Lyft announced on Friday it would be cutting a lot of jobs. The company has been struggling financially to compete with Uber.
According to someone with insider knowledge, the layoffs are expected to take place next week and will affect approximately 1,200 employees. David Risher is the new CEO of the company. This is his first major move. The person stated that Mr. Risher was considering the cuts since several weeks even though it was his first day in the role of C.E.O. It was Monday.
In a memo to his employees, Mr. Risher stated that the company must reduce its costs to provide affordable rides for customers and drivers while also achieving profitable growth. He said that the money saved by downsizing will be used to "invest" in more competitive pricing, quicker pick-up times, and higher driver earnings.
Mr. Risher stated that employees who lost their job would be notified on Thursday, and Lyft offices will be closed that day.
The Wall Street Journal had reported on the news of job cuts at Lyft. The company has approximately 4,000 employees.
Sona Iliffe Moon, a Lyft spokesperson, said that the decision was not taken lightly. "But it will result in a stronger and more competitive Lyft."
Lyft announced that in March, Mr. Risher would replace John Zimmer and Logan Green as the founders of the company. Both men will leave their executive roles but remain on the board.
Uber has been the clear leader in ride-hailing and food delivery for years.
In November, Lyft cut 13 percent of their staff. In February, Lyft reported record revenues but warned that it would be slowing down due to economic challenges while it worked on lowering prices. Mr. Risher said that keeping Lyft's prices competitive is a crucial part of his plan to differentiate Lyft and Uber.
Since months, Lyft workers had anticipated layoffs. Three current and former Lyft employees claim that business consultants were brought in to make recommendations on cost-cutting and ask departments to justify budgets.
The layoffs were expected to occur by mid-April. This was before managers had to complete their annual performance reviews, and executives decided on the compensation for the coming year.