ALEXANDRIA, Va.—A food delivery company is emerging amid a turbulent industry, as some food delivery companies are folding or changing their business models completely. Wonder Group cooks hot meals from a chef-inspired menu through a network of truck-based restaurants and delivers them to homes. The company closed on a $350 million funding round last month, reports the Wall Street Journal.
The food-delivery startup is majority owned by Marc Lore, founder of Jet.com, and according to company officials, the latest funding values the company at roughly $3.5 billion. Though Wonder is doing well financially, the industry is drying up, reports the Journal, which is a reversal from recent years when tech enthusiasm, low interest rates and other factors created a boon in the food-delivery industry.
“Six months ago, we would have raised at a higher valuation. Everyone would,” Lore told the Journal.
Wonder is based in New York City and serves a few New Jersey suburbs, covering 132,000 households, but Wonder wants to expand to an additional portion of New Jersey later this year, then eventually to regions across the U.S. by 2035.
The company also plans to add other prepared-food businesses to its network. Twenty-five percent of its revenue comes from Envoy, which is a crowd-sourced food-delivery service where people can order food from local restaurants inside the Wonder app. Wonder said it added that service so it could avoid alienating local restaurants and offer more food choices. The company also wants to eventually offer ready-to-heat meals and meal-prep kits.
“We want to be a super app for food,” Lore told the Journal.
Wonder spent substantial funds on finding ways to remake high-quality restaurant meals, such as seared steak, in a small kitchen with limited equipment. The company told the Journal that it has made progress on the recipes, but now it’s looking at how to speed up cooking to make the venture profitable. Steps have included kitchen layout redesign and using software that helps chefs identify the most efficient way to prepare a meal.
Meal-kit businesses, along with the food-delivery industry, soared during the COVID-19 pandemic but have since lost traction.
The Journal reports that Blue Apron shares are down more than 64%. The meal-kit delivery company recently partnered with Walmart.com to offer its meal kits to non-subscribers—a first for Blue Apron. Getir of Turkey, U.K.-based Zap and German-based Gorillas have all announced staff cuts, and Flink, based in Berlin, is slowing down its hiring. London-based Jiffy announced it was closing down last month.
Sajal Srivastava, co-founder at TriplePoint Capital, a Silicon Valley firm that provides debt financing to startups including Flink, said that there is no one business model for food delivery, but some mix of hot meal delivery, convenience delivery and slower grocery delivery companies will succeed in each country over time.
According to NACS’ “Last Mile Fulfillment in Convenience Retail” report, 61% of retailers are satisfied with their third-party delivery partners. Concerns include high fees, little access to consumer data, difficulties delivering age-restricted products and service and operational issues. Read more about these challenges and what c-stores are doing to make delivery work for their businesses in “Delivering Convenience” in the December 2021 issue of NACS Magazine.