A few weeks ago, the WSJ had an interesting article about Wonder, a meal-delivery service whose most recent funding round valued it at $3.5 billion and is expanding rapidly.
Interesting article, Professor. My prediction: Wonder's fleet will NOT "number in the thousands in two to three years". This is an expensive, niche service that won't scale well.
Working against them are:
(1) annoyed neighbors
(2) folks with environmental concerns
(3) "foodies" who will point out the quality gap between the "authentic" restaurant version of dishes vs. the one made by "some guys in the back of van" (although your analysis largely focuses on purely-cloud restaurants, Wonder's webpage suggests many partners are IRL restaurants, such as Maydan in DC and Fred's in Atlanta, so the ability to compare exists)
(4) the obstacle that matters most, customer acquisition cost from trying to stand out in an extremely saturated marketplace
How many more VC-money-burning meal prep or meal delivery services do we need?
Wonder, a deep-pocketed food delivery startup known for building van-based kitchens where food can be prepared and driven to customers’ doors, 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, cutting an undisclosed number of employees and selling off its fleet of several hundred Mercedes Sprinter utility vans.
Completely agree with the concerns raised here. Call me an unbeliever, but I just don't see how this model can scale and still remain price attractive. Although most reviews I've seen spoke very positively about the quality of the food, I don't believe a chef can serve enough people without the help of pooling. Currently, reviews speak to the great price, but it is probably greatly subsidized and will be unsustainable in the long run. I can't help but seeing signs of Webvan in their business model. I still think the mobile kitchen idea is really intriguing. Maybe a hybrid model that takes advantage of pooling could work out. For example, in an urban setting, if 5-6 people make orders in the same couple blocks, they could set a time and have the people just make the last leg of delivery themselves. The truck can then move and service the next batch of customers. While I feel that this model may be more cost-effective, it certainly negates mobile delivery's biggest asset, food at my house when I want it. I guess it all comes down to how much effort and money people are willing to sacrifice for higher-quality food.
While I agree that a world with hundreds of mobile kitchens buzzing around probably isn't the future of food that we want, I still think that this core idea is at least interesting and am glad to see innovations in the space, even if they're ultimately unsuccessful.
Interesting article, Professor. My prediction: Wonder's fleet will NOT "number in the thousands in two to three years". This is an expensive, niche service that won't scale well.
Working against them are:
(1) annoyed neighbors
(2) folks with environmental concerns
(3) "foodies" who will point out the quality gap between the "authentic" restaurant version of dishes vs. the one made by "some guys in the back of van" (although your analysis largely focuses on purely-cloud restaurants, Wonder's webpage suggests many partners are IRL restaurants, such as Maydan in DC and Fred's in Atlanta, so the ability to compare exists)
(4) the obstacle that matters most, customer acquisition cost from trying to stand out in an extremely saturated marketplace
How many more VC-money-burning meal prep or meal delivery services do we need?
I am still waiting for my coffee-delivery-drone. More VCs should focus on that.
From Bloomberg:
Wonder, a deep-pocketed food delivery startup known for building van-based kitchens where food can be prepared and driven to customers’ doors, 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, cutting an undisclosed number of employees and selling off its fleet of several hundred Mercedes Sprinter utility vans.
https://www.bloomberg.com/news/articles/2023-01-10/marc-lore-s-restaurant-startup-wonder-gives-up-on-food-trucks
Completely agree with the concerns raised here. Call me an unbeliever, but I just don't see how this model can scale and still remain price attractive. Although most reviews I've seen spoke very positively about the quality of the food, I don't believe a chef can serve enough people without the help of pooling. Currently, reviews speak to the great price, but it is probably greatly subsidized and will be unsustainable in the long run. I can't help but seeing signs of Webvan in their business model. I still think the mobile kitchen idea is really intriguing. Maybe a hybrid model that takes advantage of pooling could work out. For example, in an urban setting, if 5-6 people make orders in the same couple blocks, they could set a time and have the people just make the last leg of delivery themselves. The truck can then move and service the next batch of customers. While I feel that this model may be more cost-effective, it certainly negates mobile delivery's biggest asset, food at my house when I want it. I guess it all comes down to how much effort and money people are willing to sacrifice for higher-quality food.
While I agree that a world with hundreds of mobile kitchens buzzing around probably isn't the future of food that we want, I still think that this core idea is at least interesting and am glad to see innovations in the space, even if they're ultimately unsuccessful.