Food hall delivery concept Wonder has agreed in principle to partner with meal manufacturer FreshRealm to produce the meal kits that are finished and served from its locations.
The agreement will allow Wonder to expand production as it aims to reach 90 units by the end of 2025, starting with 25 new stores this year.
“It’s going to give us the ability to scale much faster, not only in the areas that we’re currently in, but across the U.S.,” Wonder founder and CEO Marc Lore said in an interview this week.
Wonder today has 12 food halls in New York, New Jersey and Pennsylvania, and next month will begin opening one store a week for 78 straight weeks. The openings will be concentrated in the Northeast.
Lancaster, Texas-based FreshRealm has facilities across the country. It produces fresh meals for retailers like Walmart and Kroger as well as meal kit providers like Wonder-owned Blue Apron. Its ability to accommodate customers’ unique production needs will allow it to keep pace with the fast-growing Wonder, CEO Michael Lippold said.
“As fast as [Lore] wants to go, we’ll be able to do that on-demand,” he said.
As part of the deal, FreshRealm will take over operations at Wonder’s four existing manufacturing plants in New Jersey.
Working with FreshRealm will help Wonder reduce costs by producing food in bigger batches and buying ingredients at a larger scale, Lore said. But the chain does not intend to cut corners on quality as it ramps up production.
“The number one thing is the quality has to be exactly the same, if not better,” Lore said.
[Read more: Marc Lore's Wonder is reinventing the meal.]
Wonder’s supply chain and production process is different from that of the average restaurant. Each of its locations offers food from as many as 30 restaurant brands, some of which are in-house creations, while others are adaptations of existing concepts or collaborations with famous chefs.
Ingredients are prepped off-site and sent to restaurants in single-serving kits. Employees finish them to order using just a few pieces of equipment, including high-speed ovens. The recipes are designed to travel, as most of Wonder’s business comes from delivery and pickup via its proprietary app.
In addition to fresh meals, customers can also get do-it-yourself Blue Apron kits from Wonder locations.
Wonder is Lore’s latest attempt at building a startup into a household name following his previous success with Diapers.com and Jet.com. While those companies were focused on online retail, Lore envisions Wonder as a “super app for mealtime.”
Wonder has been able to grow rapidly thanks to $1.5 billion in private funding, including a $700 million injection in March. But the company has also made strides at the unit level since opening its first location in January 2023.
Restaurant-level EBITDA margin, or earnings before interest, taxes, depreciation and amortization, has increased to 15%, Lore said, due to sales growth and automation that has brought down costs. And its delivery efficiency is improving, in part thanks to its acquisition of the Relay delivery service earlier this year. Cook times are now better coordinated with couriers, so meals sit for an average of just one minute before they’re picked up. The average time between when an order is placed and when it’s delivered is now under 30 minutes, and orders are 98% accurate.
“All of that is to say, the experience is getting better,” Lore said.
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