Ride-sharing apps like Lyft
After Seattle became ground zero for the virus in the U.S., Uber saw its business in the area plunge by up to 70%. In a rare move, Uber announced in April that it could no longer estimate how much money it will make this year. Lyft has yet to make a similar announcement, but the New York Times (NYT) reports that both companies saw their business collapse in March.
"I think every major metropolitan area, and really the whole country, is going to be down 70 to 80 percent" in ride-share demand, Tom White, a senior analyst with D.A. Davidson told NYT.
To make up for the lack of demand for ride-share services, Uber focused on its UberEats food delivery service which saw a 27% jump in business in mid-March. Lyft doesn't have a food delivery service exactly but has begun offering delivery for seniors and students in 11 major cities including Houston, Atlanta, Seattle, and San Fransisco.
"Delivery is the bright spot in this," Ron Josey, an analyst at JMP Securities told NYT. "Times like these do usher in a fundamental shift in how we, as consumers, act. While the fundamental shift might not be to ride-share during this time, it is toward doing more things at home."
Along with an increased focus on delivery, both companies have plans for significant layoffs. Uber has said it's considering cutting its workforce by as much as 20%, meaning 5,400 layoffs. Meanwhile, Uber CEO Dara Khosrowshahi has come under fire for his $42.4 million pay package.
Lyft stated in a filing with the Securities Exchange Commission (SEC) that it has plans to layoff nearly 1,000 employees, a 17% reduction in employment for the company. Additionally, 288 people will be furloughed, and salaried employees will face pay cuts of up to 30%, according to the SEC filing. Executive leadership will face 30% salary cuts, 20% vice presidents, and 10% for other employees. Lyft's board of directors will give up 30% of their cash compensation, as well.
Lyft has also announced plans to contribute $6.5 million to COVID-19 relief efforts. Nearly $1.5 million will go to protective equipment and cleaning supplies, according to the company's statement on its coronavirus response. The company will also donate its stockpile of N-95 masks, set aside during the California wildfires, to healthcare workers.
"As part of this work, we are pursuing new initiatives that meet the emerging needs of this crisis. We are also allocating additional funding to existing COVID-19 response efforts as the crisis evolves," the company said in a statement.
