Culture / Newsy

H-E-B’s Big Favor Surprise

Suddenly, There’s a Total Texas Underdog Alternative to the Amazon/Whole Foods Behemoth

BY // 02.20.18

Texas grocery giant H-E-B bought delivery app Favor — no ifs, ands, or Howard Edward Butt(s) about it. H-E-B is embracing tech and delivery convenience with its purchase of the Austin-based on-demand delivery specialists.

Favor delivers restaurant meals, groceries, and much more right to its customers’ doors. More than 50,000 Favor runners deliver goods throughout the Lone Star State day in and day out.

Favor will become a wholly owned subsidiary of H-E-B.

Favor’s services will not undergo any immediate changes, according to company executives. The brand will remain independent, and Favor CEO and president Jag Bath will stay in his leadership role.

“We could not be more excited to be part of H-E-B,” Bath said in a statement released by H-E-B. The mammoth grocery store chain’s resources, capital and retail experience “will enable us to further build on our momentum and significantly accelerate our growth throughout Texas,” Bath noted.

H-E-B will retain all of Favor’s runners, according to H-E-B chief operating officer Martin Otto. Longtime Favor fans needn’t fret. They’ll still be able to order from all the same places.

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As for H-E-B adjustments — initially,  Favor’s services will not be linked to the grocery stores (any more than they already are with Favor delivery of H-E-B groceries available). However, over time, H-E-B plans to accelerate the growth of both companies through their cooperation.

H-E-B has been dipping its toe into digital delivery options in the last few months. H-E-B To You brings a two-pronged approach. With Curbside pickup, shoppers can order online and schedule a pickup time for a $4.95 fee. This curbside convenience is offered at roughly one quarter of H-E-B stores and was recently introduced at the Tanglewood H-E-B when its once-hyped in-store restaurant was closed.

The chain also takes things one step further with home delivery. Working with third-party services like Favor, H-E-B has been delivering groceries directly to shoppers’ homes for several months now. The $4.95 fee still applies, with an additional $7.50 fee for the delivery.

Buying Favor — an Unlikely H-E-B Move

A splashy acquisition is out of character for the colossal but typically low-key H-E-B. This surprising purchase could be traced to the grocery delivery arms race going on.

Recently, Amazon purchased Whole Foods for a whopping $13.4 billion, creating a potential grocery juggernaut delivery service. Walmart is partner with smart lock company August, which allows delivery drivers to leave packages inside a customer’s home rather than outside the front door with one-time entry technology. And let’s not forget Target bought Shipt for a hefty $550 million price tag.

Even though the grocery world is teeming with delivery partnerships, the H-E-B/Favor deal still stands out. Why’s that? Well, home court advantage for one.

The other partnerships on the list do not share headquarters in the same state. H-E-B and Favor share a regional focus with Texas-tailored goods and services.

“I am thrilled to have H-E-B join forces with another well-respected and innovative Texas company,” Otto said in a statement.

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