My partner Kieran sent me this chart this morning:
It is a summary of the average weekday miles traveled by adults in private vehicles, including taxis and ride-hailing vehicles, for the 50 largest metro areas in the US (data is from the fall of 2023). At the top of the list with the most miles traveled is Raleigh, and at the bottom of the list with the fewest miles traveled is, not surprisingly, New York.
The other cities on the bottom of this list probably won't surprise you either. But it's a good reminder of how built form determines our mobility choices. If you look up which US cities have the highest population densities and the most compact built forms, I think you'll generally find that it mirrors what you're seeing here.
On Monday it was reported -- by the Wall Street Journal, Tech Crunch, and others -- that Uber will be laying off another 3,000 employees and closing 45 of its offices around the world. Here is a quote from TechCrunch:
“I knew that I had to make a hard decision, not because we are a public company, or to protect or stock price, or to please our Board or investors,” Uber CEO Dara Khosrowshahi wrote to employees today in a memo, viewed by TechCrunch. “I had to make this decision because our very future as an essential service for the cities of the world — our being there for millions of people and businesses who rely on us — demands it. We must establish ourselves as a self-sustaining enterprise that no longer relies on new capital or investors to keep growing, expanding, and innovating.”
According to this SEC filing, the company expects to pay approximately $110 million to $140 million in severance and other termination benefits, and somewhere between $65 million to $80 million in costs related to closing its offices.
All of this is, of course, being driven by a steep decline in ride bookings, which is about 70% of the company's revenue. Ride bookings were down 80% in April from a year earlier. For Q1 2020, they were down about 5% compared to 2019.
Uber Eats has seen a spike in demand with people staying at home. Bookings were up 52% in Q1 2020 from a year earlier. The problem is that, unlike its rides business, their food delivery business is far from profitable. That's the point of the possible merger with Grubhub.
The company has said that they are seeing some signs of a recovery in markets that have begun to reopen. But it's too early to predict what that will really look like. The hole is pretty deep.
Pre-COVID, ride hailing demand tended to surge on the weekends as people went out to restaurants, bars, and clubs. So presumably those activities will need to return for its revenue to return. But I also think we could see a spike because of people being nervous to take public transit.
Either way, the company is making some really tough decisions right now. But it seems to be doing what it needs to do in order to get to the other side of this and become a self-sustaining and profitable business. Full disclosure: I own some $UBER.
Chart: Uber Q1 2020 results
There's a lot of data/speculation out there about the impact of ride-hailing apps. Many dense urban centers are claiming that they have increased traffic (slowed average speeds) and pulled people away from public transit. The University of Toronto published this study last year. And the WSJ recently published this chart for Chicago:
To be honest, I'm not sure how much of the above is a result of ride-hailing apps, overall urban growth, e-commerce deliveries, public transit disinvestment, or other factors. But what is clear is that ride-hailing is pretty convenient and most (if not all) cities are seeing massive growth in this space.
But all of this feels to me like a bit of a red herring. People will obviously choose what is most convenient and relatively affordable. And congestion was a problem well before people started using these apps (demand > road supply). The only solution I have seen work is to price congestion/roads.