Lyft is spending $100M on new hubs for drivers

Earlier today, Lyft announced a $100 million investment in expanding its network of driver hubs in major U.S. cities, including the addition of 30 more locations.

These hubs, 15 of which are currently located in major U.S. cities, function as service centers and community spaces for drivers. They feature facilities for low-cost oil changes, basic vehicle maintenance, charging facilities for electric vehicles, and serviced car washes, as well as communal areas for drivers to meet, host skill-sharing meetups, and use “career-focused educational resources.” And yes, there’s also coffee.

The company’s investment will also expand operating hours for the hubs, from 35 to 40 hours a week to more than 70 hours per week.

In many ways, Lyft and its competitor Uber, the ride-hailing companies that control the vast majority of the U.S. market, are successful. They’ve raised billions, changed urban transportation, collectively employ millions of drivers, and have become indispensable to many riders.

But despite their rapid growth, these companies still have significant challenges, including driver retention. Lyft believes part of the solutions is taking better care of its drivers.

Lyft isn’t alone in providing these services; Uber offers “Greenlight” service center in 600 locations around the world.

Expanding the company’s retail footprint may pay off down the road as technology continues to change urban transportation. Maybe one day these hubs become a backbone for autonomous vehicle deployment, or perhaps serve as charging stations for a future electric fleet.

Lyft

In a Medium post, Lyft COO Jon McNeill says that hub expansion is an effort to use the company’s size and scale to increase take-home pay. After spending an inspiring month with drivers and seeing how “resourceful they are at raising their profits by reducing costs ” by “ stacking coupons for oil changes and negotiating better insurance rates,” he decided the company should do something.  

McNeill claims this is a big opportunity to make a difference in driver’s take-home pay and invest in community and camaraderie, part of a larger effort to be seen as the more driver-friendly option.

“To me, it sounds like a doubling down, a significant investment in their existing Lyft hubs, which are typically about issues the drivers are having,” says Harry Campbell, who runs the Rideshare Guy blog. “It’s a return to what drivers liked about Lyft in the first place. I think it’ll help with incremental retention over time.”

Of course, the fastest way to improve driver pay would be to simply pay them more. McNeill claims Lyft drivers have national median (not mean) earnings of $18.83 an hour.

According to Campbell, take-home pay is the top priority for drivers. His analysis and surveys of hundreds of Uber and Lyft drivers have found that the average driver is making between $16 and $18 a hour before taxes.

While these new Lyft hubs and community resources do benefit drivers, they don’t address the core concern of the independent contractors who work for the company.

“It’s really not the sexiest thing, but they just need to pay drivers more,” Campbell told Curbed. “Uber and Lyft are trying to do everything they can do around the edges right now.