Lyft is making significant operational shifts to stabilize its financial standing and better compete with ride-hailing rival Uber. The San Francisco-based company announced that it would eliminate about 1% of its nearly 3,000-person workforce, which would be part of a broader restructuring that would include discontinuing its dockless bike and scooter services in certain markets. The company, known for its popular Citi Bike program in New York City, is now focusing more on its core business and adjusting its urban mobility strategy.

“We are simply deprioritizing dockless scooters going forward,” a Lyft spokesperson said. “Riders love our bikes and scooters, and we’ve always expected this part of the business to continue to be a meaningful part of Lyft’s offering now and into the future.” Despite this reassurance, the company is winding down dockless scooter operations in Washington, D.C., and exploring alternatives for the service in Denver.

This move follows Lyft’s struggles to remain profitable in the highly competitive ride-hailing market. Although Lyft reported record-high bike and scooter rides last quarter, especially in key cities like New York, the seasonal nature of these services and the high costs associated with maintaining the vehicles have created financial pressures. The company missed earnings expectations last quarter, raising concerns about its ability to sustain growth and profitability.

CEO David Risher, who has been at the helm since early 2023, has emphasized cost-cutting and operational efficiency to turn the company around. “These changes are part of our ongoing efforts to streamline operations and focus on what matters most to our riders,” Risher stated during a recent call with analysts. “We have to make tough choices to ensure long-term sustainability.”

The restructuring, which will see Lyft’s bikes and scooters division renamed Lyft Urban Solutions, is expected to result in charges between $34 million and $46 million. Most of the costs are tied to asset disposals and severance packages for laid-off employees. The cuts are also anticipated to bolster adjusted earnings by $20 million annually by the end of 2025.

Industry analysts have mixed reactions to Lyft’s decision. Steven Falk, a frequent user of Lyft’s bike services in New York, expressed concern over the impact on urban mobility: “This is troubling. I was in NYC recently for three weeks and used the bikes daily for almost every trip. They are a transformative technology and — if the profit sector can’t support them — worthy of public subsidy alongside electric transit.”

The job cuts and restructuring follow a series of cost-saving measures under Risher’s leadership. Earlier this year, Lyft laid off a larger workforce as part of its plan to streamline operations. Despite these efforts, Lyft’s stock has continued to decline, down approximately 22.2% year-to-date, while its chief competitor, Uber, has seen its shares rise nearly 18%.

Albert Fong, a product marketing leader, noted the broader implications of the restructuring: “Lyft is planning a major overhaul to streamline its bikes and scooters business while attempting to cut costs. While they claim these offerings are core to their purpose, it’s coming at the expense of jobs. The shift seems to signal a move from innovation to optimizing what they already have.”

Lyft’s restructuring marks a strategic shift in how the company approaches its micro-mobility offerings, especially as it faces increasing pressure from Uber, which has recently diversified its services. As Lyft focuses on reining in expenses and redefining its urban mobility vision, the company faces the challenge of sustaining profitability while maintaining a competitive edge in a very competitive market.

With questions surrounding the long-term viability of its bike and scooter business, only time will tell if Lyft’s cost-cutting measures will position it for sustainable success.