The Wonder stuff 

Few of you will likely have heard of Tony Hoggett, who last month announced his departure from the role of head of grocery stores at Amazon. To retail commentators, it was a surprise and suggested the digital behemoth had not really been having the predicted impact on physical food retail, and so Hoggett needed another challenge.

The bigger surprise was that he was moving to New York-based Wonder to run its real estate and store operations. I’ll admit I’d never heard of Wonder, a delivery-focused restaurant brand. So what, you might ask. Such businesses are two-a-penny or even two-a-cent.
 
But this one is different. It has devised an interesting model that is having an increasing impact on the New York area, where it is in the process of pursuing blanket coverage. From ten outlets earlier in the year, it will hit 35 by the end of the 2024, and 90 are planned by the end of next year. Connecticut and Pennsylvania are in the roll-out schedule.
 
Wonder was founded in 2018, when it had an odd model of food delivery, where the dishes were completed in transit to the diner’s house. That was junked 18 months back and it adopted a new multi-channel model – with in-restaurant dining in clean-looking spaces now accounting for 50% of orders, with the rest coming from digital, notably via its app.
 
What’s most interesting is that these home and in-store diners can choose from a wide variety of cuisines – from 25 to 30 restaurants. These are a mix of in-house branded concepts and menus from recognised and renowned restaurants from across the US such as Tejas Barbeque from Texas and Walnut Lane by Jonathan Waxman (me neither). Wonder has bought the rights to produce dishes from these existing restaurants.
 
To produce such a vast range from what are pretty small physical units – measuring around 3,000 square feet in total – is some going. This is achieved by using an unusual model that is akin to the supermarkets using the “bake-off” technique for their in-store bakeries. A central kitchen partially prepares ingredients for all the dishes before blast-chilling them and sending it all out daily for final cooking at the Wonder restaurants.
 
This latter step simply involves all-electric kitchens housing quick-cooking ovens, water baths and fryers, and the task can be undertaken by non-chefs. We are talking about an arrangement enabling food to be created at a significantly reduced cost base than with more traditional operations.
 
The precisely controlled vertically integrated nature of the Wonder set up extends to the delivery element, which is undertaken predominantly by an in-house network that operates within a tight radius with a six-minute delivery in city centres, and ten minutes in more suburban locations. This arrangement was bolstered this week with the acquisition of Grubhub from JustEat Takeaway for £510m.

But haven’t we heard all this wacky stuff before? Ghost kitchens, dark kitchens and various other kitchen-sharing models sprang up before and during the pandemic. Deliveroo’s Edition kitchens were due to be operating 200 kitchens in 30 sites by now. It is some way off that aspiration. In the US, Uber founder Travis Kalanick has found significantly less success with his CloudKitchens business, which has failed spectacularly to deliver on its plans. Over time, many of the brands that were using such services have retreated, and the explosion of virtual brands has also largely flamed out.

So, what’s the chances of Wonder succeeding with its interesting approach? It certainly has the resources, having raised a further $700m earlier this year, although CloudKitchens is proof that money is no determinant of success. Wonder’s secret weapon is, no doubt, its founder Marc Lore. He previously ran the online division at Walmart, having sold his website, Jet, to the retailer for $3.3bn. Prior to that, he sold a batch of online businesses to Amazon for $545m.
 
He’s clearly got form, and high-profile reviews of the food from the Wonder sites has revealed some hits in the mix. And the fact he has recruited Hoggett – who I’m informed was in the frame for running Tesco before moving on to Amazon – along with the Grubhub deal suggests it’s a serious push. If it continues to gain traction, then there will undoubtedly be learnings to be taken by operators in the UK.

Glynn Davis, editor, Retail Insider

This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Retail Insider would like to thank Propel for allowing the reproduction of this column.