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Exclusive: Wonder to partner with FreshRealm to fuel its retail expansion

Jun 5, 2024
Animated illustration of chef hats popping up onto a conveyor belt, which carries them away.

Illustration: Brendan Lynch/Axios

Food delivery startup Wonder is partnering with fresh meals producer FreshRealm to support its retail expansion plans, the companies tell Axios exclusively.

Why it matters: Improving unit economics has been an important criteria for restaurants and investors.

The big picture: While similar cloud kitchen concepts have fallen on harder times, Wonder CEO Marc Lore says its offering differs in that consumers can get high-quality, differentiated foods quickly and more cheaply than other restaurants thanks to its in-house couriers and optimized kitchens.

The latest: Wonder will transfer over four of its production facilities in New Jersey to FreshRealm, enabling FreshRealm to take over Wonder's ingredient prep and production.

What's next: Known for giving customers access to as many as 30 restaurants in a single order, Wonder aims to open 25 new restaurant locations this year and another 90 locations by the end of next year.

  • Most of the units will be located in the tri-state area.

What they're saying: The partnership with FreshRealm "allows us to focus on what we do best, which is culinary engineering and food science," Lore says.

  • There's a formulation around how to cook a Bobby Flay steak in six minutes without needing to flip it or a pizza in 88 seconds or a pasta in four minutes without any water, he says.
  • FreshRealm will remove production risks while doing "the massive lift that is required to scale us to billions of dollars over the next few years," Lore says.

Zoom in: FreshRealm aims to lower costs for meal-kit providers, food-delivery services and grocery retailers by doing back-of-house work, like supply chain management, manufacturing and fulfillment.

  • The company has the national infrastructure and the personnel that enables it to flex up if a company like Wonder wants to grow faster, FreshRealm CEO Michael Lippold says.

Catch up quick: FreshRealm acquired the operating assets of meal kit provider Marley Spoon earlier this year, and the operational infrastructure of Blue Apron in June 2023 for $50 million. (Wonder subsequently acquired the rest of Blue Apron.)

Flashback: Wonder raised $700 million from investors in March, bringing its total funding to $1.5 billion.

  • The capital is fueling its brick-and-mortar expansion as well as R&D.
  • Wonder will also use the funds to acquire the rights to new brands to bring onto its several-restaurants-in-a-single-kitchen platform, Lore says.

The bottom line: Wonder wants to be a "super app" for mealtime, leveraging generative AI to help design meal plans and adjust to dietary needs and desires, Lore says.

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