Cost ReductionStaffTechnology

How the Gig Economy is Impacting Restaurants

A gig economy is a labor market that consists of an abundance of freelance and independent contractor positions as opposed to permanent full-time jobs. It’s an economy in which temporary, short-term positions prevail. If a recent study by Intuit is accurate, by the year 2020, 40 percent of American workers will be independent contractors. It is driven, in part, by Millennial’s search for flexible, part-time employment that allows them to live a balanced life between work, play, and the life experiences that they seem to be particularly drawn to.

Companies that make up this burgeoning gig economy include drive-for-hire and food delivery businesses such as Uber, Lyft, and GrubHub—businesses that hold tempting positions for employees looking for a sense of freedom and the ability to make their own schedules. This freedom, of course, comes at a price which can be seen in the many lawsuits these types of companies are facing. Yes, you have independence as an independent contractor but, no, you do not get any benefits, minimum wage or overtime compensation and, when the unthinkable happens and you injure yourself on the job, there is no worker’s comp to pick up the tab.

Just how is this economy affecting restaurants?

In one respect, these types of businesses can take the strain off the number one cost that restaurants face—labor. Businesses that offer delivery services can make it easy to implement a restaurant’s “to-go” strategy without the need for additional staff.

On the other hand, the face of the restaurant workforce has changed dramatically. Teenagers—those who range from ages 16 to 19—once made up a significant percentage. Today, however, teenagers are choosing to sit on the sidelines, focus on their education, and delay the inevitable world of 9 to 5 or, as is the case in many a restaurant—the 3 to 10. In 2000, 45 percent of this age group held a job. That number has now dwindled to 30 percent.

This leaves Millennials as a restaurant’s number one labor source, leaving the industry in direct staff competition with businesses in the gig economy.

When you consider recent data from the restaurant research firm, TDn2K, that found last year’s restaurant turnover rate reached an all-time high of 133 percent, it becomes increasingly clear that restaurants are going to have to increase incentives. In addition, 2017 saw the average restaurant employee staying on the job for no more than one month and 26 days. Add to that the fact that unemployment is at a 17-year-low, and it becomes obvious why mega-franchises such as McDonald’s are expanding their tuition-reimbursement program.

How can restaurants adapt in order to retain their staff?

Besides incentives such as education, free meals, professional development and gift cards as rewards for a job well done, restaurants can consider what is drawing their staff to the gig economy-type jobs and implement these aspects to the best of their ability. This may include scheduling software that allows staff some leeway when setting up their work hours or a restaurant management software that streamlines team communication, setting up a workforce that actually works together to improve both their workplace and their personal lives.

As would be expected with this generation, it’s all about technology. The new gig economy has created a work environment in which schedules are created and a job is performed with little interaction between independent contractors and those who hire them. It’s freedom and anonymity all in one. What is it missing? The heart of the matter. Those of you who have worked in restaurants where the attitude is “one-for-all and all-for one” know the type of camaraderie that develops in a congealed staff. That is hard to top and difficult to create in the new gig economy workforce.

If you’ve found it difficult to create this type of culture, consider, once again, the gift of technology. Apps such as Tipzzy are designed to bring your workforce together through rewards and recognition for a job well-done as well as a creating a fun and friendly competitive atmosphere while real-time payment apps are allowing restaurants to pay staff on a daily basis.

You can compete and win in this present staff-challenged environment.


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