How Wonder is growing its delivery app portfolio
Fresh off the announcement that it would acquire Grubhub, Wonder has big ambitions to become a super-sized food delivery app.
Earlier this month, Wonder, a food delivery startup founded by serial entrepreneur Marc Lore, announced that it would acquire Grubhub from its parent company, Just Eat Takeaway, for roughly $150 million in cash. Wonder will also take on $500 million of Grubhub’s debt as part of the deal. But this was just one of a few acquisitions Wonder has made in the past year and a half. Last October, Wonder also acquired Blue Apron, one of the first movers in the meal kit space, in a $103 million deal.
Wonder’s meteoric rise in the food delivery space has been driven by capital. Since launching in 2021, it has raised more than $1.7 billion in funding to date. Its investors include Accel, Bain Capital Ventures, Google Ventures, Nestlé and Forerunner Ventures. Wonder relies on a vertically integrated restaurant model that delivers food from chefs and restaurants like Bobby Flay, Jose Andres, Di Fara Pizza and Barrio Cafe, among others.
The acquisitions of Grubhub — which is still awaiting regulatory approval — and Blue Apron are part of the company’s ongoing effort to build a super app for ordering food at any mealtime.
Though the details are still being ironed out, Wonder hopes to use its acquisitions to build a standalone food delivery platform that fills multiple needs — be it a quick office lunch in the city or a large meal for a suburban family. According to Daniel Shlossman, the chief growth and marketing officer at Wonder, Wonder’s vision is to allow customers to choose from “a diversity of cuisines” and meal formats that can be picked up or delivered to them throughout the day. If one family member wants Thai food and another wants pizza, “a customer is able to order exactly what they or their family wants all in one app,” said Shlossman.
“Broadly, Wonder’s mission is to make great food more accessible,” Shlossman added.
Wonder’s namesake platform operates via standalone outposts that act as a cross between a food hall and a ghost kitchen. Through Wonder’s app and website, people can order meals from a variety of restaurants all housed in the same location — or have the food delivered if they’re within a certain radius. Shlossman joined Wonder from Sweetgreen in 2023, as Wonder was just opening its first location in New York City. Wonder’s growth has accelerated in the past year, and the company will end 2024 with 35 spots, having opened 25 this year and 10 last year.
“We’ve been opening a restaurant a week since Labor Day,” Shlossman said, with plans to have 90 locations by the end of 2025. “But it’s taken a lot of work to get to where we are today.”
The capital that Wonder has raised so far is going toward adding new locations and investing in other efforts like launching more partnerships with chefs. In February, it was also reported that Wonder would be piloting restaurants in select Walmart supercenters. The company hasn’t disclosed its user number or growth rate so far.
The company’s virtual restaurant locations are largely located in New York and its suburbs, along with New Jersey, Rhode Island, Connecticut and Pennsylvania. Eventually, Wonder plans to expand nationally but is currently focused on the Northeast region.
That explains why Wonder was keen to acquire Grubhub in particular. Grubhub has a large presence in the Northeast, which presented the opportunity to capture a different type of customer base, Shlossman said.
The plans for the acquisitions’ integration are still being settled, but Shlossman said the goal is to “modernize Blue Apron” and also bring Grubhub into Wonder’s fold.
These entities will help Wonder own the end-to-end customer experience, Shlossman said. “We also acquired a delivery logistics company called Relay in April of 2024,” he said. The Relay integration allows Wonder to have direct courier relationships to make food deliveries quicker.
“We don’t need the customer to think about how it will all come together,” Shlossman said. “It’s really more about how they can access all those things through Wonder.”
For instance, Shlossman said, some Wonder locations could house Blue Apron meal boxes that are being delivered through Relay. “We’re thinking about different ways of using our locations as local hubs to get food faster to people’s doorstep,” he said.
While Wonder does have national ambitions, location openings are still heavily focused in the Northeast. “We believe in density and building locations close enough together so the delivery radiuses can stay small and the food is fresher when it gets to the customer,” Shlossman said.
Shlossman said that, so far, Wonder has also had success in “key suburban markets,” such as Westfield and Teterboro, New Jersey, as well as three locations within Westchester County in New York. “We’re going to continue to expand in those directions, in New Jersey and New York, as we get out into Connecticut as well,” he said.
The urban locations tend to have heavier pick-up activity, especially at lunchtime and during office hours. In Wonder’s suburban communities, Shlossman said, the customer skews much heavier toward dinner time, with families placing larger orders on weeknights.
With each new opening, the company has been focused on getting the word out. Wonder’s marketing approach encompasses various channels, including digital marketing, direct mail, out-of-home and street teams. “We also throw a grand opening party at every single location opening, which is huge for acquisition,” Shlossman said.
Food delivery has been expensive and difficult to operate profitably, as exhibited by players like DoorDash and Uber Eats. DoorDash, for example, only posted its first profitable quarter in October after going public in 2020.
Shlossman said Wonder is betting on its vertically integrated model and direct customer relationship to successfully scale compared to other competitors, “which lean on purely a marketplace business.”
There will be new operational challenges as the fleet grows due to having to staff the restaurants for different peak periods. “But the goal is to have this singular model that ideally fits everywhere,” Shlossman said. “If something doesn’t work, we can sub in something else and work with our culinary team to build a new cuisine and a new restaurant.” But the company has not yet had to make these switches, Shlossman added.
Phil Kafarakis, president and CEO of the International Foodservice Manufacturers Association, said the food delivery space has faced many challenges that a vertically integrated model like Wonder’s can help improve. One of these is the ability to deliver restaurant meals quickly and efficiently enough that they can be eaten fresh. This model is hard to execute in a profitable way when a company is relying on gig workers to bundle and distribute all the orders in time, Kafarakis explained.
The industry, however, received a lifeline during Covid, when demand for food delivery surged. “The whole food delivery space was struggling until Covid came, and [then] it took off,” Kafarakis said.
“The way Grubhub fits into Wonder is by helping provide a 360 eating occasion to be added and overlaid [with] the existing food concepts,” Kafarakis said. But, Kafarakis said, “There are risks of trying to put all these pieces together because it’s not just about the technology but the quality of the food.”
Shlossman said Wonder is looking to build individual profitable restaurants through improvement and iteration. “We look at each restaurant from an individual profit perspective,” Shlossman said. “The locations are now in their ramp phase, but we’re very happy with how fast the new locations and some of those older ones are growing.”
If each location can do revenues in the $5 to $10 million annualized range on several thousand square feet, “we’d feel really good about how that is going to work,” Shlossman said.