub.

Walmart+ member demographics closely mirror overall Walmart shoppers, so offering discounts that appeal to those cohorts is important, Yates said. Internal data showed members spend more than twice as much at fast food restaurants than the overall population and in member surveys, many cite Burger King as a favorite. Burger King locations are often close to Walmart stores, all of which made the restaurant chain an ideal partner, she said. 

Walmart executives have highlighted Walmart+ as one of many ways the company is working to build revenue and profit beyond traditional retail, such as through advertising. The retailer has reported strong sales in recent years as inflation-weary shoppers look for savings.

Walmart is also working to improve the speed, accuracy and quality of its online delivery services, which are key to the success of Walmart+, said Seth Dallaire, Walmart’s chief revenue officer, who oversees many of its noncore retail activities such as advertising.  

“Delivery is core to the membership,” he said.

Write to Sarah Nassauer at Sarah.Nassauer@wsj.com