Friends of Branded!
Happy Saturday and I hope you had a great week!
I had the privilege of making my once a semester visit to Columbia Business School on Thursday night this week and to spend some time with Professor Stephen Zagor and his Food Entrepreneurship class.
While the professor and his students always thank me for showing up, it's me who should be doing the thanking and I find the experience truly invigorating and a whole lot of fun. It’s a good time when you get to spend 90 minutes or so with an enthusiastic group of people who are learning about topics that Branded is trying to execute on every day. I appreciate this relationship I have with Columbia, the professor, and the students who welcome me to their class.
One question that was asked of me on this particular visit was about the Marc Lore’s food hall concept, Wonder, and specifically its acquisition of Grubhub which was announced this week.
Much has been written about this acquisition, so readers of the H^2 have every right to ask what can I bring to this topic?
Fair point. Let's see.
Well, I wrote about Wonder back in 2019 when the business model was (i) utilizing a fleet of Mercedes Sprinter Vans, (ii) loaded with kitchen equipment, (iii) enabling it to delivery made-to-order meals directly to customers, (iv) in a few townships in New Jersey (a state that I love and respect despite what Schatzy says on our podcast).
Mr. Lore, a serial entrepreneur, with incredible successes with Diapers.com (acquired by Amazon) and Jet.com (acquired by Walmart) is looking to revolutionize the food delivery and dining experience by combining high-quality, chef prepared meals, with delivery & takeaway convenience. Traditionally, when speed and convenience are achieved, culinary excellence is sacrificed. This is what Wonder is set out to address and disrupt.
So far, I’ve said nothing you couldn’t find elsewhere. Fair point.
I wrote back in 2019 that when one is investing, particularly in early-stage companies, (although I’d say it holds true for companies at almost any point along the maturation curve) you’re betting on the jockey. I wrote that Marc Lore is as good a jockey as one could ever find to bet on. And then I wrote that, as a straight-shooter, I thought Wonder was an ugly baby.
Sorry, not sorry, but the costs of maintaining a fleet of trucks with kitchen equipment and the associated labor to prepare and deliver meals to peoples' homes was at least, in my opinion, an idea I couldn’t get behind. I said despite having an elite entrepreneur at the helm, I’d short Wonder if there was a financial instrument that would allow me to do so.
Team Branded doesn’t like to “YUCK on someone else’s YUM” (my daughter explained that important lesson to me from kindergarten class), and we have uber respect and big love for other entrepreneurs. So, while I shared my opinion on Wonder’s original business model, we support fellow entrepreneurs and spent a little time with the company and explored ways to be helpful and possibly engage.
At the beginning of 2023, Wonder shifted its business model from a fleet of trucks and home delivery to its brick-and-mortar model with delivery and take-away.
My mom once told me "The most meaningless statistic is the score at halftime." I’m not sure if she took that from a quote attributed to President Abraham Lincoln or Harlem Globetrotter Meadowlark Lemon, but I’m going to attribute it to my mom (along with my fully embraced sign-off, “it takes a village”).
Wonder’s food truck model was part of its early innings strategy or maybe even a warm-up act, b/c the business sure looks a great deal different today.
To be crystal clear, I’m NOT a Marc Lore skeptic, and to the contrary, people who disrupt industries look a little out there, until they don’t.
To assess Wonder, it’s important to look at the whole picture and while I’m not saying I have it all figured out, what I see is a unique and differentiated vertically integrated model coming together that combines manufacturing, retail, and delivery.
Again, I’m playing from the bleachers and while it’s good time out there in those seats, I’m most certainly NOT in the room where it happens (that last comment was a mashing of both the New York Yankees’ bleacher creatures and Lin Manuel Miranda. That’s a first!). 😊
When you look at all the partnerships Wonder has announced, the acquisitions plus the actions Wonder have taken, this strategy is becoming clearer.
Wonder has acquired culinary IP and built out a differentiated food offering and by different, I mean on quality, production techniques, innovation / development capacity and branding. They built a branding and marketing engine that quickly brought chef driven and their own brands to market.
The Wonder team is strong on technology, e-commerce, culinary, operations and again, branding & marketing. Through acquisitions, the company has acquired a logistics platform (Relay), a meal-kit company (Blue Apron) and now one of the largest delivery platforms (Grubhub). They’ve partnered with Nestle, Walmart and others.
This acquisition of Grubhub is a major piece of Wonder’s vertically integrated model. The third-party delivery platforms (“3PDs”) have all struggled b/c the two-sided marketplace has inherent conflicts of interest and specifically is in a love-hate relationship with restaurants.
Wonder is aiming to eliminate that conflict and to elevate the food b/c it’s been designed for food delivery. By operating multiple concepts from one brick-and-mortar location, they’re also optimizing finances. This adjacent business line play is allowing Wonder to leverage its expertise, resources and customer base while expanding its offering that complement its core business.
What’s the difference between home meal replacement and delivery? The answer is that it depends on the use case for the consumer and Wonder is building an infrastructure to be the “go to” source for all use cases.
I’ve been asked several times this week what Grubhub brings to Wonder? Specifically, I was asked why Wonder wouldn’t spend a fraction of the capital it took to acquire Grubhub and flood the 3PD zone with adds and SEO to make it the lead dog on DoorDash, Uber, Grubhub and other platforms.
Yes, that was of course an option, but that would be very transactional and not nearly as strategic as owning one of the leading channels of the food delivery ecosystem. Also, by acquiring Grubhub, Wonder gets its customers, technology, logistics, and team. I could see a roadmap where other restaurants on the Grubhub platform become deprioritized or even dropped completely from the site as Wonder’s brands become the dominant if not exclusive offerings.
Sticking with Lin Manuel Miranda and using one of my daughter’s favorite song & dance numbers, A Cover Is Not the Book, from the 2018 film Mary Poppins Returns, what started out as a fleet of trucks has advanced and become one of the most vertically integrated platforms in the industry.
DoorDash and Uber have and were expected to launch their own brands and to prioritize them on their respective platforms in direct competition to its restaurant customers. Wonder acquired and created its own brands and have now added a 3PD to engage more seamlessly with guests.
Is this strategy Wonder is advancing going to win? Only time will tell, but for avoidance of any doubt, as a result of everything they’ve done since moving away from a fleet of trucks model, I’m sure as hell not shorting Wonder!
I want to give a big thank you to my friend & partner, Mr. Stephen Van Note, one of the amazing subject matter experts I have the privilege of leaning on and looking to when it comes to hospitality workflow, operations and identifying where friction exists, and efficiencies are needed. It's good to have friends who are also domain experts!
It takes a village.
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Have you ever had the experience when you’re engaged in a particular project, you can’t help but see aspects of the said project everywhere?
For example, if you’re in the market for new pots & pans, you can’t help but see pots & pans in various store windows, online, or in people’s homes. If you’re looking for a new desk chair, you start noticing desk chairs and sizing them up everywhere you go.
As announced recently, Branded added to its portfolio our first consumer packaged goods company, Mr Bing Foods, and now I see Asian Street Sauces everywhere.
Case and point, our friends at Moe’s Southwestern Grill decided to get a little spicy with its new chicken and selected Mr Bing’s Chili Crisp to make the magic happen.
You can checkout the video here of Food Network alum Jet Tila: Moe’s Southwestern Grill Gets Spicy With Mr Bing
Utilizing Mr Bing’s fusion flavor profiles are part of the restaurant’s efforts to spice things up at Moe’s Southwestern Grill. According to Joe Artime, VP of Marketing, “We want to keep flavors fresh and exciting for our guests. We add limited time premium proteins to our menu to excite our community based on what our guests are craving. This also allows us to maintain our core menu and fresh and free ingredients so they can still customize and introduce new flavors among their favorites at Moe's.”
I love how Moe’s collaboration with represents Mr Bing’s Chili Crisp being embraced by non-Asian QSR food and specifically being part of the Tex-Mex angle.
But wait, there’s more!
The Doritos restaurant concept in the LA Lakers’ arena is getting big love from our friends over at PepsiCo and they’re featuring trendy snack flavors like Flamin Hot & chips being adapted to center of plate applications. And yes, that’s Mr Bing Chili Crisp mixed with crushed Flamin Hot Doritos!
Everything is better with Pepsi (and Mr Bing).
You can read more about the Doritos collaboration with the Lakers here:
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Featured Episode: Revolutionizing Hospitality with Comcast's Technology Solutions
Join Michael Schatzberg, “The Restaurant Guy,” and Jimmy Frischling, “The Finance Guy,” In our latest Hospitality Hangout episode, with Brian Klinger. Brian's journey with Comcast, a global leader in telecommunications and digital solutions, offers a fascinating look into how technology is transforming the hospitality industry. As the largest internet service provider in the U.S., Comcast is redefining the role of technology in business operations.
In this episode, Brian shares Comcast Business’s evolution from supporting small businesses to providing managed tech solutions for regional, national, and global companies. He dives into how smart solutions address key hospitality needs like security, compliance, and efficiency, while also highlighting Comcast’s strategic investments in companies and mentorship to fuel growth. Brian predicts that AI and automation will personalize guest experiences and streamline back-of-house operations in the next five years, with Comcast’s partnerships—like the one with Nvidia—leading the way.
Tune into the episode and subscribe to our channel here: Hospitality Hangout With Brian Klinger
Re-Run of the Week:
In this special Super Bowl Re-Run episode of Hospitality Hangout, Michael Schatzberg “The Restaurant Guy” and Jimmy Frischling “The Finance Guy” chat with Wade Allen, SVP and Chief Digital Officer of Brinker International, the company behind Chili’s Grill & Bar, Maggiano’s Little Italy, and the virtual brand It’s Just Wings. Allen shares how Brinker is leading the way in kitchen automation, with innovations like a grill that cooks proteins perfectly at the push of a button and an oven that can cook steaks in just 3-4 minutes.
Allen also discusses the balance between adopting new technology and ensuring it integrates smoothly into restaurant operations. Schatzy and Frischling agree, noting that the key is finding the right fit and focusing on consolidating solutions. For more on restaurant tech and industry insights, don’t miss this episode of Hospitality Hangout!
Tune into the episode and subscribe to our channel here: Hospitality Hangout With Wade Allen
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That’s it for today!
See you next week, same bat-time, same bat-channel.
It takes a village!
Jimmy Frischling
Branded Hospitality Ventures
jimmy@brandedstrategic.com
235 Park Ave South, 4th Fl | New York, NY 10003
Branded Hospitality Ventures ("Branded") is an investment and solutions platform at the intersection of foodservice, technology, innovation and capital. As experienced hospitality owners and operators, Branded brings value to its partners through investment, strategic counsel, and its deep industry expertise and connections.
Learn more about Branded here: Branded At-A-Glance