• December 7, 2022

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Wonder, the latest venture from serial entrepreneur Marc Lore, supplies chef-designed meals cooked in vans parked right outside customers’ homes. The founder of Jet.com and Walmart’s
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former e-commerce chief tells Yahoo Finance that Wonder balances the meal delivery value propositions of price, quality and speed.

“The faster we deliver the food, the cheaper it is,” Mr. Lore said during a recent appearance at TechCrunch Disrupt. “That’s how the business model’s set up. When you think about Amazon
AMZN
, Walmart, and Instacart … the faster they deliver, the more expensive it is.”

Wonder’s business model, which borrows a page from Netflix
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, stands out for its focus on content, securing exclusive rights with esteemed chefs like Bobby Flay and top restaurants to recreate items from their menus.

“We want to lock up all the best proprietary content,” Mr. Lore told CNBC. “Every chef that is well known — every restaurant that’s great — we want to basically lock it up and have it exclusively on Wonder.”

The rest is food science and sophisticated logistics. The ingredients are prepared and packaged in a centralized kitchen to keep operating costs low compared to a restaurant, then transferred to smaller kitchen hubs where they are picked up by vans. To keep them hot, the meals are finished at curbside. Each van has one trained chef onboard and is dedicated to one restaurant.

In an online discussion last week on RetailWire, BrainTrust member Neil Saunders, managing director GlobalData, said he anticipates some customer interest in Wonder but has plenty of reservations.

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“An interesting concept for which there is most certainly a demand,” wrote Neil Saunders, managing director at GlobalData. “However I do wonder about some of the bold claims such as locking down ‘every chef and restaurant that’s great.’ I’d also be curious to see how profitable this service is as that is usually the Achilles’ heel with these kinds of service — especially as there must be volume limits as to how many meals an individual van can prepare and deliver.”

Some on RetailWire’s panel were even less sold on the idea.

“As a customer, this doesn’t excite me,” wrote international business professor Gene Detroyer. “If I want a Marion Batali, Daniel Boulud, David Chang or Bobby Flay creation, I want to go to their restaurants with all the appropriate ambiance. Sitting around the table at home to eat a meal by Tom Colicchio just doesn’t cut it.”

“While intriguing, Marc Lore’s hybrid model of bringing prominent chef-designed meals prepared curbside to your home faces insurmountable operational and customer behavior hurdles,” wrote startup advisor Mohamed Amer. “There’s a cost to Mr. Lore’s lockup strategy, as is a risk to the chefs’ reputations. The fixed cost per meal cannot be advantageous today or with increased volume. Venture capitalists drool over serial entrepreneurs. Add to that a novel idea that compares its business model to Netflix, and you have guaranteed sizzle, but not necessarily the steak.”

“I like the fresh thinking, but the economics just don’t work,” wrote DeAnn Campbell, chief strategy officer of Hoobil8. “The cost of the meal would be higher than most restaurants to offset the cost of fuel, van maintenance, and the fact that one chef can only serve one household at a time.”

Launched in December 2021, the startup is currently delivering meals in New Jersey with aggressive expansion plans across the Northeast before going nationwide. The company will target dense communities to enable one van to do multiple deliveries in one trip.

Wonder scored a $3.5 billion valuation in a June funding round. The Wonder: Food Delivery app has a 4.9 rating on Apple’s
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App Store and 4.8 on Google Play with reviews praising the food quality, service and value.

Though RetailWire BrainTrust member Ron Margulis, managing director at RAM Communications, who lives in Wonder’s initial pilot area, told a different story.

“We’ve tried [Wonder] three times so far,” wrote Mr. Margulis. “Haven’t been very impressed with the meal quality (mediocre at best), portion size (small) or customer service (flat). In each case, the Wonder truck showed up on time but took more than 30 minutes to prepare the food. One time, we ordered sushi so I really had to question the wait time. In terms of value, our local restaurants deliver better food for less. We may try it one more time, but if it doesn’t taste amazing or is too expensive, we’re done.”

And one BrainTrust member believes that the key to the service working might be a rethink of the model altogether.

“I can see this working for corporate catering, ability to finish products on-site would improve quality,” wrote Kenneth Leung, retail and customer experience expert. “How profitable would it be for individual home delivery given cost of fuel and labor?”

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