Demand for ride-hailing services during the pandemic has taken a beating as a result, Lyft (NYSE:LYFT) has moved to expand its business to include food delivery services. The ride-hailing company is launching the delivery service to compete with Uber Eats and bolster its bottom line as rides continue to remain below pre-pandemic levels.
Lyft looking to partner with retailers to offer logistics services
The company’s executives announced this move during the Q3 earnings call. Lyft’s President John Zimmer said that the idea is still in the early days, and they plan to offer food delivery at affordable fees compared to those of other players in the industry. He said that the company has been talking to retailers in different categories. What they need is a logistics partner rather than a consumer marketplace coming in between them and consumers.
Zimmer said that retailers are looking for someone to help them deliver their packages to customers and sometimes use ride-sharing technology to deliver packages going the same route. He added that they are delighted to have a B2B approach against a consumer approach, which they plan to add to what the company does in transportation.
Lyft saw 47% sequential quarter growth in revenue
The entry into the logistics business comes at the back of a turnaround around its primary ride-hailing operations in Q3. During the quarter, the company reported that its active riders increased 44% sequentially to around 12.5 million as the economy reopened from COVID-19 pandemic quarantine. Quarter over quarter revenue was up 47% to $499.7 million. The improvements seen in each metric are not too unlike Uber’s Q3 numbers.
Zimmer said that there was $300 million in cost savings at the end of the quarter, which is an important driver to profitability. Lyft is reiterating its goal adjusted EBITDA positive in Q2 2021.
Uber leaned on its Uber Eats business during the pandemic, which has seen a surge over the last months. Lyft is also planning to leverage opportunities in the food delivery business.