Lyft Reduces Workforce by 1%, Drops Bike and Scooter Services

Lyft is set to lay off around 1% of its nearly 3,000 employees and will discontinue its dockless bike and scooter services. This restructuring is projected to cost between US$34 million and US$46 million.

Under the restructuring plan, Lyft will rebrand its bike and scooter division as Lyft Urban Solutions, shifting focus to docked options only. The move comes after the company acknowledged the high maintenance costs and seasonal demand of dockless bikes and scooters. Despite record usage in major markets such as New York City, where Lyft operates the Citi Bike service, the company has found these services financially unsustainable in their current model. Lyft's bike-share programs are present in over 50 markets across 16 countries, including London, Madrid, Toronto, and Dubai.

The restructuring aims to streamline operations and cut costs in anticipation of a challenging financial quarter. Since taking over early last year, Lyft CEO David Risher has made job cuts, improved driver earnings, and launched new initiatives to boost ride-sharing demand. These measures come as Lyft faces increased competition from Uber Technologies, whose stock has surged by 126% over the past five years, while Lyft’s stock has dropped by 74%.

Lyft’s plan includes ending dockless scooter operations in Washington, D.C., and exploring alternatives for its dockless bikes and scooters in Denver. In many US cities, Lyft partners with companies like Bird and Spin for bike and scooter services through its app.

The cost-cutting and strategic shift aim to enhance Lyft’s adjusted operating income by approximately US$20 million annually by the end of next year. Although Lyft achieved its first net profit as a public company last quarter, it has forecasted a weak financial performance for the upcoming quarter, according to Reuters.