Tech Check is a regular column on restaurant technology by Senior Editor Joe Guszkowski. It's also a newsletter.
When I visited Wonder in New York last month, founder Marc Lore mentioned that he wanted the nascent restaurant-delivery concept to expand into selling meal kits.
It sounded like something that might happen years down the road, once Wonder had proven out its virtual food hall operation and grown beyond its current four-store footprint.
But Lore, a former track athlete and the founder of several successful ecommerce businesses, likes to move fast.
Just over a month later, Wonder has a deal to buy Blue Apron, the onetime meal kit giant that has spiraled out of control in recent years. The acquisition will create an unusual combination: a restaurant delivery concept that also sells boxed meals customers make themselves.
It’s not yet clear exactly how a united Wonder/Blue Apron will look, but early signs suggest the two businesses will work closely together. A press release Friday said the deal will create “synergies” between their mobile apps and delivery networks, for instance. So perhaps a customer could order dinner for tonight and meal kits for next week using a single app, and it will all come from the same place.
What is clear is that the acquisition brings Wonder closer to its goal of becoming a “super app for mealtime”—a sort of one-stop shop for sustenance. This is convenient for consumers and a smart diversification for Wonder: Most people can only afford to spring for restaurant delivery once in a while, and even the heaviest users tend to max out at a few times a week. This move allows Wonder to compete for more of consumers’ non-restaurant meals.
It sounds good, in theory. But will it work, given Blue Apron’s troubled history?
Founded in 2012, Blue Apron pioneered the idea of meal kits and was able to raise a lot of money as a result. But the boxed-meal market got crowded quickly, making it harder for Blue Apron to attract customers and generate profits in the capital-heavy business.
Meal kits enjoyed a pandemic renaissance, but demand for the service has largely begun to fade. Even though it’s convenient to have ingredients delivered, customers still have to actually make the food and clean up after, and it isn’t exactly cheap, either. Meanwhile, restaurant delivery has emerged to rival meal kits’ convenience without the extra work.
Almost as soon as it went public in 2017, Blue Apron has been in a tailspin: It has laid off hundreds of employees and sold its production and fulfillment operation en route to losing 99% of its value. Today, the company is mainly focused on developing and marketing meals that it does not actually prepare or deliver.
That said, Blue Apron is not necessarily representative of the meal kit market as a whole. U.S. leader HelloFresh has fared better, and the overall market is still expected to grow over the next decade, from about $15 billion globally last year to $50 billion or more by 2030, depending on which data you look at.
At $13 a share, Wonder will pay a premium to acquire Blue Apron. And yet the $103 million deal could end up being a steal if Wonder can successfully integrate meal kits into its operation.
Wonder already appears to have much of the infrastructure needed to run a meal kit delivery business, including a hub-and-spoke distribution network that starts with a food manufacturing plant in New Jersey and ends at customers’ doors. Adding meal kits could help it better leverage those assets.
And Wonder’s virtual food halls appear ready to pull their weight. They are on track for AUVs of $4 million and have the kitchen capacity for $10 million, according to Lore. And they have earned strong ratings from customers. It expects to have 10 locations by the end of the year and has long-term plans to open as many as 7,000.
And it is almost certainly not done evolving. Lore said Wonder could also sell recipes and even groceries in its quest to become a super app. If it can figure out meal kits, why not?