NEW YORK (Reuters) - Ride-sharing service Lyft Inc will give its most loyal members free restaurant delivery from Grubhub Inc beginning Tuesday, a partnership that could hit their shared rival Uber Technologies Inc.
The agreement may steer Lyft customers away from Uber Eats while driving more restaurant orders to Grubhub+, which provides free food delivery for its paying members.
Lyft’s VP of marketing, Heather Freeland, said in an interview that the partnership was “not about going head to head” with Uber, but simply intended to offer more benefits to Lyft Pink members who had asked for food delivery perks in a survey the company conducted.
“We haven’t discussed a deeper partnership at this point,” she said of Grubhub.
The deal comes as restaurant delivery has soared during the coronavirus pandemic and as competitors Uber, DoorDash and Postmates vie for market share.
However, ride services have plunged as the pandemic kept people home. While demand has recovered from rock bottom in April, rides remain down more than 50% from last year, Lyft said in August.
Larger rival Uber launched its food delivery business in 2016. Though the unit continues to lose money, revenue doubled in the second quarter of 2020 while ride demand plummeted.
Freeland said that in the last month, Lyft has seen “consistent recovery” of its core ride-sharing business as well as increasing interest in bicycle and scooter use.
Lyft executives throughout 2019 emphasized that they were not interested in food delivery but remained focused on transportation alone.
Chief Executive Logan Green in an August earnings call said Lyft was not working on a consumer-facing delivery service.
Neither Lyft nor Grubhub would disclose how many members they had in their loyalty programs. Grubhub, which owns Seamless in New York, is set to be acquired by Europe’s Just Eat Takeaway.com NV.
Reporting by Hilary Russ; Editing by David Gregorio
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