Lyft seeks slice of food-delivery amid a slow recovery in rides

By Tina Bellon and Akanksha Rana (Reuters) - Lyft Inc said on Tuesday it was working on a new service to take a slice of the burgeoning food-delivery market as it works to make up for a 48% drop in quarterly revenue and a slow recovery of ride-hail demand. Unlike larger ride-hail rival Uber Technologies Inc , Lyft has no food-delivery business to fall back on amid the pandemic

Reuters November 11, 2020 03:05:24 IST
Lyft seeks slice of food-delivery amid a slow recovery in rides

Lyft seeks slice of fooddelivery amid a slow recovery in rides

By Tina Bellon and Akanksha Rana

(Reuters) - Lyft Inc said on Tuesday it was working on a new service to take a slice of the burgeoning food-delivery market as it works to make up for a 48% drop in quarterly revenue and a slow recovery of ride-hail demand.

Unlike larger ride-hail rival Uber Technologies Inc , Lyft has no food-delivery business to fall back on amid the pandemic. That means that while Lyft is largely unable to offset the decline in trips, it also avoids Uber's added costs in scaling its Eats business.

But Lyft President John Zimmer on Tuesday said the company was looking to enter what it considered an untapped market by offering delivery services for restaurants without launching a full-fledged consumer-facing platform for food delivery.

"What we're hearing from restaurants is they're looking for a partner who will not charge 30% commission, but still offer delivery service," Zimmer told Reuters in an interview, adding the service would offer new income opportunities to drivers.

While details remain unclear, the offer is aimed at undercutting the prices Uber, GrubHub Inc and other food-delivery services charge restaurants for every order - a method that has drawn opposition from some restaurants and lawmakers.

Lyft in October announced a partnership with GrubHub that allows Lyft's loyalty-program members free restaurant delivery from GrubHub restaurants.

Lyft's third-quarter revenue fell to $499.7 million (£377 million), surpassing average analyst expectations of $486.5 million, according to Refinitiv data.

Though Lyft shares have surged this week thanks to hopes for a coronavirus vaccine, the stock has overall lost more than 15% this year and now trades more than 50% below the price of the company's 2019 public debut.

Lyft on Tuesday said demand for rides continued to increase in the months from July to September, but active ridership remained down 44% on a yearly basis.

Besides its core ride-hail business, Lyft offers bike, electric scooter and car rentals in several cities, but does not break out financial details of those units. Lyft on Tuesday said performance improved at those units.

Third-quarter active riders stood at 12.5 million - a significant increase from the 8.69 million in the second quarter but a far cry from the 22.3 million riders who used Lyft during the third quarter of last year.

Lyft reaffirmed its goal to reach profitability on an adjusted basis of earnings before interest, taxes, depreciation and amortization by the end of 2021. The company so far this year has implemented drastic cost cuts, including wide-ranging layoffs.

Lyft reported a third-quarter adjusted EBITDA loss of $239.7 million, narrower than the $254.1 million loss expected by analysts.

The company said the quarterly adjusted EBITDA loss was $25 million narrower than Lyft's recent forecast, reflecting progress in reducing costs.

Unlike Uber, Lyft operates only in some Canadian cities and the United States, where Uber last week said demand for ride-hail trips recovered the slowest compared with other regions around the world.

Uber last week reported $3.13 billion in third-quarter revenue, nearly half of which came from its food-delivery unit. Uber said it could become profitable on an adjusted EBITDA basis by the end of 2021 even if rides continue to remain 10% to 20% below pre-pandemic levels.

Uber and Lyft recently scored a significant win in their California home market, where voters passed a company-sponsored ballot measure that cements the status of app-based food-delivery and ride-hail drivers as independent contractors, not employees entitled to unemployment pay, health insurance and other costly benefits.

Gig workers in California will now receive limited benefits, including minimum pay rates and accident insurance and the companies hope to turn the California decision into a model for the nation.

Lyft's president, Zimmer, on Tuesday said the company was talking to lawmakers in other states and on the federal level and added he was optimistic that the model would be implemented more widely.

"Politicians in other states were surprised how successful this measure was in a very progressive state," Zimmer said, referring to California.

(Reporting by Tina Bellon in New York and Akanksha Rana in Bangaluru; Editing by Peter Henderson and Matthew Lewis)

This story has not been edited by Firstpost staff and is generated by auto-feed.

Updated Date:

TAGS:

Find latest and upcoming tech gadgets online on Tech2 Gadgets. Get technology news, gadgets reviews & ratings. Popular gadgets including laptop, tablet and mobile specifications, features, prices, comparison.

also read

U.S. job openings rise slightly in September
Business

U.S. job openings rise slightly in September

WASHINGTON (Reuters) - U.S. job openings increased moderately in September and layoffs appeared to abate, pointing to a gradual labor market recovery from the COVID-19 pandemic.

Central bankers seek new role in brave new world
Business

Central bankers seek new role in brave new world

By Balazs Koranyi and Francesco Canepa FRANKFURT (Reuters) - Taking a break from fighting the coronavirus crisis, the world's top central bankers will attempt to resolve the existential questions of their profession this week as they tune into the European Central Bank's annual policy symposium. Having struggled to lift anaemic inflation for years, officials including the heads of the ECB, the U.S. Federal Reserve and the Bank of England will attempt to figure out why monetary policy is not working as it used to and what new role they must play in a changed world - be it fighting inequality or climate change.

Asian stocks extend gains as vaccine hopes support global reopening
Business

Asian stocks extend gains as vaccine hopes support global reopening

By Lawrence Delevingne BOSTON (Reuters) - Asian shares rose on Wednesday as hopes for a successful coronavirus vaccine lifted expectations of a swift reopening of the global economy, which would help the region's heavily trade-dependent markets.