Lyft Inc., a ride-hailing service that allows customers to book using smartphone apps, is nearing its one-month mark in metro Detroit, where the San Francisco-based company is competing locally with similar service Uber.
The additional service has offered transportation options to riders — and business opportunities to drivers.
Lyft, which differentiates itself by adorning cars with giant pink mustaches and having drivers greet riders with fist bumps, won’t disclose the number of drivers or riders it’s had in its first three weeks in the Detroit area.
Uber also is vague, refusing to be more specific other than saying it has “hundreds” of drivers in metro Detroit.
Jay Beck, 63, is a recent retiree from a publishing company and one of the founding Lyft drivers in Detroit. Beck said he completes seven to 10 rides and makes $125 to $150 for a seven-hour shift.
Beck said many of his passengers are familiar with Lyft’s model because they’ve experienced Uber, and the only problem he has seen is demand for drivers exceeding the capacity of those working at times. He said he expects the number of drivers to grow, as demand increases.
Some drivers also are cashing in on both services.
A Lyft driver who picked up a Crain’s reporter at lunchtime this week said he also drives for competitor Uber. During the 2.3-mile ride, there were 10 active Uber drivers in the area. The driver said he carries two phones, including an iPhone provided by Uber.
The ride back on UberX from Midtown to the Eastern Market area was a 2.54-mile, 11:44 minute ride, costing $9.21.
The Lyft ride was “free” because the new service has been offering a two-week ride-free “pioneer” deal for rides less than $25.
Drivers, who use their own vehicles, apply through Lyft’s website and must pass thorough background checks. In Detroit, Lyft drivers range from a former professional soccer player to students and entrepreneurs, said Paige Thelen, public relations specialist at Lyft.
Lyft and Uber allow users to request rides via smartphone and then match them with nearby drivers using GPS on the phones. The apps send riders a photo of the drivers and approximate arrival time.
Riders and drivers rate each other after trips are completed, and if a rider receives too many low ratings he or she could be blacklisted.
Lyft was created to be a mobile application version of Zimride, a long-distance rideshare community that connects users at universities and companies through social media. Lyft sold Zimride to Enterprise Holdings Inc. last year, Thelen said.
In addition to arriving in mustachioed cars, Thelen said Lyft allows riders to choose the music they listen to and encourages conversation between drivers and passengers.
She said the company has thousands of drivers who operate in 28 cities across the country.
Instead of set fares, Thelen said, Detroit drivers are paid in donations. There are “suggested” rates based on $1.60 a mile and 20 cents a minute, but they are paid at the discretion of riders, who she said are not penalized for not leaving a donation. In other markets, Lyft has switched to a payment system with a required fare, she said.
In metro Detroit, Lyft’s coverage area includes all of Detroit, then extends west to Novi and Canton Township, north to Troy and south to Riverview. Thelen said those boundaries may be expanded.
“We’ve had a really positive response so far,” she said.
Similar to Lyft, Uber has a ride-hailing service called UberX. It also offers more expensive options that partner with local transportation service companies to provide professional drivers with sleek black cars called UberBlack and UberSUV.
Like Lyft, UberX drivers receive 80 percent of passengers’ fares.
Michael White, general manager for Uber in Detroit, said the option users choose depends on their style and budget, but customers tend to use UberX on a more regular basis, upgrading to UberBlack or UberSUV for special occasions.
UberX drivers must go through background checks, vehicle inspection and training before being approved, said White.
“Uber is really a means for people to make money with the assets they have,” he said.
That includes the professional chauffeurs at the local transportation service partners, who can use UberBlack or UberSUV to earn additional money during down times in their regular schedule, said White.
In Detroit, there are hundreds of companies that provide Uber with drivers, he said.
One of those companies is Dearborn-based K.A.R.S. Transportation Services LLC. Owner Rico Durrah said Uber has been a supplement to his wheelchair and executive transportation business for the past year. Durrah said he has three drivers who complete 20-30 trips a week for Uber users, many of whom are going to downtown Detroit bars and restaurants.
“It makes sense to work with Uber because I’m already in the transportation business and Uber puts me in touch with more clients,” he said.
White said transportation providers pay Uber a commission for connecting them with riders through the app. That commission varies by city and service option, but is usually around 20 percent of the fare, he said.
Uber, which operates in more than 70 cities worldwide, has experienced double-digit growth each month since it began service in Detroit last March, White said. The company may expand its service outside the metro area, he said.
Criticisms and some controversy
UberX and Lyft have not been without controversy. Ride-sharing services have been criticized over safety concerns and accused of skirting taxi regulations. Uber faces a wrongful-death lawsuit after a 6-year-old girl was hit and killed by an UberX driver in San Francisco.
In Detroit, the company was served with a “cease and desist” order by the city for failing to operate within its “vehicle for hire” statute in February. In order to comply, UberX drivers would have to be licensed to do business in Detroit, undergo vehicle inspections and background checks, as well as prove they are insured, said Melvin Butch Hollowell, Detroit’s corporation counsel.
Hollowell said Uber signed and returned the order, but continues to operate without having met with the city’s legal team about it. If Uber executives do not comply with city regulations, they could face civil fines and criminal penalties, he said.
Lyft drivers would be subject to the same city requirements, and lawyers from the company have met with city officials concerning those requirements, said Hollowell.
The companies represent a growing business model, “but we need to make sure they operate properly so the public is protected,” he said.
White said Uber will continue to operate in Detroit, and that he does not believe the company falls under current regulations because it is a technology company, not a transportation company.
A third option: Self-serve Zipcar
Competing with Lyft and Uber for the business of Detroiters in need of a ride is Cambridge, Mass.-basedZipcar Inc., which allows customers to use their smartphones to find, reserve and unlock its cars.
Zipcar has one to three vehicles parked at each of 14 locations in Detroit and one location by Detroit Metropolitan Airport, according to the company’s website. Prices to share one of those cars vary by the type, but cover gas, insurance and up to 180 miles per day.
To drive “Woodward,” a Ford Focus hatchback parked by the Wayne State University Medical School, it would cost $7.50 per hour or $69 a day to rent, according to Zipcar’s website.
Zipcar operates in 50 cities around the world — Detroit is the only Michigan city — and 100 universities in North America including Wayne State, the University of Michigan, Michigan State University andKettering University in Flint.