H-E-B has acquired Favor, the on-demand delivery service out of Texas.
Favor will continue to operate as an independent wholly-owned subsidiary of the grocery chain.
The company first launched in 2014 at SXSW, bringing a Texas-tailored approach to on-demand delivery. While many on-demand services, such as Postmates, focus on high-density areas like NYC and San Francisco, Favor built a product that serves the sprawling cities of Texas.
Users could order food from a restaurant, or any item from a local store, to be purchased and delivered to wherever they were, all through an app. The idea itself isn’t revolutionary, but Favor claims to be the first on-demand service to become profitable.
Meanwhile, H-E-B is the largest grocery retail chain headquartered in Texas, and one of the top grocery retailers in the country. The acquisition comes at a time when the industry is in flux, preparing for a boom of online grocery shopping on the consumer side.
Amazon bought Whole Foods for a whopping $13.7 billion. Target acquired Alabama-based Shipt for a cool $550 million. Sam’s Club just recently started offering an online membership club with free shipping. And Walmart is working with August smart lock company to test in-home delivery of grocery items and other packages. And is on the hunt for more startups to buy.
H-E-B has already started working on curbside service, which is available at 100 of its stores, and is fulfilling online orders from 73 of its 339 Texas stores. The acquisition of Favor will help accelerate that transition into digital.
Favor will continue operating as an independent brand, so delivery junkies in Texas can rest easy. The company currently serves 50 cities in Texas with more than 50,000 runners and 8 million deliveries fulfilled to date.
Favor has raised a total of $37.9 million, according to Crunchbase. Terms of the deal were not disclosed.