Scooters: Annoying or Reassuring?

Charles Crumpley
Editor and Publisher of the San Fernando Valley Business Journal

At least some folks are annoyed that electric scooters are invading the San Fernando Valley. I’m not. I’m heartened to see them.

OK, so maybe I’m a little annoyed. But for the most part, I’m pleased and even a bit reassured to see them. Why? Because it’s a sign that the area has grown up.

For electric scooters to work, as a business, they need to be in bustling zones. Residential areas are not attractive to them. They need to be where there’s traffic and workplaces as well as some residences.

The Valley has the reputation, still, as a bedroom community. Those of us who live or work in the Valley know different. So, it’s reassuring to see that scooter companies acknowledge that there’s enough economic vibrancy in the area to warrant scooters.

It’s kind of like years ago when a neighborhood got a McDonald’s. Forget any execrable effects of the fast-food eatery: a neighborhood that scored a McDonald’s automatically got bragging rights. After all, it meant the neighborhood was big enough and important enough to deserve attention from America’s biggest restaurant chain.

What’s particularly interesting is that a few Lime scooters have popped up even in the Warner Center area, as the article in the last issue of the San Fernando Valley Business Journal pointed out. You expect scooters in North Hollywood, downtown Glendale and similar active spots, but Woodland Hills is a bit of a surprise.

To get a sense of it, consider the economics of the scooter business. According to an article last year in The Information and a follow-on piece in Crunchbase News, the biggest scooter company, Bird, based in Santa Monica (Full disclosure: my oldest son works there.), averaged $3.65 a ride last year. Each scooter got five or six rides a day, implying each one grossed roughly $20 a day. After deducting operating costs such as overnight recharging (47 percent of revenue), repair (14 percent), credit card processing (11 percent), regulatory costs (5 percent) and customer support and insurance (3 percent), what’s left is an operating profit margin of 19 percent. That’s pretty low, considering the overhead costs – such as my son in the central office – must be paid from the operating profit with enough left over for a net profit. The article didn’t say it, but it’s hard to see a net profit based on those numbers.

This all means companies really need to put their scooters in places with lots of foot traffic, such as people going from train stop to work and back and workers going to restaurants at lunch.

They need at least six rides a day for each scooter, hopefully more.

Said the Crunchbase article: “The number of rides per day matters for Bird and other scooter companies. If they can generate more revenue per day per scooter by increasing utilization, their model makes more sense.”

It’s reassuring to see at least one scooter company even believes the Warner Center area is active enough to support their business model.

And yes, I too am a little annoyed that suddenly we must be on the lookout for scooters zipping by. On the other hand, it means scooter riders are not in their cars, adding to traffic congestion.

City Councilman David Ryu, speaking at a Valley Industry and Commerce Association event at Vitello’s Restaurant on April 2, put it this way: “When you see a millennial riding on a scooter, what’s he not driving?”

 

 

 

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