Austin-based food delivery service receives $2 million in seed money

Favor is a food and grocery delivery app that is targeted at college students. It has been in existence for three years and has recorded about $2.7 million in transactions while servicing more than 53,000 customers, according to The Wall Street Journal. It has received $2 million in financing from angel investors and venture capitalists. 

Favor users can place orders on the smartphone application, and couriers will then make the deliveries for a $5 charge on orders under $50 plus a $2 tip. Favor also generates revenue by offering restaurants the option of paying for promotional activity and lead generation. Restaurants who opt-in to this program get featured more prominently on the app, generating more new customers for the business.

The Wall Street Journal reports that Favor "has developed proprietary algorithms that help restaurants 'forecast supply and demand, prevent delivery errors and dispatch deliveries to the best available assistant,' while also marketing their dishes to local customers including college students, and other users of mobile-on-demand services." 

Favor is currently operating in several college cities, but is looking to expand in the near future as it gains a more stable client base and greater demand. The company is also developing a website to allow both restaurants and customers to track orders, providing a forum for user feedback both on the food quality and delivery service. 

Other delivery start-ups have failed in the past because product delivery and transportation is a complex business with many potential pitfalls. In order to succeed, delivery companies need flawless organizational structures, clean communication between business and client, and efficient intra-company operations. The stakes are obviously low for a $12 grocery order, but if you have something important that must be reliably shipped it's really best to choose a third-party logistics company that you can trust to get the job done.