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Will Marc Lore’s Ghost Kitchen Concept Work Inside Walmart?
Wonder Group, the ghost kitchen food hall founded by Jet.com founder Marc Lore, is opening a 750-square-foot location inside Walmart, marking its first shop-in-shop.
Wonder, which received a $3.5 billion valuation in a funding round in June 2022, earns much of its attention by being associated with serial entrepreneur Lore, who sold Diapers.com and parent company Quidsi to Amazon in 2010 for $545 million and Jet.com to Walmart in 2016 for $3.3 billion. Lore oversaw Walmart’s e-commerce business for over four years following the Jet.com sale.
Promising to reinvent the at-home meal delivery experience, Wonder launched in 2021 by offering meals from the recipes of famous chefs such as Bobby Flay and Michael Symon cooked from vans parked outside homes.
In January 2023, Wonder abandoned the food truck concept in favor of opening retail locations, called “Fast Fine,” that allow for delivery, pickup, and limited dine-in options. A benefit is that while each van had one trained chef onboard dedicated to one restaurant concept, the physical locations can handle orders placed across multiple Wonder concepts.
Lore recently told Fox Business that the physical locations can support food preparation for 30 to 40 restaurants from a “small kitchen” in a “much more scalable model.”
The single kitchen inside the Fast Fine in Walmart’s Quakertown, Pennsylvania, location handles menus from eight restaurants with a fast-casual emphasis: Limesalt (Mexican), Yasas by Michael Symon (Greek), Alanza Pizza, Tejas Barbecue, Wing Trip, Burger Baby, Fred’s Meat & Bread (sandwiches), and Room for Dessert.
The concept allows customers to combine dishes from multiple restaurants in a single order for delivery, dine-in, or pickup.
“Let’s say you’re a family, and you want sushi,” Jason Rusk, SVP of Wonder, told Pennsylvania’s The Morning Call. “But your little one wants pizza. With Wonder, [the food] is all produced and made in the same area and same kitchen. It’s a blending of restaurants, quality of food, delivery.”
McDonald’s and Subway have shuttered hundreds of locations inside Walmart in recent years as stand-alone locations better support online ordering and drive-thru options. Walmart has since emphasized more diverse in-store restaurant options, including forming a partnership to open Ghost Kitchen Brands locations inside select stores offering delivery and to-go meals from up to 25 national restaurant brands, including Nathan’s Famous and Saladworks.
A recent CNBC article notes that many ghost or virtual kitchens have closed as brick-and-mortar restaurants have reopened post-pandemic and as consumers seek more transparency. Many ghost kitchen concepts were only accessible via delivery apps and offered little indication of where the food was being made or by whom. According to the National Restaurant Association’s 2023 State of the Restaurant Industry Report, 70% of diners say it’s important for their food to come from a publicly accessible, physical location.
Wonder promises to bring more transparency to the ghost kitchen model with its physical locations and acquisition of the rights to use renowned chefs’ likenesses and recipes.
The Walmart location represents Wonder’s 11th storefront. Two to three more are planned inside Walmart stores as part of 25 new locations for Wonder this year, with a focus on the New York metropolitan area, according to Fortune.
Speaking to Fortune, Daniel Shlossman, Wonder’s growth and marketing chief, said the Walmart opening will show the Wonder concept is “adaptable” across spaces. He said, “We think the product-market fit works everywhere.”
Discussion Questions
Do Wonder’s ghost kitchens and “Fast Fine” concept overall make sense inside Walmart?
How confident are you that Wonder’s “Fast Fine” concept offers a more scalable model around ghost or virtual kitchens?
Poll
Loading …BrainTrust
Verlin Youd
SVP Americas, Ariadne
Sarah Pelton
Partner, Cambridge Retail Advisors
I have more faith in this iteration of Wonder than I did in their previous model of using food trucks – which was always destined for failure. The store-based model is a lot more sustainable and has better economics. However, it relies on having a strong throughput which, presumably, the footfall in Walmart is supposed to bring about. The critical thing is conversion rate. This will rely on persuading existing customers to have a bite to eat in the store or get items to takeout. That requires a mindset shift which, although not impossible, will take time to bring about. Of course, the store can also be a place for people to pick up online orders and that is sound as, by design, Walmart stores tend to be in convenient locations with plenty of parking.
Remember the maxim “when in doubt, don’t”? I’d apply it here: there seem to be a lot of different concepts mixed together – ghost kitchens, home delivery, in-store dining – and I’m having trouble relating them to WalMart, specifically. As best as I can understand it, the kitchens would offer multi-brand options for either pick-up or home delivery. So right away, I wonder about proximity: how many homes is a typical WM “near”. (My image of a typical store is in a fringe location, so the answer is “not many”). Or does the mention of (formerly existing) McD’s and Subways imply that this expects to capture the in-store market? Whatever the goal(s), I find myself asking a basic question: is this better than opening a stand-alone facilty somewhere (particulary given the challenges that sharing space with a busy retailer might entail)? And my finger is drawn to “no”.
I love the idea of a real kitchen in a real location (NOT ghost) that has the talent, the ingredients, and the overall bandwidth to serve an array of fast foods beyond burgers, subs and burritos. It reminds me of a condensed version of Eataly with a wonderful mix of ethnicities. My mouth is watering just thinking about it. BUT…I’m having a very tough time envisioning Walmart as the optimum location. And not because I don’t like Walmart. I love Walmart. Maybe it’s the dine-in part that I’m having difficulty with. For delivery and pickup, it would be just like any other competitor. Only, with LOTS of great choices in a single location. That’s huge. That’s the draw.
Even with my reservations, I can easily see why both parties are seriously excited about this venture. If it works, it’s a great draw for Walmart. If it works, it’s thousands of locations just waiting for the roll out to happen.
The ghost kitchens and the food trucks probably burned a lot of cash. But Fast Fine may be on the verge of inventing a whole new fast food model. And hey, there might be a couple of malls out there who should be throwing their hat in the ring for a Fast Fine installation. Food courts could also benefit from a re-invention.
The emergence of “fast fine” dining holds the potential to disrupt both dine-in and food delivery landscapes. While DoorDash has introduced the option for two delivery stops, the process still has flaws. Wonder food halls present a versatile solution, catering to dining in, takeout, or delivery from various brands. If this concept gains traction, services like DoorDash may need to pivot their business model to stay relevant. The decision to open within Walmart appears risky initially. However, it offers convenience, especially for families blending shopping with a meal stop. Nonetheless, Walmart might not be perceived as a dining destination for groups without children, especially given Wonder’s emphasis on celebrity chefs and “fine dining” experiences.
So, I am a quick or casual restaurant with many doors. I worry constantly about the quality and consistency of my product. How do I surely make my offering meet the expectations of my customers? At least I have a dedicated team in each restaurant trained appropriately, if not professionally.
Now Wonder has the same team preparing in the name of eight different restaurants. I do not see any way that the consistency of the offerings will hold up in this environment. On the other hand, Nathen’s may work just fine.
On one hand, what does Marc Lore know that the rest of us don’t that would lead him to believe this could work. After all, he’s got a little inside knowledge. On the other, having a hard time grasping this concept appealing to the Walmart clientele. Granted, the foot traffic may be there, but does it resonate.
Aside from the challenge of producing multiple cuisines to a good standard, the “last mile” challenge could be a roadblock. It’s tough enough for a company like DoorDash to deliver restaurant-quality meals (meaning, hot and on time), this partnership will need Walmart and Wonder to develop a completely new skill set. Mark me as a skeptic.
“Jack of all trades, master of none,” especially with astroturf restaurant brands, and coming from a serial e-commerce flipper. There’s no authenticity here, for the price point needed to make the investment work. At least with the Hy-Vee food court you know they aren’t trying to be gourmet.
This has a potential. First it may find a way to draw in more customers that may not typically visit a Walmart or even order things online. Additionally, it can also create more excitement and potentially create another incremental trip to the store in a week or a month for their core customers. While I think that the Wonder model has a great deal of flexibility in terms of the diversity of culinary options, I hope that they also provide some options or diversity in terms of affordability options. Without a few family value options or quick affordable bites, they have the risk of alienating some of Walmart’s core customers who are there because their EDLP value.
It appears that the Wonder and Walmart teams are taking a methodological approach so I think that some of the kitchens will work in some locations. At this stage it is about capturing the data, identifying consumer insights/learnings and great execution before expanding too quickly.
I find this very interesting and applaud both Wonder and Walmart for being willing to experiment to find additional ways to provide value to current and new Walmart shoppers, a group whose demographics are broader than ever. Takeout has become a regular part of our family routine. I could see us using this service regularly assuming the quality holds and order/pick-up/delivery provides the expected convenience and service. I expect Walmart and Wonder to iterate quickly based on real-world experience and fail fast if necessary. Why not?
Conceptually, I think the Fast Fine concept is a great idea. I love the mixing of multiple cuisines into one order to satisfy diverse appetites from one family. The foot traffic from Walmart is a value added to increase orders. However, I am concerned that the demographics of Walmart shoppers may not be upscale enough to support what appears to be more expensive than the restaurant chains that have failed in Walmart stores.
Are they going to be able to do this in a 750 square foot location??
There is a food concept that will work inside Walmarts. Is Wonder’s Fast Fine concept the answer? We will find out, but it might take a while. Walmart is cautious in rolling out new concepts. (That’s a good thing.) What bothers me, in general, is that Subway and McDonald’s pulled out of Walmart. Why couldn’t those concepts work? There’s plenty of traffic. Perhaps the options were too limiting. The Fast Fine concept is new and exciting. I’m a fan of success, so I hope that Walmart, Wonder Group, and Walmart’s customers are all happy with the new concept.
The question that needs to be answered is fit. Do ghost kitchens with renowned chefs’ likenesses and recipe, fit the Walmart target market. If yes, this could provide a significant differential advantage to Walmart. If no, it will simply be a failed experiment.
I live in the original test market for Wonder and was utterly unimpressed with the three times we tried the service. The meal quality was mediocre at best, portion sizes were small and customer service was flat. In each case, the Wonder truck showed up on time but took about 30 minutes to prepare the food. In terms of value, our local restaurants deliver better food for less. My experiences don’t give me a lot of confidence for the success of the new ghost kitchens, but I’d be happy to be proven wrong as it’s basically a great idea.
Right concept, wrong store. For full disclosure I have to admit I have no inside insight into Walmart’s ideal customer profile, I believe that take out from restaurants (multiple restaurants since, in the example one value proposition is to feed most of the family while “bending the knee” to some finicky child who ONLY wants Pizza) does not fit the WM customer. I agree with Verlin-kudos to WM for the innovation, however I believe this one will not stick.
At the end of the day Walmart has unused space to experiment and Wonder will have to prove that attaching to a physical storefront helps it attract customers. The details is what matter and how much variety can be operated out of one ghost kitchen and delivery decent food at value pricing to shoppers. Walmart does have the advantage of large amount of parking which makes it easier for delivery pickup compared to packed urban locations. Time will tell….
This iteration of the Wonder model is more likely to succeed because it shifts the focus from value creation at the point of consumption to one that attempts to optimize the kitchen operation while providing more variety for their customers (emphasizing delivery and pickup versus dining-in).
Volume and scale will come from sharing the model across multiple menus for easier decisions and saving precious time by creating optionality for families without compromising on a favored food banner. One area that is unlikely to lose any market share to the Wonder/Walmart combination is Costco’s food court. It is difficult to compete with the highly affordable prices and the simplicity of its limited menu.