US-based food delivery startup Favour abruptly shuts down Toronto operations

Austin, Texas-based Favor, which launched in Toronto in August 2015, has shut down operations in Toronto.

In Canada, the company rebranded itself as Favour. Favour is a food delivery startup that promises to deliver food from local restaurants in under an hour thanks to its runners. These Toronto-based runners report that they weren’t informed that the company was planning on shutting down in the city, and only found out they lost their jobs through an alert on the mobile app that said Favour was no longer available.

Runners also received an email statement from the company, where CEO Jag Bath indicated that “operational dynamics” made it difficult for Favor to stay in Toronto. Former Toronto runners (who wished not to be named) said that there was no indication that the company was struggling in Toronto. In the last few weeks, Favour introduced an Uber-style surge model to delivery fees during peak hours and bad weather which runners suggest was too high. The regular delivery fee, which was $6, would be multiplied according to the surge, so if the surge was x2 it would be $12. The delivery fee could get as high as $18.

In a statement to BetaKit, Favour said that Toronto, as a dense tier 1 city (population of 100,000 and above), does not fit into Favour’s scaling plans of growing in tier 2 (50,000 and above) cities:

We do not differentiate tier 1 and tier 2 markets based on population, but rather on density, which drastically affects things like parking, traffic and restaurant wait-times. We will continue to evaluate expansion opportunities in tier 2 markets across Canada.

Favour notified all full-time employees in Toronto with ample notice before the market withdrawal. For on-demand contract Runners, who are not employees and work on their own schedule, we provided as much notice as possible, without compromising our ability to serve Torontonians while operational in the market.

Toronto was Favour’s only Canadian location. A month after launch, Favour faced criticism after restaurants listed on the app said they weren’t informed that their menus were available through Favour.

Food delivery startups haven’t had the best luck in Toronto. In October, UberEATS scaled back its instant delivery service, while Feast stopped its online delivery service that same month.

Jessica Galang

Jessica Galang

Jessica Galang is BetaKit's News Editor.