What is The Gig Economy And How Can Its Success Help Restaurants?

By: Jessica Reimer

8 Minute Read

Nov 06, 2018

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what is the gig economy

You know it, I know it, and pretty much anyone with experience in the foodservice industry knows it: restaurant staffing can be a serious struggle.

It seems like no matter which way you slice it, an obstacle awaits. A shrinking labor pool makes it hard to source quality talent, and sky-high turnover rates suggest the staff you do find aren’t likely to stick around for long. All things considered, it’s no surprise restaurateurs consistently cite employee recruitment and retention as their top operational challenge.

However, a new labor market is redefining the way we find quality candidates: the gig economy. When it comes to staffing, the gig economy offers a revamped, innovative approach to the old tired way we approach employment and business operations.

Chances are, you’ve either heard the gig economy sprinkled in conversation or seen it slapped across news headlines. The term "gig economy" has generated a lot of buzz since it was first coined at the height of the Great Recession back in 2009; so much, in fact, that the Financial Times named it one of 2015’s defining words.

Whether from want or need, more and more workers are choosing to dip their toes into gig work, giving the “be your own boss” thing a try. So when it comes to the world of restaurant staffing, is the gig employment model a friend or a foe?

What is The Gig Economy?

The gig economy offers job seekers a departure from the drudge of the traditional 9-to-5 setup.

Gig workers set their own schedules and deliver on-demand services for businesses via short-term contracts; these workers are neither full-time nor part-time employees, but rather independent contractors.

A business that runs on a gig model will hire candidates to perform one specific function – like driving a car, hosting guests overnight, or delivering food. However, the exact manner that candidate does the job in question is up to the gig worker.

The gig economy refers to the market created by businesses running on gig employment models, including big names like Uber (and UberEATs), Lyft, Postmates, Etsy, and AirBnB. You may also hear it referred to by another name; the collaborative economy, sharing economy, and “Uberization” are all generally accepted synonyms.

The biggest and most popular gig economy player today is Uber, an app-based platform that has expanded its horizons beyond ride-sharing to include food delivery, freight hauling, and even on-demand aviation. Uber single-handedly turned the transportation industry on its head and we’ve seen the same from other businesses in the retail, hotel, and even child care spaces. But what about restaurants?

To learn more about what qualifies an individual as an independent contractor, click here to read the IRS' guidelines.

Restaurants And The Gig Economy

There are three key stakeholders in the gig model:

  • The employer
  • The worker
  • The “middle man,” a person or platform that bridges the two

As a restaurateur, you’re probably most interested in the gig model's benefits and challenges for employers, wondering whether it could be a fit for your business.

The Benefits Of Switching To A Gig Model

1. It's Cost Effective

Because a gig worker is not technically an employee, you as the employer are not responsible for their pension, benefits, or for providing them with a salary (most gig workers are paid an hourly rate). And given the 73% annual turnover rate can cost restaurants hundreds of thousands of dollars each year, reducing those costs even slightly can have a big impact on your bottom line.

2. It's Flexible

Operating a business that runs on a gig employment model allows you to bring someone in when (and only when) you need them. For example, you may not have enough need to justify adding a full-time graphic designer on your team, but when the time comes to give your menus a visual refresh, it’s nice to know that you can hire an experienced, talented professional for the project using a freelance, gig work site like UpWork or Freelancer.

The Challenges Of Switching to A Gig Model

1. Lack of Control

One of the hallmarks of hiring independent contractors is that you, the employer, give up a lot of control when it comes to management. For example, you the employer are legally required to let the contractor set their own schedule, use whatever tools they deem necessary, and generally stay away from giving any unsolicited guidance or direction as to how to get the job done.

The hands-off approach the gig model requires isn't a fit for roles that require a lot of management or training, but it is great for roles that perform a universal function, like washing dishes, bussing tables, or bar-backing.

2. Employee Indifference

Because gig workers have no real stake in the company they're contracting with, loyalty can be hard to breed. Businesses who run on a gig employment model run the risk building a list of on-call contacts who, while available, may not feel the same sense of loyalty or commitment to a business as a paid staff member. As a result, they may churn quicker than the average restaurant employee or not feel as motivated when working.

How Restaurants Can Build On The Success of The Gig Model

Even if the foodservice industry isn’t evolving at the same pace as other arms of the hospitality sector, there is no denying that our expectations of and interactions with food have changed.

Automation and convenience are of the utmost importance to today’s consumer, and although restaurateurs have shown a willingness to invest in technologies that will serve these values – things like restaurant scheduling software, self-serve kiosks, and POS systems – it’s worth considering how embracing elements of the gig model can alleviate some of your restaurant staffing pressures, too.

Before we dig in, a disclaimer: I am not suggesting your restaurant business model requires a full “Uberization.” However, considering the benefits and challenges addressed above, here are a few key takeaways for restaurateurs when it comes to staffing in the age of the gig economy.

1. Embrace (and promote) flexibility

Gig workers value the ability to dictate when and where they work.

In traditional shift-work industries like restaurants and retail where employers need to juggle and satisfy a wide number of employee availabilities, someone invariably will draw the short straw and the manager will be left with a disgruntled employee and an empty spot on a shift.

Leverage the "pick your own schedule" model gig workers love by adding a set of open shifts. With 7shifts, any workers you add to the system (scheduled or not) will be alerted to new schedules and given the option to pick up and trade shifts according to their availability.

Besides gig workers, we also know that millennials and Gen Zers (who collectively comprise the large majority of the hospitality workforce) prefer work arrangements that offer flexibility as well as autonomy and opportunity.

2. Listen To Your Employees

One of the reasons the gig economy has been so successful is that it satisfies consumer preference for products that are on-demand, convenient and easy to use, in the words of Toast CEO Chris Comparato.

What can you be doing to better incorporate these principles into your restaurant's operations? To start, invest in an employee scheduling solution that has a mobile app. This will allow your employees to pick up, drop, and switch shifts while they're on the go (which they usually are). Consider adopting additional apps to make your employees' lives easier, like a calendar app that keeps them up to date on your restaurants' upcoming events and promotions or a payroll app that allows them to track their earnings and auto-deposit into a bank account. See all Toast partners.

3. Hire short-term help

Even if you have a huge roster of full-time staff members, chances are that there will be times when a bit of extra help will come in handy.

Sites like Fiverr, TaskRabbit, and Hyr are great places to find short-term help. You can choose when, where, how long, and how much, for everything from menu item description copy to Instagram campaigns, inventory counts, and delivery drivers.

Say your restaurant has been booked for a huge event in a month and you'll need some support. You can use one of the above sites to find an event coordinator, a DJ, additional bussers, or additional bartenders to help the event go off without a hitch.

Switch Up Your Staffing Model

While the restaurant industry may be one of the oldest in the world, it's been able to survive for as long as it has by constantly innovating. Who would have thought we'd see a day where businesses have gone cashless and orders are placed on screens?

If you're finding your restaurant is having a hard time satisfying employees, try learning from industries and markets that have it figured out, like those that make up the gig economy.

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