Marc Lore does not fear risk. As the decorated entrepreneur likes to say, it can be riskier to uphold the status quo than it is to upend it.
Lore rolled the dice with Diapers.com, the online diaper business that sold its namesake product at a loss. He did it again with Jet.com, an ecommerce retail site that went toe-to-toe with Amazon.
But he may be making his biggest gamble yet with Wonder, a food delivery super app that is aiming to combine multiple risky businesses into something greater than the sum of their parts.
Largely through acquisitions, Wonder has cobbled together brick-and-mortar restaurants, food delivery (through Grubhub) and meal kits (through Blue Apron) to create what it is calling a “mealtime platform”—a delivery service that can meet multiple consumer dining needs, whether that’s a hot meal for tonight or a couple of make-at-home kits for later.
The risk lies in the fact that none of those three legs are entirely sturdy, at least on their own: Restaurants are notoriously difficult. Food delivery is costly and dominated by two massive players. Meal kits have struggled considerably after a rapid rise in the 2010s.
Wonder has the good fortune of having raised more than $2 billion in private funding at a reported $7 billion valuation—an incredible number for a company at such an early stage, and a sign of investors’ confidence in Lore. It has given the company the freedom to take big swings and make some mistakes.
Still, to ultimately make good on those investments, Wonder will have to find a truly wondrous alchemy among these differing, difficult businesses.
Operating restaurants, to begin with, is not for the faint of heart: The National Restaurant Association estimates that 30% of them fail in year one. For better or worse, Wonder’s restaurants aren’t restaurants in the traditional sense, but rather “digital food halls” featuring food from multiple concepts. There are Wonder’s proprietary brands, like Limesalt and Burger Baby; brands developed with well-known chefs like Bobby Flay; and existing brands that Wonder has acquired the rights to, such as Brooklyn’s Di Fara Pizza.
The idea is to offer enough different cuisines to eliminate the veto vote that can paralyze group dining decisions. Families are a key audience for Wonder; it even has a kid-friendly concept called Bellies to please little ones and make things easy on parents.
It makes sense, and yet the digital food hall model is new and unproven. Kitchen United, the ghost kitchen outfit that also allowed customers to mix and match, fell apart in 2023. Some smaller players, like Local Kitchens on the West Coast, are growing.
There are downsides: Digital food halls tend to rely heavily on takeout, and the lack of a succinct brand can put them at a disadvantage against more recognizable options.
There’s also the operational challenge of executing multiple restaurant concepts well. Wonder says it has solved this problem by prepping meals off-site and then reheating them in its stores using specially calibrated Turbochef ovens.
Wonder is betting that its variety, celebrity cachet and consistency will help it stand out from the competition. A brand refresh, unveiled last week, puts the focus on satisfying any customer craving. “Everything’s on the menu. Except compromise,” its revamped website now reads.
Wonder is also moving quickly to address any deficit in brand recognition by blanketing the Northeast with stores. As of Monday, it had more than 60 locations in seven states and Washington, D.C., and it expects to hit 90 by the end of the year. It’s also launching a major advertising campaign in its home markets.
The fact remains, it's not easy to run a restaurant, let alone a good one (or 90). I personally was impressed by Wonder's food when I sampled it in 2023. Other reviews have been more mixed.
But the company’s plans have always extended beyond restaurants themselves. The first sign of its true ambitions came in late 2023, when Wonder announced that it was acquiring Blue Apron, the meal kit pioneer that had fallen on hard times.
Wonder has since added Blue Apron meals as an option in its mobile app, alongside its restaurants. Last month, it completed an overhaul of Blue Apron, adding new types of meals and, notably, ditching subscriptions in favor of a la carte ordering. It believes that bold move will ultimately help it sell more kits by lowering the barrier of entry for customers.
But meal kits are another risky business, and Blue Apron is Exhibit A. It was in bad shape before Wonder acquired it, reporting “substantial doubt” about whether it would be able to continue operating. It had significant losses and cash flow problems and had lost a lot of customers: Blue Apron had more than 1 million users as of its 2017 IPO, but just 238,000 when Wonder stepped in to buy it. The price was $103 million—just a fraction of its nearly $2 billion IPO valuation.
Despite those problems, Wonder sees synergies between meal kits and restaurants because of how they can be combined to cover more meal occasions.
“The customer insight that people do want flexibility in how they eat week in and week out and don’t want to be locked in is a core understanding that fuels this Wonder vision,” Blue Apron GM Whitney Pegden said in an interview last month.
Like Blue Apron, Wonder bought Grubhub for a song after its value crumbled in the hands of previous owner Netherlands-based Just Eat Takeaway.com. During Just Eat’s four years of ownership, Grubhub’s order volume shrunk while competitors DoorDash and Uber Eats ran away with the market. Wonder acquired it for 90% less than what Just Eat paid, giving it a nationwide delivery network and a huge restaurant inventory to help Wonder reach more people.
Since Wonder took over, Grubhub has reported a return to growth and profitability. Wonder has breathed new life into Seamless, the Grubhub-owned delivery app popular in New York City. And last week, Wonder announced that Grubhub restaurants will now be listed on the Wonder app for the first time, giving customers another reason to use it.
If Wonder can turn around Blue Apron and Grubhub on their own, it would be a feat in and of itself, given how far they had fallen before it acquired them.
The bigger question is, will recasting them as part of a mealtime super app result in something that is truly original and disruptive? Or will Wonder just be Grubhub in disguise, playing a distant third fiddle to DoorDash and Uber Eats?
The two market leaders continue to grow revenue by double digits each quarter. They may not have meal kits or brick-and-mortar stores, but they do offer delivery from thousands of restaurants, grocers, convenience stores, pet shops, etc. (Grubhub, to be fair, offers a lot of that too, but it has been late to the party.)
Uber, of course, also offers rides, and DoorDash has been investing heavily in its B2B tech, making it an increasingly important partner to many restaurants.
Both are beginning to look like super apps in their own right. And they don’t seem to care much for the status quo either.