Favor Pulls out of Other States to Focus on the Texas Market

Favor’s headquarters in Austin

In 2013, Zac Maurais and Ben Doherty launched Favor in Austin to deliver food to people’s doorsteps.

The startup quickly grew and later that year, Favor attracted $2 million in seed stage funding. The next year, the company landed $13 million with plans to expand nationwide.

Those plans came to a halt this week.

Favor announced it is pulling out of all cities outside of Texas. At its peak, the company operated in 23 cities across the U.S. and Canada. But it began scaling back operations last June when it pulled out of five cities: Chicago, Philadelphia, Atlanta, Miami and Washington, DC.

Favor faced a lot of competition in the food delivery business from Instacart, Postmates, Uber Eats, Amazon and others.

The Austin-based mobile delivery app reported it achieved “3X growth” in 2016 and it is “aggressively pursuing a clear path to profitability with a singular focus on continued rapid growth throughout Texas.”

“We’re incredibly proud of the strong growth we experienced in 2016, especially in Texas” Favor CEO and President Jag Bath said in a statement. “As part of our ongoing smart growth strategy, we are shifting our near-term focus back on Texas, creating a clear line of sight to profitability while still maintaining an impressive rate of growth.”

“As an Austin-based company, Texas makes up a significant part of our business, and as the second most populous state in the nation, we have ample room to continue growing our dominant presence throughout the state. Our approach mirrors the growth strategy of several successful Texas brands, including Alamo Drafthouse and HEB, that perfected their model within the state before expanding more broadly. We are excited about our prospect for growth and profitability in 2017 and beyond,” Bath said.

Last year, Favor reported more than $60 million in gross product sales. It has more than 20,000 active runners. The company did not comment on how its scaling back will affect contract and full time employees.

Last year, the company, with 121 local employees, moved into 12,000 square foot headquarters at 1705 Guadalupe Street.

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