It remains to be seen whether Marc Lore can revolutionize the restaurant business. But he sure can raise money.
As my colleague Joe Guszkowski reported this week, Lore’s Wonder raised another $600 million in venture funding. The company has now raised $2 billion. And it has used those funds to make all sorts of deals. It’s bought Grubhub and Blue Apron and then the media company Tastemade.
The truly eye-popping number is $7 billion, which is Wonder’s valuation after its latest fundraise.
To put that into perspective, it is more than the market caps of Chili’s, Cheesecake Factory, Sweetgreen, Papa John’s, Shake Shack and Wendy’s.
It is also more than the combined market caps of BJ’s Restaurants, Krispy Kreme, Kura Sushi, Noodles & Company, Biglari Holdings, Bloomin’ Brands, Denny’s, Dine Brands, Jack in the Box, Cracker Barrel, El Pollo Loco, Red Robin, Dave & Buster’s and Potbelly.
Early valuations are based on potential, of course, and not performance. Both Dutch Bros and Wingstop, for instance, have far higher market caps than Wendy’s, even though the burger chain is twice as big as their combined size.
In this case, the investors are betting Lore can revolutionize the industry and are jumping in early, which can inflate valuations.
Whether Wonder is worth this amount probably depends on how the company is viewed. Lore is creating what he sees as a service for every type of meal occasion, where a “superapp” can manage what customers eat, order restaurant meals, make reservations or even buy groceries. The app would use AI that can help users choose what they eat every day.
The idea of a company that can do something like that may certainly be worth that type of valuation. Convenience wins, typically, and consumers have demonstrated an affinity for picking from a selection of restaurants on a single app, which is what helps drive the popularity of DoorDash and Uber Eats. In theory, consumers might appreciate the idea that AI can help with meal planning.
At the same time, it’s difficult to look at the pieces being assembled and wonder how this is going to add up to such a valuable piece. Food halls themselves have a mixed track record of success thus far. Wonder wants 7,000 of them. That’s an expensive proposition that will require an insatiable need for fundraising and profitability.
Pairing food halls with delivery is interesting. But consumers in the bulk of the country have demonstrated an affinity for using one of two third-party delivery apps—so much so that Just Eat Takeaway sold Grubhub to Wonder for less than one-tenth of the valuation it had just four years earlier. Consumers can already largely order whatever restaurant meal they want through an app.
Blue Apron, meanwhile, had a history of ups and downs and financial losses before its sale to Wonder in 2023 for $109 million. Meal kits remain a niche market.
Wonder’s job will be to put these disparate parts—and, we assume, whatever additional companies it plans to buy—into a single entity that fulfills its founder’s vision of a superapp for meals. That will be tough on its own.
Tougher still will be to convince consumers this is something they need more than the existing options on the market.