Uber Cuts Spending; Lyft Stops Adding Drivers in Many Cities
Lyft Stops Adding New Drivers in Major Cities as Demand Falls
(Bloomberg) -- Ride-hailing companies are beginning to taking far-reaching steps in response to plummeting demand and economic hardships facing their drivers.
In a bid to prop up earnings for existing drivers as the coronavirus freezes normal activity, Lyft Inc. said Wednesday it will stop adding new drivers to its platform in many cities. Uber Technologies Inc. said it slashed nearly all marketing campaigns designed to recruit drivers and is evaluating whether to follow Lyft in limiting the ability for workers to sign up.
Spending on Lyft and Uber has been falling across the U.S. in the last couple weeks, mirroring slowdowns in other countries during the virus outbreak. Each company saw a decline of about 20% last week compared with the week before, according to Edison Trends, a research firm.
The pause on new drivers for Lyft is going into effect immediately in New York, San Francisco, Seattle and other regions hardest hit by the virus and will be extended to other areas as needed, said the second-largest ride-hailing company in the U.S. For Uber, a major focus is on moving its drivers to deliver food and groceries, which has seen an uptick as more people stay home, a spokesman said.
On Tuesday, both Lyft and Uber suspended shared rides, which allowed people headed in the same direction to ride together and cut costs. Drivers concerned about the virus spreading had been lobbying to remove the option, which didn’t follow social distancing guidelines from public health officials. A survey of drivers for both apps published Tuesday showed widespread concerns about declining income and a perception that the companies aren’t doing enough in response.
Although both ride-hail companies have pledged to compensate drivers diagnosed with the coronavirus, that coverage won’t supplement the earnings shortfall caused by the cratering demand from passengers. With schools and colleges closing, companies mandating that employees work from home and official advice urging people to stay home and avoid group gatherings, service workers like Lyft drivers are reporting reduced demand and earnings.
Spokeswoman Alexandra LaManna said Lyft was “coordinating with government officials on additional solutions,” including federal stimulus dollars for drivers to help make up the difference. Lyft is also exploring ways to have drivers boost earnings by delivering food or medical supplies.
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