Wonder modified Mercedes Sprinter vans to house its mobile kitchens. Now, it’s pivoting to immobile ones.
(Bloomberg) — Wonder, a deep-pocketed food delivery startup known for building van-based kitchens where food can be prepared and driven to customers’ doors, is abandoning the idea of food trucks altogether. It will begin shuttering operations in suburban New Jersey and New York next week, according to a company spokesperson, and will wind the operation down entirely by late May, cutting an undisclosed number of employees and selling off its fleet of several hundred Mercedes Sprinter utility vans.
The startup was valued at about $3.5 billion last year, and is the latest to trim staff and scale back operations in the face of the larger tech rout.
Wonder, started by Diapers.com and Jet.com founder Marc Lore, will pivot to a model of immobile kitchens. It already operates five facilities that it calls commissaries, where food was partially prepared before going into the trucks where it was finished off and delivered. In addition to those facilities, Wonder will begin opening pickup and delivery locations. It is already building out at least one of these new locations on Manhattan’s Upper West Side, the spokesperson said. News of the changes at Wonder was earlier reported by the Wall Street Journal.
The new model resembles the “ghost kitchen” businesses pursued by other startups like CloudKitchens, founded by Uber Technologies Inc. co-founder Travis Kalanick. CloudKitchens serves primarily as a real estate company, acquiring space and renting out micro-kitchens to people looking to operate their own delivery and pickup restaurants. Reef Technology Inc., another prominent restaurant industry startup, struck deals with fast-food chains like Wendy’s to serve food from mobile kitchens based in converted parking lots.
Wonder operates facilities where many different foods are prepared for delivery in tiny kitchens — the company says a 3,500-square-foot facility could service as many as 30 restaurants. Still, Lore has consistently bristled at the suggestion that Wonder is a ghost kitchen company. It has licensing deals with well-known restaurants to make takeout and delivery food under their brands, and customers primarily order through Wonder’s own app. This vertical integration, according to Lore, is a substantially different business, which can operate more efficiently than the broader food delivery industry, where profits have been hard to come by.
Since its founding in 2018, Wonder has raised $900 million. It had planned to raise as much as $1 billion more over the next two years to pursue a significant expansion of its food truck business. Now, after jettisoning that part of the business, it plans to raise $350 million over that time. The startup has already cut 400 jobs in recent months.
In addition to its consumer product, Wonder operates a business-to-business arm, where it makes meal kits and licenses its technology to other companies looking to set up food service operations. The enterprise unit currently accounts for about 10% of Wonder’s business.
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