The rideshare company thinks it can find a way to deliver food without tacking on high commission fees, which probably involves blowing ever-larger amounts of other people’s money.
In their every-three-month exercise in “How much money are we losing?” known as a quarterly earnings call, SF-based rideshare company Lyft reported losing about $240 million in the third quarter of 2020, according to Reuters. (That is considered “good” in Silicon Valley terms, and Lyft stock is up since.) But the more interesting revelation on the call, as Eater SF picks up, is that Lyft is contemplating jumping into the food delivery game.
It’s not surprising, given that the Uber Eats spinoff has been Uber’s only financial bright spot during the pandemic. And Silicon Valley investors do love copycats. But there are already zillions of third-party food delivery options, so it seems unlikely that adding yet another one is going to somehow power Lyft to profitability.
But Lyft thinks they have a solution in offering lower delivery fees, or maybe even no fees at all. Restaurant trade publication Restaurant Dive quotes Lyft co-founder and president John Zimmer as saying, “What's happening to restaurants in the time like this, when they sell food on a platform, like Uber Eats, they get charged 20% to 30%, they lose 20% to 30% of their revenue to that platform." Zimmer offered little detail, though, on how Lyft’s food delivery knockoff would be cheaper.
Maybe we should have seen this coming when Lyft pivoted to an essential deliveries experiment in April. Lyft also announced some difficult to understand partnership with GrubHub barely a month ago “to offer Lyft Pink members complimentary membership to Grubhub+,” a statement which has too many premium add-on branding surnames for a normal person to understand.
That GrubHub partnership is likely short-lived if Lyft decided to compete with GrubHub. Restaurant Dive observes that “If Lyft is able to find a way to make money off delivery without having to charge steep commissions, it could have a leg up on other companies that rely on these commissions.”
That’s probably true. The problem is that sentence begins with the phrase “If Lyft is able to find a way to make money…,” a proposition which has eluded the company over its entire eight-year history.
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