I wonder, Wonder...
More questions for and about the $3.5 billion startup making your family dinner in a van
Last week at a conference hosted by The Spoon, I conducted a quick fireside chat with Katherine Prime, the chief customer officer at Wonder. Wonder is the startup I’ve previously referred to as “the company that cooks you dinner in a van outside” — which Prime said is still an accurate description. Customers place on-demand food orders on the Wonder mobile app, and a short time later, a van outfitted with a high-speed convection oven arrives, the chef-driver finishes the dish, and delivers it to the front door.
I got to ask her plenty of questions, but truthfully, I have *more* questions. They’re not about Wonder’s business, specifically, but about the underlying concept:
Could a new, tech-enhanced logistics company upend restaurants?
Thanks to its branded vans, Wonder looks like a delivery company. But pitting it against DoorDash and co. undersells Wonder’s efforts. Instead, Wonder taps into the benefit of a corporate chain restaurant — scale, brand recognition — for customers in a few affluent New York City suburbs. In the next decade or so, Wonder plans to launch in many more markets across the country. You don’t go to a restaurant, the restaurant comes to you. It’s less about the act of delivery, and more about recreating a restaurant experience worth paying for at home.
If this idea sounds wild to you, you’re not alone.
“I love skepticism,” the company’s founder and CEO, serial entrepreneur Mark Lore, said on a recent episode of the “How I Built This” podcast. But so far, it’s proved popular among its earliest users, with a 70 percent household penetration rate in its launch market of Westfield, New Jersey. Close to three-quarters of those customers reorder within 60 days.
Wonder works with well-known chefs and restaurants to create or license concepts and menu items. Think: Bobby Flay, Nancy Silverton, José Andrés; and restaurants like Maydan in Washington, D.C. and Tejas Barbecue, outside Houston. Per Prime, Wonder pays chefs and restaurants a “sizable partnership fee”; they also get equity in the company in exchange for signing onto the platform. What they don’t get: per-order commissions or any other compensation based on order volume. That means Wonder can charge diners prices that are comparable to restaurants; a steak from the mobile restaurant costs the diner about the same as it would inside the “real” restaurant.
Sizable partnership fee aside, lauded chefs signing on to participate in this van-restaurant experiment must worry about how their food is perceived, right? Prime said that partner chefs and restaurants are heavily involved in developing dishes that ultimately make it onto Wonder’s menus. Even then, they seem surprised that it works.
“The first chefs we had come in and taste were from Frankies Spuntino in Brooklyn — the Franks — and they were skeptical at best,” Prime said. “They started tasting it and, this stands out so much in my mind, Frank looked at Frank and said, ‘They might be better than ours.’ By the end of the tasting they were talking to our chefs about [how they did it]. Of course they weren’t better, but the fact that we were able to live up to the quality of that restaurant spoke volumes.”
“Nancy Silverton did a tasting, and she didn’t necessarily believe that we could produce the pizzas from the equipment we were using,” Prime continued. “We had to take her into the kitchen to show her, no this is how it will come off this vehicle. It was really gratifying and exciting.”
In our interview, Prime referred to Wonder’s concepts as “restaurant chains,” and its vans as “mobile restaurants,” intentional labels for a novel idea.
Is this a natural next step for the future of popular restaurant brands, or a well-funded fantasy, ushered in by one of the most successful e-commerce entrepreneurs in history? (Lore started diapers.com and jet.com, both of which enjoyed successful and significant acquisitions by Amazon and Walmart, respectively.)
Wonder is growing. It recently launched in Westchester County, New York, just outside of the city. It added prepared foods and some local grocery offerings and has deals with local restaurants to provide delivery. During his aforementioned appearance on the popular “How I Built This” podcast, Lore said by July the company will grow from hosting 20 to 30 restaurant concepts, the “right number” for Wonder. Those concepts anchor the full offering on Wonder’s hopeful path to becoming, per Lore, “the go-to solution for mealtimes.”
Right now, Wonder enjoys some luxuries associated with its small footprint. Chef and restaurant partners don’t compete against themselves, since the businesses operate in different geographical areas. Customers eagerly provide detailed feedback about attributes of each dish, from taste to temperature. And Wonder’s fleet of recognizable vans attracts plenty of IRL attention for its own brand, not the restaurants. (Though Prime says the balance of pushing the Wonder brand vs. the restaurant brands will change over time as the company grows.) Plus, Lore said, the company is able to prove profitability in a specific region before it moves onto the next; it doesn’t need to scale nationwide to prove its value.
The company is also sitting on a pie of money; it’s raised $800 million at a $3.5 billion valuation. And it’s already insulated itself against copycats and competition since it would take immense resources for any other company to compete. In their separate interviews, both Lore and Prime hinted at a slightly different model that could launch in cities with higher density — where a fleet of vans is impractical. (From the little they shared, it sounds a whole lot like the existing ghost kitchen model, already popular and established in plenty of markets from a number of other players, but this company has surprised me so far, so...)
Wonder probably isn’t coming for America’s restaurants — not right away, anyway. But it is providing an interesting alternative. Right now, desirable reservations are at a premium and the spotlight on celeb chefs and hot restaurants has never been brighter. If some of the country’s most successful and respected chefs are signing on to lend their name to van dinners, van dinners probably have the potential to go big.
“I like hard businesses, I like businesses that require capital, that are hard,” Lore said on the podcast. “Because if you pull it off, it makes it really hard to be copied.”
Are reservations just as hot in Europe? Coming later this week for paid subscribers: an interview with Xavier Zeitoun, co-founder of Paris-based Zenchef. What’s the line on getting a popular table across the Atlantic?
Expedite, elsewhere:
Thanks to my fellow Substack food fellow, Jason Wilson, for giving me the keys to his newsletter last week. I’m excited to share thoughts from three nights of solo dining at New York wine bars last month during a visit for my best friend’s birthday. (Tl;dr, visit Place des Fêtes in Clinton Hill.)
What else?
Wow, maybe don’t mess with free Dunkin’. In one of my favorite headlines of the week, Bon Appetit declares Dunkin’ [got] roasted for changing its rewards program. It now takes many (many!) more points to earn a free drink, and free birthday drinks are gone, too. The changes came with a brand announcement touting more rewards and increased flexibility for redemption. Typical.
Uber Eats is delivering pot in Toronto. It’s through a partnership with Leafly, a cannabis delivery service. Customers 19 and older in the city can order via the Uber Eats app, but products are delivered by retail staff from the cannabis companies, not independent Uber couriers.
Grubhub will pay $42 million to settle a claim it misled investors. The case dates back a few years and is related to Grubhub’s efforts to add non-partnered restaurants to its marketplace in 2018. (Grubhub’s younger competitors did this; the decades-old delivery company had to level up in order to compete.) Investors say the change in strategy hurt order volumes, and the company hid it. Grubhub denied this and filed a motion to dismiss the lawsuit, but a judge disagreed. “We are satisfied that we reached a settlement to put this matter to rest,” Grubhub told Restaurant Business in an emailed statement.
Uber Eats settles with Seattle for $3.3 million. This comes after Uber Eats allegedly violated Seattle’s Gig Worker Premium Pay Ordinance, which mandates that companies pay gig workers an additional “premium” compensation of $2.50 per order that is picked up or dropped off in Seattle. The city’s Office of Labor Standards said that due to a software glitch, Uber Eats paid drivers $0.025 per order, rather than the $2.50 required, for a period of 14 days.
-Danielle Hyams
Want to tip your Amazon delivery driver? There’s an app for that. This isn’t a restaurant story, but it is a labor story. Tipping is expected almost everywhere (it even has a name: tipflation). But you know who doesn’t get tipped? Many delivery drivers who may not work for the company you purchased from. A new startup launching in Santa Cruz, CA, called Drivr, is a crowdfunded tipping platform that maps drivers to neighborhoods and lets residents make monthly cash contributions to be divided among drivers. One of Drivr’s co-founders, Sol Lipman, told TechCrunch that “even a modest tip jar to start has value. Again, if 10 percent of customers tip $10/month, driver pay will go up by 20 percent. This has a significant impact on driver income. The alternative is just keep on doing nothing to show your support for drivers.”
-DH
