H-E-B Acquires Food-Delivery Service Favor

Grocer joins a growing number of retailers that are betting on off-premise

SAN ANTONIO -- Grocer H-E-B is the next retailer to enter the off-premise foodservice space: The San Antonio-based grocery and convenience-store chain has purchased food-delivery company Favor.

As with Grubhub and other third-party delivery sites, Favor users can download the company’s mobile app and have runners deliver items from restaurants and grocery stores directly to their door.

As part of the deal, H-E-B will hire Favor’s 140 corporate employees and 50,000 contract delivery drivers. The on-demand delivery company’s headquarters will remain in Austin, Texas.

“It is our intent to continue to grow Favor just as it is our intent to grow H-E-B,” Martin Otto, the chain’s chief operating officer, told the Statesman. “We’re very excited about this because of the opportunities it will afford both companies to better serve our customers.”

The acquisition isn’t H-E-B’s first foray into the online or consumer-direct marketplaces. In the past, the retailer has partnered with grocery delivery service Shipt, launched curbside pick-up at select locations and sold merchandise on its website.

With competition from Amazon, meal kits and third-party delivery all looking to provide convenience, several retailers have launched delivery services. QuikTrip Corp. is testing Uber Eats at four locations in Tulsa, Okla., where the 740-unit chain is based. In December, 7-Eleven Inc., Irving, Texas, rolled out on-demand ordering for delivery or in-store pickup at select Dallas stores with its proprietary 7-ElevenNow smartphone app.

Offering quick, frictionless options might be especially crucial for c-stores as they work to capture younger demographics. Nearly half of Gen Z consumers say they order food for delivery at least once a week, compared to 23% of consumers overall, according to Technomic’s 2017 Consumer Direct Study, powered by Ignite.

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