Who Owns the Curb? Cities + Businesses Vie for Space

Plenty to get to in this week’s roundup, including summaries of Prop 22’s win in California, ghost kitchens and their impact on real-life restaurants, plus who actually owns the curb? Is it cities, restaurants, or pedestrians? Depending on your answer, the future of the curb could look dramatically different. Senior RSG contributor John Ince breaks it all down for us below.

Uber, Lyft eager to take California labor win nationwide  [TheHill]

Sum and Substance: Uber and Lyft are celebrating a major ballot measure victory in California, and they’re looking to notch similar wins nationwide that could formalize labor classifications for gig workers.

Passage of Proposition 22 in California effectively exempts gig companies from a state law aimed at providing gig workers with the same kind of benefits for employees: minimum wage, health care and the right to organize.

Top executives at Uber and Lyft are signaling a desire to replicate those exemptions in other states.

“Going forward, you will see us more loudly advocate for new laws like Prop 22, which we believe strike the balance between preserving the flexibility that drivers value so much, while adding protections that all gig workers deserve,” Uber CEO Dara Khosrowshahi said during an investor call Thursday….

My Take:  Basically, it comes down to labor vs management.  In California, management won this round. But in states like Massachusetts and New York, it may be more difficult, no matter what Uber and Lyft want. Read more about our takeaways on Prop 22 here.

California votes to allow gig work. What this could mean for the future of work [NYTimes]

Sum and Substance: Two questions hung over millions of people who worked for Uber, Lyft and other app companies: Should it be legal and was it fair for them to be considered independent contractors rather than employees?

This week, Californians said yes.

Voters in the state overwhelmingly approved a ballot proposal, Proposition 22, that enshrines so-called gig work into law. The measure overrides a 2019 state law and a 2018 State Supreme Court ruling that would have forced the companies to treat workers in California as employees with wage guarantees and other benefits.

My colleague Kate Conger spoke with me about why this California measure is relevant for all Americans’ jobs, and why the app companies are likely to pursue a federal law establishing contract work nationwide.

My Take:  California was one thing.  National… well, let’s see how this plays out.  Biden is no fan of Prop 22.  The progressive wing of the national party is no fan either.  So let’s see. In this article two tech journalists go at it.  Interesting read.

The gig economy is here to stay. Now let’s humanise it [TheGuardian]

Sum and Substance: Delivery drivers need a new ‘social contract’ that guards them against the risks of our age. … The companies had spent $200m on a campaign to preserve their exemption and it worked: voters approved the proposition by 58% to 42%. It was, said the Los Angeles Times, “one of the most closely watched ballot measure contests in the country and the costliest in state history”.

Now, $200m is peanuts to these money-burning enterprises, but it was peanuts well spent from their point of view. Having to shoulder the responsibilities of “real” employers would grievously undermine their business models and therefore the prospects of big eventual payouts for their investors.…

What the pandemic has brought home to us is the extent to which our economies – and our industries – were being reshaped by technology and economic ideology. Evidence of this reshaping has been available for years to those who were disposed, or professionally obliged, to pay attention to it. But now it’s inescapable. And the question is: will we use the lessons we’ve learned from the pandemic to reshape our world? In particular, how can we adapt our laws and institutions to exploit the benefits of new industries while reducing their downsides?

My Take:  This is a big picture story, and we need someone to figure out just how these so-called “gig workers” are going to make due.  We thought we had an answer in AB5 in California.  The companies thought otherwise and placed a $200 million bet down.  They won.  Now what? The answer will unfold in the coming months and years.  It’s not going to be pretty for many.

Food delivery apps are a lifeline for restaurants during the pandemic, but at a high cost  [Berkeleyside]

Sum and Substance:  Third-party apps like DoorDash expand restaurants’ geographic reach and customer base, but service fees cut too deeply into their bottom line, say some East Bay businesses….

Sean Hagler with a to-go order at Smoke Berkeley. Hagler has signed on with three food delivery apps, Grubhub, DoorDash and Uber Eats. Hagler says that while it does keep his kitchen busy, Smoke has to pay each service 20% of each order made through the respective service.

Pre-pandemic, Smoke had been doing around $1,200 a week in sales via third-party delivery apps, paying around $400 in commission, and netting around $800 for the business. Roughly the equivalent of an extra Monday’s worth of business. “We weren’t focused on [apps] saving our business, just looking to enhance our existing one,” said Hagler.

But since the coming of coronavirus, orders coming from third-party delivery apps have gone from a modest 15% at Smoke to nearly 80%. The jump has been jarring for the business.

My Take:  If you’ve ever wondered what the economics are in the food delivery business, read this article.  I don’t know how things will work out after the pandemic, but right now it’s causing a bit of angst amongs restaurants – do I or don’t I.  You don’t have a choice.  You have to use them.

Ghost Kitchens Are the Wave of the Future. But Is That a Good Thing?  [Eater]

Sum and Substance:  Delivery-only restaurants, which have proliferated during the pandemic, could change the way the industry does business for years to come

Sunset Squares Pizza has fewer than 1,000 followers on Instagram. Delivery in its neighborhood — San Francisco’s Sunset district — costs $5, while those farther afield in the city pay $10…

Virtual brands, ghost kitchens, delivery-only concepts — whatever you call them — have thrived during COVID-19. Euromonitor, a market research firm, recently estimated that they could be a $1 trillion business by 2030. That’s happening concurrently with near-impossible working conditions for many brick-and-mortar restaurants. Stores in cities that once did a brisk lunch business saw sales fall off a cliff. To mitigate losses, some restaurants are throwing everything they have at virtual expansion, creating entirely new brands that live online.

My Take:  Part of the trend came from the pandemic.  But part also was just general eating habits.  People like to order food and eat in their own living room.  They don’t like to fix food at home all the time.  Voila – a whole new industry – ghost kitchens.  Travis Kalanick is once again laughing all the way to the bank.

Lyft (LYFT) and Uber (UBER) Upside Appears Limited [Investopedia]

Sum and Substance: Lyft, Inc. (LYFT) added another 5% to a torrid two-week advance overnight after beating third quarter 2020 earnings estimates by $0.01, posting a loss of $0.89 per share. Revenue decreased a staggering 47.7% year over year to $499.7 million, beating $489.3 million consensus. Active riders fell 44% year over year, while revenue per rider contracted 7%. Even so, active riders increased by 44% compared to the second quarter….

Lyft stock has rallied more than 40% since California voters approved Proposition 22, allowing ride-share drivers to continue working as independent contractors and not employees. Rival Uber has booked a smaller gain over the same period but holds a much stronger technical position, lifting to an all-time high on Monday. In contrast, Lyft just reached the halfway point of a steep decline that ended at an all-time low in the teens in March….

My Take:  A 40% gain in a little over two weeks.  Does anybody remember this company’s earnings before AB5?  They were losing tons of money and still are.  I don’t get it. The stock market seems disconnected from reality.

Read more about Lyft’s quarterly earnings here and Uber’s quarterly earnings here.

The first Tesla taxi in NYC just hit the streets as the city’s only electric yellow cab. The plan is for hundreds more to join it.  [BusinessInsider]

Sum and Substance:  One year after New York approved the Tesla Model 3 to enter its fleet of yellow cabs, the first one has hit the streets.

A Model 3 with medallion number 8P86 — the only electric taxicab in the city, according to public records — just finished its first full weekend of service, completing more than 100 trips over the two-day period. The electric vehicle is owned by Drive Sally, which operates a fleet of more than 1,000 cars that it leases out to cabbies and drivers for ride-hailing platforms in New York and Chicago.

Editor’s Note:  This is an interesting story about NYC’s taxi cab industry getting more innovative by introducing new, fuel efficient cars to their fleet – like this Tesla Model 3. There are some kinks to work out, but one of the biggest benefits is no gasoline costs. Would you switch to an all electric vehicle?

Read more about the best electric vehicles for rideshare drivers.

As businesses adjust to Covid-19, a new take on an old question: Who owns the sidewalks?  [TheCounter]

Sum and Substance:  U.S. cities have kicked their businesses to the curb, transforming everyday walkways into hot real estate. That’s raising new concerns about the rapid commercialization of public space.

Editor’s Note:  Great article not only summarizing the recent conference called Curbivore, but also why curbs are so important to cities, people, and businesses. It’s a really interesting discussion: who owns the curb? Who pays to maintain the curb? And who does the curb serve?

Let us know what you think – is your city using the curb more for business and take out? Are your city’s curbs walkable and accessible, or are they littered with scooters?

-John @ RSG