We Wonder How This is Going to Go

Stay in this business long enough and you can see armies of Venture Capitalists barge into the business on a mission to revolutionize the revolution industry. As a highly fragmented market (tons of restaurants) with a huge “Total Addressable Market” ($1T in US market spending) it’s been a siren call for fleets of marauding capital. The newest billionaire backed “disruptor” seeks to go farther than the recently exorcized ghost kitchen trend that allows operators to prepare food in small footprint hidden away common kitchens for delivery via the 3rd Party Apps, which themselves have proven problematic for the industry in many ways.

Wonder, an app founded by billionaire basketball owner Marc Lore, seeks to improve on the ghost kitchen model by partnering with high-profile chefs to offer 30 unique concepts in brick and mortar storefronts for online ordering takeout/delivery in tight radiuses. Using precise recipes and low variance cooking methods such as combi-ovens, immersion circulators and pressure fryers, Wonder claims that they can accurately and faithfully recreate beloved restaurant dishes that they will deliver or allow customers to pick up, mixing and matching from their various concepts.

Befitting a start-up with hundreds of million of capital, they can get  glowing articles placed in the trade publications. If it seems we woke up today and chose violence – it’s because we primarily serve small to medium sized businesses that are the heartbeat of vibrant cities and the restaurant industry and we have concerns. Now for those chefs that can get these lucrative partnerships – it’s all love for getting what you can in a tough business.

But at Harmony, we chafe about the distortive effects of the venture capital model that burns massive amounts of money in a market to hope to achieve profit at scale (see Third Party Delivery), disintermediates restaurants from their customers and seeks to exploit collective action problems. Too often their promises to “help restaurants” is illusory.

Licensing a brand and beloved dishes for third party production isn’t anything new – go to any airport or stadium and you’ll see brands offering limited menus prepared by third party companies that specialize in large scale operations. Wonder adds an interesting wrinkle by promising upfront cash and equity not the traditional royalty structure. We haven’t reviewed any agreement* but this structure raises red flags which we can go into later if people want (click here to say we want more).

* Harmony never discloses and will never disclose any client business terms. If we had a client who partnered with Wonder we couldn’t and wouldn’t write this article.

What we hope you understand from this article is that the restaurant landscape is constantly changing.

We sometimes joke that after software “ate the world” it became an ouroboros where every company exists just to buy software from other companies. A key thing we do for our clients at Harmony is help them manage the suite of software that they use (or “their tech stack”).

Whether it’s labor scheduling, point-of-sale, payroll, account payable and cost management, tip management, or event booking there are numerous options and our industry leading expertise allows us to effectively advise our clients on what soft software solutions is best for the task or whether it’s better to manage those workflows with in-house processes.

Please don’t hesitate to consult with us if you’re thinking about adding to your tech stack.