After pursuing an ambitious expansion plan, Austin-based delivery service Favor is closing all of its operations outside of Texas.
The company said it would pull out of six cities nationwide, ending all service outside of Texas. Its delivery service remains in 15 Texas cities, including Austin, Dallas, Houston and San Antonio.
The cities Favor is exiting are Boston, Denver, Nashville, Charlotte, N.C. and Tempe and Scottsdale, Ariz.
The departures follow another pullback six months ago, when Favor left five U.S. cities including Philadelphia and Washington, D.C. At the time, the company, which once operated in 23 cities in the U.S. and Canada, said it planned to focus on smaller markets.
“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,” Favor CEO Jag Bath said in a written statement.
“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 H-E-B, that perfected their model within the state before expanding more broadly.”
Favor launched its service in Austin four years ago, initially targeting cities that have a strong concentration of college students. In Austin, the company got off the ground with University of Texas students and gradually added new zip codes.
Using Favor’s mobile app, users place orders on a smartphone and a courier delivers items to their door, usually within 35 minutes. The cost in Austin is $7 per trip, which includes a $5 delivery fee and $2 minimum tip.
The company's couriers deliver anything from restaurant meals to prescription medicine to anything on grocery or store aisles.
Favor said the service handled more than $60 million in sales and delivered more than 2.5 million orders with 20,000 runners in 2016.
Two years ago, Favor raised $13 million from investors including Austin-based S3 Ventures, Silverton Partners and Silicon Valley investor Tim Draper. The company had previously raised $2 million.
In July, when Favor announced it was doubling its coverage area in Central Texas, the company had about 120 employees. At that time, it had recently tripled the size of its corporate offices, moving into a 12,000-square-foot space at 1705 Guadalupe St., near the University of Texas campus.
It has faced increasing competition from other on-demand delivery services, including UberEats, DoorDash and Postmates.
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