According to the San Francisco Examiner, the city's largest yellow cab company will soon file Chapter 11, with multiple sources telling the paper that rising competition from app-based ride-hailing services like Uber and Lyft was among the reasons for the company's financial collapse. It appears to be the first bankruptcy of a major cab company in the post-Uber era.
In a letter sent to shareholders, the cab company's president said they would have to file for bankruptcy in order to survive. "We are in a midst of serious financial setbacks," Yellow Cab Co-op president Pamela Martinez wrote in a letter obtained by the Examiner.
"We're in the midst of serious financial setbacks."
Some of these financial setbacks "are due to business challenges beyond our control and others are of our own making," she wrote. "Today we are faced with fiscal obligations that far exceed expected income."
The rise of Uber and Lyft has left cab owners across the country feeling the pinch. Drivers are flocking to the app-based enterprises, lured by the promise of more riders and a flexible schedule. Fleet owners have declared bankruptcy.
The value of a New York City taxi medallion, the metal plaque affixed to the hood of yellow cabs that allows drivers to pick up street hails, has dropped by over 40 percent in the last five years. Credit unions and lenders to the medallion industry have gone out of business. And one public company that specializes in medallion lending has seen its stock plummet.
But despite the steady drumbeat of negative stories about the traditional taxi industry, some insiders feel that Uber's rapid growth will dilute drivers' earnings, and lead to an inevitable reverse-exodus back to yellow cabs.
The Co-op, which got its start in 1977 out of the bankruptcy of its owner, is the largest cab company in San Francisco, with about 530 medallions. San Francisco is also where both Uber and Lyft are headquartered. Nothing subtle about this symbolism.