Less than a decade after Marc Lore founded Wonder in 2018, the food startup has grown to 170 storefronts and secured a $9 billion pre money valuation. Its next act could include a major Texas expansion, deeper automation, user created restaurants and a potential initial public offering.
Wonder promotes itself as a place where diners can order from restaurant concepts across the country through one platform. Customers can place delivery or takeout orders from its food hall style locations using Wonder’s app or third party services, including Grubhub, which Wonder owns.
Lore described the business to CNBC as “a vertically integrated food technology platform to make great food more accessible.” Wonder wants locations in urban, suburban and rural communities while keeping prices below the cost of delivered groceries.
Customers ordering through Wonder’s app do not pay delivery fees, and menu prices are not raised to offset commissions charged by delivery platforms. The company is also automating kitchen work such as assembling salads and bowls, with sauces and beverages expected to follow.
Lore said Wonder aims to make food preparation and delivery fully autonomous by 2040. That sweeping goal comes as the company works to prove that its combination of selection and cost savings can attract diners in a highly competitive industry.
Wonder has raised $3.3 billion from investors including DoorDash, Alphabet’s venture arm and Gwyneth Paltrow. Its Series D funding round earlier this year established a $9 billion pre money valuation, just below the price paid for Subway two years ago.
Lore said an IPO could provide capital for building what he called a generational business while creating public currency for more mergers and acquisitions. He declined to discuss timing, though he previously told Fortune that Wonder would be “ready and prepared to go public early next year.”
Lore previously helped create the parent company of Diapers.com, which was sold to Amazon for $545 million in 2010. Walmart paid about $3 billion for his next venture, Jet.com, six years later, and Lore remained with the retailer until 2021 to accelerate its online commerce growth.
Wonder began with sprinter vans containing mobile kitchens that brought food preparation closer to customers. The company used the trucks for roughly two years before shifting to physical storefronts, which could offer more food choices while lowering costs.
The company has spent more than $1 billion on disclosed acquisitions, buying businesses including Grubhub, logistics provider Relay and meal kit provider Blue Apron. Wonder also acquired New York restaurant concepts as Lore pursued what he called a “tremendous total addressable market.”
Wonder plans to enter Texas for the first time next year and have at least 100 locations there by the end of 2027. The company sees an opportunity in exurban and rural communities where dining choices may be limited largely to fast food and gas stations.
Food is prepared in commissary kitchens and transported to individual Wonder locations, where employees unseal, cook and finish each item. The storefronts use electricity without gas or venting, allowing Wonder to enter new spaces quickly while reducing renovations and regulatory delays.
Each location offers menu items from more than two dozen restaurant concepts, including Dabba Indian Kitchen, Tejas Barbecue and Pop Salad. Celebrity chefs Bobby Flay, Michael Symon and Marcus Samuelsson receive initial payments and Wonder equity for allowing the company to use their names on concepts.
Wonder will push further into user created dining brands through Wonder Create, scheduled to begin Nov. 17. Influencers, entrepreneurs and brands can pay $10 monthly to create a restaurant operating from a Wonder location and receive part of the revenue generated by orders.
Artificial intelligence will help participants develop names, logos, prices and recipes. Lore said the service could support a restaurant built for friends or an influencer’s existing audience, and the platform is eventually expected to become available to the public.
Wonder is also developing MEL, a proprietary artificial intelligence platform designed to use customer health information when preparing breakfast, lunch and dinner. Potential inputs include Oura ring data, Whoop tracker information and blood biomarkers, though MEL is not currently available to customers.
The company still faces pressure from cautious consumers who are eating out less frequently and scrutinizing restaurant spending. Delivery demand remains above levels seen before the pandemic, but it has retreated from its pandemic peak as fees and elevated menu prices weigh on orders.
Some customers have criticized Wonder’s food quality and venture funding on social media. Lore said the company reviews thousands of daily customer ratings covering taste, temperature and portion size, while investor Dave Munichiello said board meetings begin with discussions of taste scores.
Transaction data from Indagari presented a brighter picture, showing Wonder with higher weighted average retention and customer lifetime value than Cava and Sweetgreen. Munichiello also pointed to Wonder’s success in New York, where customers already have extensive restaurant choices.
Wonder has operated at a financial loss since acquiring Blue Apron and Grubhub, according to The Information. It plans to lower meal prices through automation and drone delivery, although establishing those systems will require substantial spending before potential long term savings emerge.
The company hired Gabrielle Scheibe Rabinovitch, previously with payment processor Worldpay, as chief financial officer in March while preparing to go public. Its challenge is now to show investors that growth can continue and that a credible path toward profitability exists beyond any IPO.