Are Gig Economy Platforms a Solution for Restaurant Labor Shortages?

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on Oct 22, 2019 12:05:21 PM
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Finding qualified cooks and chefs in the restaurant industry has long been a challenge. Now, due to America’s present low unemployment rate (currently at 3.8 percent) and the growing number of restaurants, that labor shortage has reached the front and back of the house and even the management pool.

Forbes reported that Joe Pawlak, managing principal for Technomic, stated that job openings in restaurants are up 40 percent in the last two years. The average tenure of a restaurant employee, according to 7shifts, is 1 month and 26 days.  

At the same time, in 2019, 19 states across the country have or will raise the minimum wage.

A storm is brewing in the restaurant industry and the life raft many are turning to is temporary staffing agencies and gig economy platforms.

First, let’s define the difference.

A gig worker is technically a freelancer who finds jobs through a gig platform. They do not, however, decide their rate or market their wares. A job pops up on the app, the employee accepts, and the deal is done. This process allows for quick fill-ins when a business is suddenly short-staffed.

Whereas gig workers are usually scheduled through an app, temporary workers usually come through a staffing agency. Some believe that, because recruiters are involved in this process, candidates tend to be better suited. In this arrangement, employers are also more involved with the decision-making process.

The Benefits of Using a Gig Platform for Restaurant Staffing Solutions

Unfortunately, many restaurants are facing staff shortages on a daily basis. Their options are asking current staff and managers to perform double duty while dealing with disappointed guests or turning to gig platforms that can fill their staffing needs quickly.

Many in the industry swear by this alternative, reporting that the increased wages are worth the ability to fill positions on short notice and that, for the most part, the staff provided are capable and professional. Other’s report issues in this area.

The Pitfalls of Using a Gig Platform for Restaurant Staffing Solutions

One complaint from restaurateurs is the level of skilled labor, or lack thereof, that comes from this type of employment. The marketplace is crowded with low-skilled people that do not have strong motivations to perform optimally, particularly if this is a one-shot fill in that is not expected to lead to further employment. Others in the industry wonder if these types of platforms will end up exacerbating the labor shortage.

In September of 2019, the New York Times reported on Mr. Mortenson, a cook that turned to a full-time member of the gig economy after working 50 hours a week for low pay as a cook. He has worked in 70 kitchens in the New York area and turns off his app notifications at night so that he can sleep. Ten jobs often show up at the same time.

Let’s take a look at the top apps in the industry that are vying for the lion’s share.

Instawork

In 2018, Eater reported the launching of Instawork’s gig economy platform for restaurant workers. Employers are able to post shifts that need filling, up to 24 hours in advance. The platform matches the request with one of their workers in the system, handling the paperwork as well as the payroll. For this service, employees pay anywhere from $18 an hour for a dishwasher or a host, and around $25 for a line cook or bartender.

According to Chris McKenna, Director of Guest Services at Hornblower Cruises, he is able to “fill positions fast, and the professionals who walk through the door are reliable, accountable and very qualified.”

Instawork recently expanded to Chicago and is available in eight additional U.S. markets including the Bay Area, Boston, Las Vegas, Los Angeles, San Diego, and Greater Phoenix.

Pared

Pared is also an app that supplies restaurants with needed employees; and employees with higher than average wages and changeable shifts in various venues. According to Jae Lee, Executive Chef at Rice & Gold and property chef at Hotel 50 Bowery, the use of Pared has relieved staff burnout as well as saving the establishment hours of overtime. This is particularly valuable during the holiday season from the months of November to December when, according to Pared’s internal data, catering bookings can increase by 150 percent.

What started as a Bay Area-based program has expanded to New York with the intention of reaching Philadelphia and Washington, D.C. by the end of 2019. By 2020, their goal is to be in place in all the major U.S. metropolitan markets.

As is usually the case, venture capitalists have spotted a knight on a white horse. Pared has raised $13 million in venture capital, while Instawork has raised $28 million.

Only time will tell if this expanding solution for labor shortages will be a blessing or a curse.

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Topics: labor costs, Staff, Employee Hiring

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