Wonder CEO Marc Lore on Spyce acquisition, robotic kitchen technology and growth outlook

Key Concepts

• Robotic Kitchen Technology: Automated systems designed to prepare food with minimal or no human intervention.
• Spice: A business unit formerly part of Sweetgreen, specializing in developing and launching robotic kitchen technology, particularly automated wok and bowl-making machines.
• Wonder: A food hall and delivery company that has acquired Spice.
• Automated Woks: Robotic systems capable of preparing stir-fry dishes on demand.
• Robotic Bowl Technology: Machines that can automatically assemble food bowls, such as salads, with precision.
• Sauce Machine: A robotic system capable of producing a wide variety of sauces on demand.
• On-Demand Batter Production: Robotic capability to create batters for frying in real-time, allowing for custom recipes.
• Labor Story: The impact of technology on staffing needs in kitchens.
• Food Costs: The expenses associated with purchasing ingredients for food preparation.
• Price Point Diversification: Offering a range of meal prices to cater to different consumer segments.
• Fast Casual vs. Fast Food: Differentiating between quick-service restaurants offering higher quality and price points compared to traditional fast food.
• Licensing: The potential to grant permission to other companies to use proprietary technology.
• Augmenting Humans: Using technology to enhance human capabilities rather than solely replacing them.

Wonder's Acquisition of Spice and its Strategic Implications

Wonder, a food hall and delivery company, has acquired Spice, the business unit responsible for developing and launching robotic kitchen technology for Sweetgreen. This acquisition is poised to significantly transform Wonder's operational capabilities and growth trajectory.

Details of the Spice Acquisition

• Spice's Background: Spice was founded by MIT-trained engineers and has spent the last 10 years developing automated kitchen solutions. Their initial focus included automated woks and, more recently, robotic bowl technology.
• Sweetgreen's Use of Spice Technology: Sweetgreen utilized Spice's technology to automate salad preparation, achieving perfect and aesthetically pleasing results without human intervention.
• Wonder's Motivation: Wonder's CEO, Mark Lur, emphasizes that the acquisition is driven by both the advanced technology developed by Spice and, more importantly, the expertise of the Spice team. This team and their robotic technology will be applied across all of Wonder's restaurant concepts housed within their kitchens.

Transformation of Wonder's Operations and Growth Plan

The integration of Spice's technology is expected to unlock significant scalability and efficiency for Wonder.

• Scalability: Wonder currently operates 30 restaurants within a single small kitchen. The acquired robotic technology will enable them to house "literally hundreds of restaurants and thousands of meals out of a small kitchen."
• Growth Projections: Wonder has an ambitious growth plan:
  • 80 locations currently open.
  • Projected to reach 200 locations by the end of next year.
  • Targeting 400 locations by the end of 2027.

Labor and Operational Efficiency

The acquisition is set to revolutionize the labor model within Wonder's kitchens.

• Lean Staffing: Even before the acquisition, Wonder's kitchens were lean, with a maximum of 15 people during peak hours.
• Extended Hours with Minimal Staff: The technology will allow Wonder to operate extended hours (until 2 a.m. in suburbs and 5 a.m. in New York City by Q1) with as few as three people managing all 30 restaurants.
• Revenue Potential: This increased efficiency is projected to significantly boost revenue per location. A 2100-square-foot location, comparable in size to a Chipotle, is expected to increase its revenue from $5-6 million to $20 million.

Advanced Robotic Capabilities and Future Potential

The acquired technology extends beyond simple automation to enabling novel food preparation processes.

• Robotic Sauce Machine: A key capability is a sauce machine that can produce 90% of all sauces globally on demand, opening up vast possibilities for meal customization and variety.
• On-Demand Batter Production: The technology can create batters for frying in real-time, allowing for custom recipes and automated frying processes, such as for chicken.
• Automated Woks: The ability to create any stir-fry on demand is another significant application.
• Distinction from Human Replacement: Mark Lur clarifies that this is not about replacing humans with robots on existing equipment. Instead, it's about creating new equipment to perform tasks that are difficult or impossible for humans, such as producing thousands of sauces on demand. The goal is to "augment humans and create things that weren't possible before."

Pricing Strategy and Market Positioning

Wonder aims to leverage its technological advancements to offer high-quality food at accessible price points.

• Price Point Range: Wonder's platform offers meals ranging from under $10 to premium options like a $35-$40 filet mignon steak.
• Market Segmentation: While acknowledging the "tale of two cities" in consumer spending (luxury vs. price-conscious), Wonder's diversified price points allow them to cater to a broad customer base.
• Bridging the Gap: The robotic acquisition is expected to further lower the prices of high-quality food, making it more accessible and closing the gap between fast casual and fast food.

Competitive Landscape and Licensing Potential

Wonder believes its acquired technology is superior to anything else currently on the market.

• Unique Technology: They have not seen comparable technology and consider Spice's to be the "best technology in market" and the "only truly commercialized robotic machine."
• Licensing Outlook: While not explicitly detailed, the potential for licensing this technology to other entities is implied by its unique and commercialized nature.

Perspective on Sweetgreen's Challenges

When asked about Sweetgreen's recent challenges, Mark Lur expressed a positive outlook on their partnership.

• Positive Relationship: He has had "great discussions" with Sweetgreen CEO Jonathan Neman and considers him a "visionary founder."
• Smart Move: Lur views the sale of Spice as a "smart move" for both companies.
• Continued Partnership: Wonder will continue to supply machines to Sweetgreen, indicating a long-term collaborative relationship.

Tipping and Delivery

The discussion touched upon tipping practices in the context of automated services.

• No Tipping for Robots: Customers do not need to tip the robots.
• Delivery Driver Tipping: Tips are directed towards delivery couriers.

Food Costs and Inflation

Wonder believes its acquisition provides a degree of insulation from rising food costs.

• Stabilized Costs: While food costs had been increasing, they have "stabilized a bit."
• Insulation through Efficiency: The ability to produce food more efficiently and at lower price points makes Wonder more resilient to inflationary pressures.

Comparison to Other Automation Efforts

The conversation briefly contrasted Wonder's approach with broader automation trends.

• Elon Musk's Optimus: While acknowledging the potential of robots like Elon Musk's Optimus, Wonder's focus is on creating new capabilities rather than simply automating existing human tasks. The emphasis is on "augmenting humans" and enabling new possibilities.