Image Credits: Lyft
In an industry where unit economics and rider utilization are key to running a profitable business, perhaps it’s better to cut your losses early on. Lyft notified employees today that it’s pulling its scooters from six markets: Nashville, San Antonio, Atlanta, the Phoenix area, Dallas and Columbus.
“We’re choosing to focus on the markets where we can have the biggest impact,” a Lyft spokesperson told TechCrunch. “We’re continuing to invest in growing our bike and scooter business, but will shift resources away from smaller markets and toward bigger opportunities.”
That means Lyft is laying off about 20 employees from its bikes and scooters team, which consists of about 400 people. Additionally, a number of contractors responsible for scooter charging and repositioning are also losing their jobs. This is the second round of layoffs in the bikes and scooters division this year. In March, Lyft laid off around 50 people, mostly those who came on board from Motivate following Lyft’s acquisition of the company last year.
Lyft landed on this decision because it found that cities with the greatest population density are best for micromobility, and those six markets are not included in that group. But Lyft is not the only company to pull out from markets this year. Competitor Uber has also pulled JUMP bikes and scooters from a handful of markets, including San Diego, Providence and Atlanta. In some cases, what led to ceasing operations were regulatory hurdles. For Lyft, however, the company said it came down to a lack of ridership.
Back in June, Lyft deployed its new scooters, built by Segway, which are designed for sharing. Since then, Lyft says its operating costs have decreased and ridership has increased about 20% in markets like Denver and Miami. These Segway-built scooters make up more than 65% of Lyft’s scooter fleet, and the company plans to upgrade the entire fleet by the end of January.
Lyft currently operates its scooters in Alexandria, Arlington, Austin, Denver, Los Angeles, Miami, Minneapolis, Montgomery County, Oakland, San Diego, San Jose, Santa Monica and Washington, D.C.