Food-delivery startup Wonder Group is laying off staff and scrapping its plans to roll out a nationwide fleet of food trucks, shifting to a more conventional and less expensive restaurant delivery model.
The shift is a significant change for the four-year-old startup, which currently cooks food with a fleet of around 500 food trucks that deliver to households in the New Jersey and New York suburbs. The company has raised $900 million in venture capital and was valued at around $3.5 billion last year.
Marc Lore, Wonder’s majority owner and chief executive, said in an interview that the new strategy offers the company a faster path to profitability that requires less capital. Wonder needed to raise another $1 billion in about two years to expand its mobile kitchen truck fleet at the pace it hoped, said Mr. Lore. Now it plans to raise around $350 million in the same period, he said.
“I see a much bigger opportunity to be more profitable, more capital efficient and slightly improve” the customer experience with physical kitchens compared with the food truck system, said Mr. Lore, an experienced entrepreneur and former Walmart Inc. e-commerce executive.
Wonder has laid off around 400 workers in recent months and currently has around 1,400 employees, a spokesman said. The company plans to lay off more people in the coming months, said Mr. Lore, but will end the year with more employees than it currently has as it opens physical locations. The Information reported in November that Wonder was laying off about 130 workers.
The company will wind down its fleet of trucks in the coming months and open around 10 physical locations in New York and New Jersey over the next year, said Mr. Lore. The model resembles a ghost kitchen, a network of kitchens that cook multiple cuisines from a single location for local delivery. Wonder’s version will offer some in-restaurant seating and food pickup, as well as delivery, and cook food from specific restaurants with which it has licensing deals.
Unrestrained by the confines of a delivery truck, a physical location allows Wonder to sell from more restaurants at once, Mr. Lore said. The company can use its knowledge of cooking high quality food in small spaces to be a more efficient version of a high-end restaurant, he said.
Fixed locations also allow Wonder to better control delivery times, reduce mistakes because more workers review each order and scale to other cities faster, he said.