Favor Leads Austin's Growing Food and Tech Industry
It’s noon on a Saturday. Maybe you’ve just woken up, or maybe you’ve spent the last hour in bed staring at your phone. Maybe you’re hungover, or maybe you’re just exhausted from the work week.
But you do know one thing: you’re hungry. You can’t seem to muster the energy to drag yourself up, toss whatever you have into a pan and hope it turns into something edible.
Luckily, your options are endless when it comes to food delivery and meal services in Austin.
Favor, the popular delivery service that charges a $5 flat rate for almost anything, expanded its coverage area in Austin this summer to include more of Cedar Park as well as north and south Austin.
This expansion comes as a response to UberEats’ decision to remain in the city following its ridesharing counterpart’s departure.
Favor completes over 2,000 deliveries per day in Austin, while UberEats boasts a speedy 35-minute delivery time from start to finish. And yet, both companies still compete with other delivery and meal services such as Austin Postmates, Dinner Elf, Grub Hub and Bite Squad. So why do all of these businesses continue to thrive in Austin?
Convenience is extremely important for bustling, urban communities.
According to Mintel, a market intelligence agency, “Respondents who are most willing to sacrifice food quality for convenience live in households with an annual income of $100,000 or more, and use online delivery services twice or more a week. They are 60% more likely than the general population to say they would sacrifice quality for convenience.”
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Dinner Elf, an Austin-based startup, claims there is no need to make that sacrifice. The company, founded in 2014, provides customers with a licensed chef who prepares three meals in their own kitchens. It targets families who wish to consume healthy, affordable meals without sacrificing their own time.
Nicole Vickey, co-founder of Dinner Elf, attributes her company’s success toAustin’s unique collaborative startup community.
“I wouldn’t say there’s competition. It’s very, ‘Let’s sit down and see how you’re doing well and how we’re doing well,’” Vickey said. “I think one thing we’ve loved about starting this company in Austin is that there is such a rich entrepreneurial, tech startup community, but there’s also the very rich foodie community, and those people have started to come together.”
by Brenna Pollock, Chealsea Hunt, and Deanna Govea
But despite the seemingly cooperative nature of the market, not all businesses make the cut.
Nimble Foods, a small Austin startup which provided unique $8 meals with no delivery fee, began business in 2014 and was forced to stop service in March of this year.
Kevin Cho, owner and operator of Nimble, said that UberEats’ similar business model was executed more effectively than Nimble’s. In addition to offering typical food delivery, UberEats added “Instant Delivery,” a curated daily menu of specials from a variety of restaurants that can be delivered in as fast as 10 minutes.
“They offered more variety in their offerings and had a bigger fleet of drivers. They ended up beating us on our own unique selling proposition. In addition to the numerous discounts they had, they also offered a generous referral program,” Cho said. “It became tough to compete at that level.”
Though Cho cites UberEats as a former direct competitor to Nimble, he considers other delivery companies to live on a separate plane due to their differences in services and company structures.
“We were really going after the individuals who ordered meals for themselves, and when you try to use Favor or Postmates for yourself, it gets pretty expensive,” Cho said.
In contrast to Dinner Elf, whose services are suited for families requiring larger portion sizes and the option to re-heat meals, Nimble’s free delivery was ideal for the single customer. Favor allows customers to order anything from snacks to playing cards to speakers, creating its own unique home in the market. These differences in services allow for the many seemingly-similar companies to grow together, especially in Austin.
“We’re all coming about it [meal solutions] from a different way,” Vickey said. “What I love about the Austin startup community is that it’s very giving.”
And when it comes to Favor’s expansion, Cho agrees.
“I’m rooting for the home team and hope they make it.”