Favor, the Austin, Texas-based on-demand delivery service, at one point had expanded to 23 cities in several states across the nation and to Canada's largest market. Its growth seemed exponential.
But, on Monday, the company announced it is shutting down operations in all markets outside of Texas.
That means Favor, which abruptly closed its Toronto office in early December, will cease operations in Boston, Denver, Charlotte, Nashville, and in Tempe and Scottsdale, Ariz.
It wasn't immediately clear how many full-time workers or part-time delivery runners would be out of work as a result of the shutdowns. The company has about 20,000 active runners.
“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 prepared statement.
Favor's withdrawal from those seven markets comes seven months after Bath announced Favor would withdraw from most of the big markets it had only recently entered, including Chicago, Philadelphia, Atlanta, Miami and Washington, D.C. At the time, Bath said Favor would focus future investment on technology and perfecting its service.
Favor faces strong competition in the on-demand delivery space. Although its "order anything" model allows the ultimate in flexibility, it has sometimes been undercut on pricing by better funded startups, such as UberEATS and PostMates, which take a significant share of the prepared meal delivery market. Still, Favor has still seen strong growth in some areas.
In the past two years, Favor has expanded its delivery service area in Austin and branched out to several new Texas markets, including Dallas, Fort Worth and several suburbs; College Station; Houston and several of its suburbs; San Antonio, and San Marcos.
The startup has raised $16.9 million since its founding in 2011. Its lead investors include Austin-based S3 Ventures and Silverton Partners, which led Favor's most recent round -- a $13 million Series A in March 2015.
In September 2015, Favor appointed Bath, a former executive at Austin-based coupon site operator RetailMeNot, as CEO. He replaced founding CEO Ben Doherty, who became Favor's chief operating officer, a position he held until August 2016. In spring 2016, Favor moved into a new headquarters in Austin.
Favor said it grew 3x in 2016, and it indicated that its retreat from all non-Texas markets will help it achieve profitability.
The startup has logged more than $60 million in gross product sales. Bath said Favor is in good company with other businesses that sought to dominate in Texas before expanding beyond its borders.
"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," he said.
