Food delivery startup Wonder has raised $700 million in its latest round of funding. CEO Marc Lore joins Yahoo Finance's Executive Editor Brian Sozzi on the Live show to discuss the company's investment plans for this funding.
Lore states that Wonder is looking towards expansion with the $700 million, saying they've "proven the business model." He reveals that they are planning to open 80 new units over the next two years, continuing to invest in research and development, enhancements, and expansion plans, in order to take things "to the next level."
Lore explains that an automated Wonder will give consumers the ability to order from multiple restaurants in a single checkout and delivery, with a promise of a 6-minute delivery range, "delivered hot to your door." He emphasizes that the mission is "to make great food more accessible," noting that by bringing together different restaurant partners they are giving people access to dining options that would not typically exist in the areas they operate.
Lore acknowledges that "customer behavior is changing," with people placing more value on convenience. He notes that the food delivery trend will continue to grow both domestically and internationally, and Wonder presents him with an opportunity to "vertically integrate" in this space.
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Editor's note: This article was written by Angel Smith
Video Transcript
BRIAN SOZZI: Start up Wonder is looking to take its food delivery business to the next level. With sights set on an initial public offering in the coming years and adding several new locations. wonder Is putting its fresh $700 million capital raised to good work. Joining us here to discuss is founder and CEO of Wonder Group, Marc Lore. Marc, good to get some time with you. It's been for-- been a while. Lots popping over there.
MARC LORE: Yeah. Great to see you at the HDR location up West Side. Right?
BRIAN SOZZI: $700 million.
MARC LORE: Yeah.
BRIAN SOZZI: That's a lot of money, man. What are you going to use it for?
MARC LORE: It's really expansion now. We've proven the business model. And we've got 11 units open right now. We're opening 25 more units this year and another 55 next year, all in the New York metro area. So a lot of it is just continued expansion. Continue investment in R&D. We're continuing to look at what the next generation kitchen looks like with automation. And right now we're able to cook 30 restaurants in a 2,800 square foot kitchen, with three pieces of electric cooking equipment. So there's no hood, there's no flames, there's no stove.
BRIAN SOZZI: Really?
MARC LORE: So-- but there's other things that we can do to take it to the next level as well.
BRIAN SOZZI: What does an automated Wonder look like? Because it was about a year ago. I saw what you did. And it was pretty mind blowing. What does an automated location look like? And how are you going to build that out?
MARC LORE: Yeah. I mean, you have the ability to order from multiple restaurants, all with separate branding. In one checkout, one delivery. We set a maximum 6 minute delivery radius in the city. So the food's getting cooked in on average now 6.5 minutes. And the delivery time is 6 minutes. We do keep a queue during peak. So it's about a 30 minute order to eat. But off peak hours you can get it in 15 minutes. Three, four different restaurants, all cooked to perfection, and delivered hot to your door.
BRIAN SOZZI: Did I see that right? That this is now going into a couple of Walmarts.
MARC LORE: It's in a Walmart. And it's going into a couple more.
BRIAN SOZZI: You must a couple of people at Walmart. Of course you, Marc, led Walmart US e-commerce. But it pays to know people.
MARC LORE: Yeah. We basically opened up in Quakertown, Pennsylvania in a Walmart about a month ago. And it's doing great. We've got eight restaurants live in what used to be a subway. They're in about 750ft. We're adding two more restaurants in there very soon. Marcus Samuelsson streetbird is going into their fried chicken sandwich concept and one other one. So we're [INAUDIBLE].
BRIAN SOZZI: Thank you for replacing Subway in Walmart. I know you're not going to say, look Subway it's got to go. I mean, but is that part of your passion here to democratize good food. I think back when I was going to Walmart as a kid. I went into McDonald's. I went to those Subways. I didn't have anything like this before.
MARC LORE: Yeah. I mean our mission is to make great food more accessible. And so with the Wonder model we're able to bring fractional restaurants into a small space. So we can bring restaurants to places that would never make sense to exist on a standalone basis. So yeah we, are giving people access to food they never otherwise would have been able to get.
BRIAN SOZZI: Why are you so passionate about this? You've created so many businesses. Why food delivery?
MARC LORE: Yeah. I think, I mean, where customer behavior is changing with the beginning stages. I think of a mega trend. And people are not cooking as much. They're putting much more value in their time. Putting a premium on convenience. And just see food delivery exploding in the US and around the world. And I think that trend is going to continue. And just think there was a big opportunity to vertically integrate. To basically, own the cooking, the delivery, the physical brick and mortar, the technology.
And integrate everything together to offer customers a much elevated customer experience when it comes to dining in your own living room, dining room.
BRIAN SOZZI: How hard was it to raise this amount of money in this market?
MARC LORE: It was definitely a tough market. I've been raising money now since the late 90's. So 20, 25 years I guess, a professional fund fundraiser at this point, you could say. But back in 2000, 2008, I think it was 2015. Just recently, every eight years or so seven, eight years you see a really tough market to raise. And it's the same cycle and over and over again.
There's a bubble and euphoria. And people are making money and making lots of bad investments. And then the market corrects, flushes that out. And then great companies get funded. And then they make the new market. And then the money starts to flow in. It goes back up again. The bubble builds. And then it ultimately busts again. And so we're in a cycle. Now we're in that trough. I think we're starting to come out of it. I think the last 18 months have been really tough.
I think we're starting to come out of it now. But I think we've still got a little ways to go before the market starts, on the private side at least, starts to really roll.
BRIAN SOZZI: Your real business, Marc, and Wonder doing real things trying to sell real food and make things more accessible. Is it just a lot of money is going after bad AI software companies? You've been around tech enough. I mean, what are these valuations look like out there?
MARC LORE: Yeah. Actually, I'm not that familiar with the valuations in AI right now. Because I'm just so focused on Wonder. But I do know that and hearing just a lot of companies getting funded in the space. I tried adding AI after Wonder.
BRIAN SOZZI: Wonder.AI.
MARC LORE: Wonder.AI. It didn't work. But I think we're going to see that similar type of bubble. Where there will be some big winners. But there'll be a lot of losers in the space. And I think the business we're building at Wonder is meant to sustain through any market. It is food. People, everyone eats. And our big vision is to create the super app for mealtime. So anytime you want to eat breakfast, lunch, and dinner, you pull up the Wonder app and you can get a meal.
Either could be delivered first party, by our experience. It could be a Meal kit, Blue Apron, a company that we bought. It could be an oven ready meal. Basically, all the ways in which somebody would want to consume food. We want to be there for the customer.
BRIAN SOZZI: I've covered-- really, I've covered your career for a long time. And I really only known you, Marc, to have a lot of success. Diapers.com, Jet.com. What you did with Walmart e-commerce. Do you ever Wonder that or just concern that Wonder doesn't work? Does your mind even work like that? Are you worried that maybe this just doesn't work out? I don't know. I have no idea.
MARC LORE: No. I don't ever. I don't waste any time thinking about what went wrong in the past. And don't spend any time worrying about the future. It's always in the now. We know what the vision is. And we know what we've got to do today. And the goal is to get as much done today to move us toward our ultimate vision. And there's really no time to think about what if something doesn't work. It's going to work.
BRIAN SOZZI: Lastly, before I let you go. Last time we talked we talked about Telosa, your city. Where does that stand? I mean, I still visit the site from time to time. Looks mind blowing and futuristic. But what's the-- any update on there?
MARC LORE: There's no update. There's a team working on it. I'm not involved. I can't do more than one thing at once. When I'm all in on a startup, I just made a big personal investment in this round as well. Yeah.
BRIAN SOZZI: Wow.
MARC LORE: Yeah. And made a big personal investment, I'm all in. I'm working 100 hours a week, morning till night on this. And it's the only way I know how to do it. If you want to create something that's long standing, you just have to put all your time into it. And so there's really no time for Telosa Although I still think it's a great idea. And maybe 10 years from now, I'll get back to it. But yeah.
BRIAN SOZZI: Well, maybe I'll be living there by then. Marc Lore, always nice to see you. Good luck with Wonder.
MARC LORE: Thank you, Brian.
BRIAN SOZZI: And I appreciate what you guys are building up there.
