Lyft CEO wants to curb surge pricing: 'Riders hate it with a fiery passion'
Lyft CEO says they hope to reduce surge pricing by adding more drivers
Some Minneapolis Uber & Lyft drivers want minimum wage, companies say it could be worse for riders
The City of Minneapolis is considering a minimum wage for rideshare drivers. New York City, states Washington and California have all passed legislation setting a minimum wage for app-based workers.
Lyft is trying to curb surge pricing with an increased driver supply, according to CEO David Risher.
Risher said on the company earnings call this week that Lyft saw an "improved balance in our marketplace" of active riders and drivers. Lyft rides with surge pricing in the second quarter went down 35% compared to the prior quarter, the CEO reported, and a "larger percentage of ride intent converted into rides taken."
The number of drivers using Lyft and the amount of hours they did so both increased year-over-year, with the former doing so by over 20% and the latter by over 35%, according to the company.
LYFT OPEN TO SELLING BIKE, SCOOTER BUSINESS
Later in the call, Risher explained price surging as happening when a ride-share company "do[esn’t] have enough driver supply," allowing it to bring out more drivers and reduce demand from riders. Lyft uses the term "primetime" instead of price surging.
Lyft driver and passengers want more safety precautions, according to 17 new lawsuits filed Wednesday. (David Paul Morris/Bloomberg / Getty Images)
It is a "particularly bad form" of price raising "because riders hate it with a fiery passion," according to Risher.
"So we’re trying to really get rid of it. And because we’ve got such a good driver supply, which we’ve worked really hard to get, it’s decreased significantly," he said, citing the earlier statistic about Lyft rides that saw price surging going down quarter-over-quarter.
A Lyft spokesperson told FOX Business the company was not doing away with the practice. Risher’s comment about trying to get rid of it "means getting more drivers on the platform because more drivers means less primetime," according to the spokesperson.
Lyft logo displayed on a phone screen is seen in this illustration photo taken in Krakow, Poland on July 8, 2021. (Photo Illustration by Jakub Porzycki/NurPhoto via Getty Images / Getty Images)
Risher told analysts and investors the decline in surge-priced rides came with an effect on revenue, saying Lyft was "actually taking less money."
UBER, LYFT GET NEW COMPETITION IN RIDESHARE BATTLE
"But that’s good for our riders, and it’s good for our overall market itself," he continued. "Yes, revenue is kind of a funny thing because it kind of goes in both directions. But broadly speaking, we’re kind of happy with where we are on the pricing side."
Lyft Inc
Lyft saw revenue in the second quarter increase 3% year-over-year and its net loss shrink by 69.7%, hitting $1.02 billion and $114.3 million respectively. Meanwhile, the revenue it brought in for each of its nearly 21.5 million active riders in the three-month period came in at $47.51, a decline of roughly 4.8% from the same quarter last year.
The ride-share company, which is available in America and Canada, has been vying for market share with Uber, which also has food delivery and other services. One way Lyft had done so was by making how much its trips cost riders on par with competitors.
A Lyft decal is seen on a car in the pick-up area at JFK Airport on April 28, 2023 in New York City. Lyft, the ride-hailing app, confirmed that it will be laying off 1,072 employees, which equals to roughly 26% of its corporate workforce. The layoffs (Photo by Michael M. Santiago/Getty Images / Getty Images)
Earlier in the month, Uber CEO Dara Khosrowshahi said Lyft has become "competitive in pricing now" after them having "taken some tough actions," something that has brought a "constructive competitive marketplace."
HOW LYFT, UBER DIFFER AS RIDESHARE WARS ESCALATE
Risher said Tuesday that "a lot of our focus is more focused on competing on service and differentiation and so forth" in the market now.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LYFT | LYFT INC. | 15.64 | -0.66 | -4.05% |
| UBER | UBER TECHNOLOGIES INC. | 66.27 | -1.13 | -1.68% |
He has been Lyft’s CEO for nearly four months, having taken over steering the company from co-founder Logan Green.