Why hasn’t Lyft moved into food delivery?
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The rivalry between Lyft and Uber is an epic one, as far as the ride-hailing market goes. But the two businesses are also starkly different: While Uber has expanded into a whole roster of other businesses including food delivery and trucking, Lyft largely has stuck with one thing: Moving people.
So why has Lyft remained on the sidelines of the food delivery business?
When asked during a Fortune Reinvent podcast if Lyft ever would compete with the DoorDashes and UberEats (which is slated to acquire rival Postmates) of the world, Lyft cofounder and president John Zimmer explained the thinking: “We don’t think the world needs another one of those,” Zimmer says. “It’s also not our specialty. Our focus is on transportation—on going deep on personal transportation.”
That’s not to say Lyft won’t enter the delivery business—but the model it may choose to take on could be quite different, at least based on what Zimmer suggests in the podcast. The Lyft cofounder says he has sought to address longstanding criticism that food-delivery companies charge restaurants so high a fee that some mom-and-pop shops find it difficult to survive.
“What we’ve heard directly from retailers and restaurants is that they don’t want to pay the 20 or 30% being charged by something like UberEats—they are coming to us and saying how can we help them with delivery to their customers,” he says. “That is the conversation we are having, and that is something we may continue to lean into over the next few months.”
The question is, will Lyft stay in delivery in the long run? Early in the pandemic, Lyft launched a pilot program for drivers to make “Essential Deliveries” of goods such as medical supplies and groceries to partner organizations. The move was aimed at giving drivers a new stream of income at a time when ride-hailing had ground to a halt. A few weeks ago, the company also added free GrubHub food delivery as a perk for subscription-based Lyft customers.
Undoubtedly, starting a food delivery business may have been lower on the list of priorities in past years as Lyft went up against its much better funded competitor, Uber. When Uber raised more than $3 billion in 2016 from Saudi Arabia, “everyone said … we could not compete. Someone even thought we should return money to our investors at that point.”
Meanwhile, across the pond, another ride-hailing startup, Grab, says it is partnering with Microsoft to reskill its drivers for the digital economy. That comes as the Southeast Asian company has become a super-app akin to Tencent’s WeChat, complete with food delivery, financial services, and even health care.
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