Update: HEB Announces Intention To Purchase Austin On-Demand Delivery Service

“I am thrilled to have H-E-B join forces with another well-respected and innovative Texas company,” said Martin Otto, H-E-B’s Chief Operating Officer.

Update: While the full terms of the transaction still have not been disclosed, 100 HEB stores have already started working on curbside service, including their San Marcos location, and fulfilling online shopping orders at 73 of its 339 locations in Texas.

San Marcos residents can now order their groceries online and have them delivered right to their homes thanks to Favor Delivery.

There is a $4.95 fee for a personal shopper in the curbside pickup; shoppers who have their groceries delivered are charged an additional $7.50 service fee. Large items, such as grills and electronics, are not eligible for either service. Select stores have beer and wine delivery. Shoppers can reserve time slots between 8 AM and 10 PM for delivery.

While these services are only available in select zip codes, HEB intends to expand the services to its other stores over time.

On Feb. 15, H-E-B announced plans to join forces with an on-demand delivery service headquartered in Austin.

H-E-B is a Texas homegrown food retailer and the state’s largest private employer. The company announced its intentions to buy Favor Delivery.

According to H-E-B, the retailer aims to become a digital retail industry leader enabling customers to choose how they shop, pay for and receive products. The partnership also complements H-E-B’s brick-and-mortar operations by growing its online presence to meet customers’ evolving needs and expectations.

H-E-B intends to retain all of Favor’s employees as well as its 50,000 runners, who operate as contract delivery drivers. Chief Executive Officer and President, Jag Bath, will continue to lead the on-demand food delivery service as it operates as a separate brand.

“I am thrilled to have H-E-B join forces with another well respected and innovative Texas company,” said Martin Otto, H-E-B’s Chief Operating Officer. “We share similar values, including a commitment to excellence in customer service and to our greatest resource – our people. Over the past two years, we have established a strong working relationship with Favor that has proven to be immensely successful for both companies. We see a unique opportunity with this partnership to support and accelerate each other’s growth through the sharing of experience, insight and resources.”

Favor was founded in 2013 and has quickly grown to provide service to 50 cities across the state of Texas; currently, it is the state’s best-rated delivery service. The company more than doubled its footprint across the state and became the first U.S. on-demand delivery company to achieve “profitability at scale.”

“We could not be more excited to be part of H-E-B,” said Bath. “I am incredibly proud of our team’s success and the business we have built at Favor. H-E-B’s extensive resources, capital and retail food industry experience will enable us to further build on our momentum and significantly accelerate our growth throughout Texas.”

With Favor, H-E-B gains access to best in class consumer-facing technology and the on-demand company’s advanced delivery system. H-E-B will also leverage Favor’s data-driven approach to capture valuable insights to deliver the best customer experience possible.

Home grocery delivery is already a key pillar of its offering through HEBtoYou. H-E-B also already offers customers the convenience of “Curbside Pickup” at over 100 stores, a service that enables customers to order online and have their groceries delivered right to their cars, and HEB.com offers customers the ability to order and ship grocery, drugstore and general merchandise products to 48 states and military bases worldwide.

Full transaction details have not been released. But the latest endeavor is part of a strategic investment in technology and partnerships; H-E-B aims to enhance its digital and delivery offerings in Texas.