Ride-sharing service Lyft is preparing to lay off hundreds of employees just days after new CEO David Risher began leading the company with an eye to cutting costs to help bring its fares more in line with those of its biggest rival, Uber.
Risher, a former Amazon executive, informed Lyft’s workforce of more than 4,000 employees in an email posted online Friday that a “significant” number of them will lose their jobs. The message came at the end of his first week as Lyft’s chief executive.
The memo did not specify how many people would be laid off, but the Wall Street Journal reported that at least 1,200 employees will be laid off. The report cited unnamed people familiar with the cost-cutting plans.
San Francisco-based Lyft did not immediately respond to a request for comment.
Risher, who had served on Lyft’s board before being recruited to replace co-founder Logan Green, listed cost control as one of his top priorities during an interview with the Associated Press shortly after his hire was announced.
By ensuring that Lyft is “super efficient,” Risher said, the company would be in a better position to lower its fares and attract back riders who had switched to using Uber more frequently because that service offered lower prices for the same passengers. trips.
It was a theme that Risher emphasized again in his email on Friday explaining why he decided to cut payroll, which does not include Lyft drivers, a group classified as independent contractors.
“We need to lower our costs to deliver affordable travel, compelling driver earnings, and profitable growth,” Risher wrote.
Lyft intends to begin notifying employees who will be laid off on Thursday when the company plans to close its offices.
It will mark the second round of recent job cuts for Lyft after laying off 700 workers last year.
Recurring waves of layoffs are emerging as a new phenomenon in the tech industry, reversing more than a decade of largely rampant growth.
The pandemic initially hit Lyft by drying up demand for ride-sharing services, a blow that Uber was able to soften through an aggressive expansion in food delivery. That gave people a reason to keep using the Uber app even when they were stuck at home while Lyft fell out of favor.
Over the past year, it has become even clearer that consumers kicked the Lyft habit as Uber ridership rebounded to pre-pandemic levels and Lyft’s losses mounted. Those struggles have caused Lyft’s share price to plunge 69% over the past year, prompting the decision to hire a new CEO to turn things around.
Lyft’s shares rose 6% after news of its cost-cutting plans closed Friday at $10.44.