How partnerships are driving growth for fast-fine dining brand Wonder | CO

Why it is important:

• According to a survey by the National Restaurant Association, 66 percent of consumers said they now order take-out from a restaurant more often than before the pandemic.
• The food disruptor Wonder, founded by serial entrepreneur Marc Lore, is profiting from the takeaway boom, but has a special trick: its prominent partners, including Marcus Samuelsson and Jose Andres, whose meals are offered in a kind of digital “Fast Fine” snack hall, receive shares in the startup as an incentive and are thus encouraged to support the success of the brand.
• Investors have backed Wonder with a total of $1.5 billion, including a $700 million funding round earlier this year, giving the company plenty of room to test and evolve its consumer appeal and business model as it expands.

Wonder has brought a new ordering and dining experience to the restaurant industry, combining the culinary diversity of a modern market hall with convenient, user-friendly takeout and delivery.

The company was founded in 2018 by Chairman and CEO Marc Lore, the well-known serial entrepreneur whose previous e-commerce ventures include Diapers.com, which he later sold to Amazon, and grocery website Jet.com, which Walmart bought. (Diapers.com and Jet.com have since shut down.) He also oversaw Walmart’s e-commerce operations from 2016 to 2021, after the retailer acquired Jet and folded it into Walmart.com.

At Wonder, Lore and his team aim to disrupt traditional restaurant dining by partnering with renowned chefs and restaurant owners like Marcus Samuelsson, José Andrés, Bobby Flay, Michael Symon, Nancy Silverton and more. Wonder users can create mixed orders from the various dining concepts to meet the preferences of everyone in the group – maybe a steak for Dad, tacos for Mom, pizza for the kids and a few salads and desserts to share.

“Our mission is to make good food more accessible,” said Daniel Shlossman, Wonder’s chief marketing and growth officer, in an interview with CO—. “We’ve done a lot of research and development on the culinary and technology side, and that allows us to do it in a very different way than any other restaurant or food delivery concept out there.”

Wonder benefits from foodie culture and the ongoing post-pandemic takeaway boom

During the pandemic, consumers have become significantly more comfortable with pickup and delivery of food from restaurants. Two-thirds (66%) of consumers said they now order takeout from a restaurant more often than they did before the pandemic, and 55% said the same about delivery, according to the National Restaurant Association’s 2023 Industry Report. Additionally, 55% of adults surveyed said takeout/delivery is essential to their lifestyle, and these types of order fulfillment are especially important for younger consumers, many of whom, particularly Generation Z, have embraced foodie culture.

“Operators are introducing new business models into the industry, revamping existing concepts and giving more space to take-out to satisfy customers,” said Hudson Riehle, senior VP of research at the National Restaurant Association, in a statement.

Wonder’s partnerships with chefs and restaurants not only allow the company to offer trendy dishes like Samuelsson’s Chicken and Waffles with Maple Chili Sauce and Flay’s Salmon with Hazelnut Cherry Butter, but also strengthen Wonder’s marketing opportunities because the company can associate the chefs’ names with its products. In addition, Wonder’s partnerships with chefs generate publicity for special events that the chefs help promote.

Wonder’s chef partners are compensated with upfront payments and company stock, Shlossman explained, so they have an incentive to drive the success of Wonder as a whole.

(Read: Chef Marcus Samuelsson on entrepreneurship and the future of the restaurant industry)

Expansion into the meal kit sector with the acquisition of Blue Apron

Last year, Wonder expanded its food offerings beyond restaurant concepts with the $103 million acquisition of Blue Apron, the subscription-based meal kit delivery service that had struggled to increase profitability due to high customer acquisition and retention costs. Wonder has since begun adding Blue Apron’s meal kits, which include partially prepared ingredients and recipes, to its offerings.

In addition to its culinary partnerships, Wonder has also created its own restaurant menus, which it offers alongside those associated with chefs’ creations. The company operates a research and development facility in New Jersey where it creates and tests menu items and production processes.

“It all comes down to the food,” Shlossman said. “If the food isn’t great, none of this matters.”

Wonder has put considerable effort into developing systems that help coordinate kitchen production so that all dishes in an order are ready for pickup by customers or delivery drivers at approximately the same time. The company is now offering its technology and menu expertise to other large-scale foodservice operators through its WonderWorks division.

The fact that the company initially started as a food truck concept helped Wonder focus on kitchen efficiency early on, Shlossman said.

After testing the mobile kitchen concept, the company changed course last year and began opening brick-and-mortar locations. It quickly grew to 12 stores in New York City and the surrounding area and plans to add another 23 this year and 55 next year. It aims to reach 90 stores by the end of 2025.

(Read: Walmart.com’s Marc Lore on when to take risks, even without a safety net)

Walmart launches “Fast Fine Dining”: “This is an exciting opportunity for us to scale the model to reach more communities”

Wonder is also working with Walmart to test a smaller version of its multi-restaurant concept in some of the retailer’s stores in Pennsylvania and New Jersey. The first such location opened earlier this year in Quakertown, Pennsylvania, and at least two more are planned in Ledgewood and Teterboro, NJ.

According to Shlossman, Walmart stores use the same principle of offering multiple restaurant menus in an area that would otherwise only accommodate one store, albeit in an even smaller space.

“This is an exciting opportunity for us to scale the model – in this case down – to fit additional communities in different ways,” he said.

At the Walmart in Quakertown, Wonder launched with eight proprietary restaurant menus served from a single, scaled-down 1,400-square-foot kitchen: Limesalt (Mexican), Yasas by Michael Symon (Mediterranean), Alanza Pizza, Tejas Barbecue, Wing Trip, Burger Baby, Fred’s Meat & Bread (sandwiches) and Room for Dessert. These eight concepts operate in a space where a typical Walmart would house a McDonald’s or Subway restaurant.

Customers can order online through the Wonder app or website or through the in-store kiosk. The digital-focused ordering experience and the positioning of the foodservice concepts as “fast fine” (as opposed to fast food or fast casual) align with Walmart’s own recent efforts to expand its digital presence and broaden its appeal to higher-income shoppers.

Other multi-restaurant kitchens have struggled in retail, including the Kitchen United Mix and ClusterTruck concepts, which were tested in Kroger stores and have since closed.

But investors seem to believe Lore can make Wonder a success, whether at Walmart or other retail stores, through its rapidly growing number of standalone locations, or through other add-on offerings like WonderWorks. Earlier this year, the company raised $700 million from investors, bringing its total funding to $1.5 billion. That sum includes $100 million from food giant Nestlé, which is reportedly working with Wonder to develop ingredients and products.

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Published 14 August 2024