Marc Lore's Delivery Startup Reduces Operations in Face of Tech Downturn

Wonder, a food delivery startup that has been known for its van-based kitchens, 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. This will result in the cutting of an undisclosed number of employees and the sale of its fleet of several hundred Mercedes Sprinter utility vans.
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The startup was valued at about $3.5 billion last year, but has been forced to scale back operations in the face of the larger tech rout. The company has trimmed its staff in recent months in an effort to cut costs.
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Wonder, a food delivery company started by Diapers.com and Jet.com founder Marc Lore, is pivoting to a model of immobile kitchens. It already operates five facilities that it calls commissaries, where food is partially prepared before going into the trucks where it is 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.
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The new model resembles the "ghost kitchen" businesses pursued by other startups. These companies primarily focus on acquiring real estate and renting out micro-kitchens to people looking to operate their own delivery and pickup restaurants. Prominent examples include CloudKitchens, founded by Uber Technologies Inc. co-founder Travis Kalanick, and Reef Technology Inc., which has struck deals with fast-food chains like Wendy's to serve food from mobile kitchens based in converted parking lots.
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Wonder operates food preparation facilities where different foods are prepared for delivery in small kitchens. The company says that a 3,500-square-foot facility could service as many as 30 restaurants. However, Lore has consistently bristled at the suggestion that Wonder is a ghost kitchen company. Instead, it has licensing deals with well-known restaurants to make takeout and delivery food under their brands. Customers primarily order through Wonder’s own app. According to Lore, this vertical integration is a substantially different business, which can operate more efficiently than the broader food delivery industry, where profits have been hard to come by.
Wonder, a food truck startup, has raised $900 million since it was founded in 2018. It had planned to raise as much as $1 billion more over the next two years to pursue a significant expansion of its business. However, after jettisoning its food truck business, it now plans to raise $350 million over that time. The startup has already cut 400 jobs in recent months.
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Wonder also has a business-to-business arm, which produces meal kits and licenses its technology to other companies wanting to establish food service operations. This enterprise unit comprises approximately 10% of Wonder's business.