Already the grocer with the largest footprint – by far – in Texas, H-E-B is making a big bet on digital as it looks to ensure a future filled with continued growth.
The San Antonio-based chain said Thursday that it is buying Austin-based Favor Delivery, an app-based delivery service with a network of more than 50,000 runners statewide delivering meals from restaurants, groceries and a lot more almost around the clock.
Financial terms of the transaction were not released.
Favor will become a wholly owned H-E-B subsidiary as part of the deal. It will still be based in Austin, with current CEO and president Jag Bath continuing in that role.
“We’re super proud to be joining forces with H-E-B,” Bath said. “We are two Texas-born and -based companies. Everybody in Texas knows H-E-B. H-E-B is a fantastic brand.”
H-E-B chief operating officer Martin Otto told the American-Statesman all of Favor’s employees will be retained and that more workers will likely be added in the coming months.
It’s a rare acquisition for H-E-B, which boasts $25 billion in annual sales and has traditionally grown organically. No immediate changes are planned to the Favor service, executives said. Customers will still be able to order Favor delivery from all their favorite businesses.
“Favor is great at home delivery. We think they’re the best at what they do,” Otto said. “Their values sync up with ours. That matters. We both believe people come first and that each and every person counts.”
Consumers won’t – at least initially – see H-E-B pushing Favor’s services in its 400 stores. But over time, that will likely change.
“It is our intent to continue to grow Favor just as it is our intent to grow H-E-B,” Otto said. “We’re very excited about this because of the opportunities it will afford both companies to better serve our customers.”
H-E-B has been adding services in recent years aimed at helping busy shoppers save some time. About a quarter of its stores now have curbside pickup, while some even offer H-E-B to You home delivery using a mix of runners from Favor and competing services, as well as its own delivery drivers in some cases. The chain sells groceries and other merchandise on its heb.com website, as well.
“It’s clear to us digital matters a lot and delivery matters a lot,” Otto said.
Other grocers are making similar moves. In Austin and a few other select markets, Amazon-owned Whole Foods Market last week rolled out delivery for Prime members. Randalls, a subsidiary of Albertsons, has its own fleet of delivery trucks zipping across the city, while Sprouts uses Instacart to get groceries to customers’ homes.
Founded in 2013, Favor says it serves about 50 cities statewide. Joining forces with H-E-B will help take the service to the next level, Bath said.
“We’re going to have access to a lot more resources, capital and most importantly access to the years of retail food industry experience that H-E-B has,” he said.