Progress is rarely linear. Wonder, the startup that tried to fix restaurant delivery by cooking food in vans outside customers’ homes, is the latest example.
The company founded by Walmart and Amazon ecommerce veteran Marc Lore said this week it’s abandoning its restaurants on wheels in favor of a less costly, more traditional strategy: physical locations.
Public reaction to the change has been smug, which tends to be the go-to response when billionaire entrepreneurs fail. (See: Elon Musk.) It doesn’t help that Wonder appears to be back-tracking from something truly innovative, if risky, to something more commonplace and only a little less risky. Lore set out to change how people eat, and ended up back at ghost kitchens. (Welcome, Marc.)
In hindsight, Wonder’s “Chef on the Road” system was destined to fall flat. For delivery to work, it needs volume, density and scale. How many orders could one of those restaurant vans realistically fulfill in an hour? And how many chefs want to work in a van?
And yet I don’t see Wonder’s new direction as a backwards move. In fact, I think it’s onto something, even if it took four years and millions of dollars to arrive at an idea that is not new, using logic that is so obvious it’s comical. (“Instead of having 30 vehicles serving all of our different cuisines on a given night, could we create a scenario where we serve all 30 of our restaurants from a single, fixed space?” Lore wrote Tuesday in a LinkedIn post. Congrats, you just invented the food court.)
But back to why I think this idea is good. The new Wonder will indeed use “fixed spaces” (aka buildings) to prepare and serve dozens of its proprietary restaurant brands for delivery, pickup and even some dine-in. This omnichannel approach has been adopted by many other ghost kitchen companies, which have realized a profitable business cannot subsist on delivery alone.
On top of that, every part of Wonder’s operation, from the ordering platform to the kitchen to the delivery, will be controlled by Wonder. There will be no outsourcing deliveries to DoorDash or leasing space to other restaurants. Every penny customers spend will go to Wonder.
This vertically integrated ghost kitchen model is intriguing. It has worked remarkably well for ClusterTruck, an Indianapolis-based company that calls itself the largest and most profitable ghost kitchen in the U.S. The whole business was engineered with delivery in mind, from the technology to the menu to the layout of the kitchen. ClusterTruck keeps its delivery radius tight, so food is never more than 7 minutes old when it arrives at a customer’s door. It can afford to do that because it has a big menu (90 items) that appeals to a wide variety of customers.
(If you're looking for another endorsement of this strategy, Chick-fil-A is doing the same thing with its Little Blue Menu concept.)
Wonder’s philosophy is similar. A fully integrated operation, Lore wrote, “enables us to be hyper-precise with our cook times, timing pick-ups and deliveries down to the exact moment orders are ready.” That should yield hotter and fresher food and a better customer experience, which was the problem Wonder wanted to solve in the first place.
Wonder’s stationary outlet will open in February in Manhattan. Up to nine more are set to follow this year in established markets—NYC exurbs like Westchester County, N.Y., and Union County, N.J.
What makes me think this will work for Wonder? After all, Lore is not a restaurant expert. But neither was ClusterTruck founder Chris Baggott. He, like Lore, was a tech entrepreneur who saw an opportunity in restaurant delivery. Lore, who founded Jet.com and sold it to Walmart, has vast e-commerce experience. Getting the logistics right has got to be at least half the battle of running a ghost kitchen. Lore’s experience in that department should be an advantage.
No matter who is running them, ghost kitchens face a lot of questions. Unlike “Field of Dreams,” building one does not guarantee customers will come. A lack of brand recognition has proven to be many operators’ downfall. Wonder, which has raised $850 million since 2021, likely can afford marketing. And its restaurants aren't no-names: Concepts like Brooklyn’s Di Fara pizza and Fred’s Meat & Bread out of Atlanta are popular in their home markets. Their ability to translate to other locales, where plenty of other restaurants are vying for customers’ attention, will ultimately decide Wonder's fate. Putting its vans in reverse is the first step forward.