H-E-B retailer buys on-demand delivery start-up

H-E-B, the Texas grocery powerhouse, has made a strategic digital acquisition that will boost its food delivery capabilities.

The supermarket retailer is buying Favor Delivery, an on-demand delivery service headquartered in Austin, Texas. Favor will become a wholly owned subsidiary of H-E-B. The financial terms of the transaction were not disclosed.

Favor will continue to operate independently as a separate brand, led by Jag Bath, who will continue as CEO and president. H-E-B will also retain all of Favor’s employees, and its 50,000 runners, who operate as contract delivery drivers.

The partnership complements H-E-B’s brick-and-mortar operations, which continues to grow its online presence and e-commerce offering. For example, Favor will provide H-E-B with best-in-class consumer-facing technology and an advanced the on-demand delivery system. H-E-B will also leverage Favor’s data-driven approach to capture valuable insights to deliver the best customer experience possible, according to the grocer.

“Over the past two years, we have established a strong working relationship with Favor that has proven to be immensely successful for both companies,” said Martin Otto, CEO, H-E-B, which is based in San Antonio and operates more than 400 stores across Texas and northern Mexico. “We see a unique opportunity with this partnership to support and accelerate each other’s growth through the sharing of experience, insight and resources.”

This transaction is H-E-B’s latest strategic move to enhance its digital and delivery offerings. The grocer already offers home grocery delivery through its HEBtoYou program, as well as curbside pickup — a service that enables customers to order online and have their groceries delivered right to their cars at over 100 stores. The grocer’s e-commerce site also enables customers to order and ship grocery, drugstore and general merchandise products to 48 states and military bases worldwide.