Pared, an on-demand hiring platform for restaurant workers, has raised a $10 million financing round led by CRV, TechCrunch reported last week. The platform aims to help restaurants fill last-minute staff shortages, particularly in back-of-house roles like line cooks and dishwashers, but could conceivably be used for waitstaff and other front-of-house positions as well:
Restaurants go to the app and say they are looking for what the app calls a ‘Pro’ in whatever role they need, and are able to book the employee right away for the slot they have in their schedule. It might come at a slight premium over the typical hire, but restaurants are already willing to pay overtime in order to cover those gaps and keep things moving smoothly, [co-founder Dave] Lu said.
For employees, it’s a pretty similar experience — they see a job posted on the app, with a time slot, and they make themselves available for an hourly wage. The second benefit, Lu said, is that they can start to slowly make a name for themselves if they are able to prove out their skills and move up the ranks at any of those restaurants. The culinary community is a small one, he said, and it offers a lot of room to start building up a reputation as an exceptional chef or just finally get a first shot at a sauté position in the kitchen after working at the back of the house. That, too, might be part of the appeal of jumping on a service like Pared rather than just driving for Uber.
Pared is part of a growing ecosystem of platforms offering an “Uberized” approach to hiring hourly workers in various roles. By catering exclusively to restaurants and promising to help chefs build their personal brands, Pared is looking to build its own reputation as a reliable place to find quality kitchen talent on short notice.
These new platforms are emerging in retail and food service to address these industries’ unique staffing and scheduling challenges: Customer traffic is variable, but employees’ availability may not be. To address this mismatch, technological solutions are being built to help connect businesses in need of shift workers on short notice with employees willing to take those shifts, on the employees’ terms. For instance, Legion, another startup that raised $10.5 million in first-round funding last year, is using big data to better predict customer traffic and schedule the right amount of staff in advance.
When the US Department of Labor proposed a new rule in December concerning the treatment of tips under the Fair Labor Standards Act, the proposal drew fire from critics who said it effectively permitted employers such as restaurants to withhold their employees tips. The regulation, which would only apply to employers who pay a full minimum wage and do not take a tip credit, would allow these employers to require that tips be pooled and shared with back-of-house staff who do not traditionally receive direct tips, such as restaurant cooks and dishwashers—a practice banned by the Obama administration.
A stipulation in the regulation that managers could use pooled tip money to make structural improvements, like expanding the dining area, or to lower menu prices, led employee advocates to argue that it would result in many tips not accruing to employees at all. The Labor Department publicly contended that these fears were baseless, but last month, an internal analysis of the proposal’s impact came to light, showing that employees could indeed lose out on billions of dollars in tips. Senior officials in the department shelved the analysis and ordered staff to revise their methodology to produce a more favorable result. The revelation cast doubt on the future of the rule and led to calls from members of Congress to discard it and warnings from state attorneys general that the department may have broken the law in rolling out the proposal.
The rule is still pending, but now, if it does come into effect, it will do so with its critics’ main objection addressed.
Last week, the board of elections in Washington, DC, approved a ballot measure for the upcoming primary election on June 19 that will ask voters whether to raise the minimum wage for tipped employees in the restaurant industry from its current rate of $3.33 per hour to match the capital city’s minimum wage for all other workers by 2026. Advocates of the measure are framing it as a way of protecting low-income workers, especially women, from harassment and abuse, the Washington Post reported:
[C]ritics of the split-wage system say some workers face intimidation and retaliation when they tell their bosses that tips came up short. They say low-income workers in the restaurant industry deserve the same predictable income as other employees. …
“In this Me Too moment, in this Time’s Up moment, we have to stand up for women and empower women and really call this two-tier wage system for what it is: a source of sexual harassment,” said Diana Ramirez, director of the Restaurant Opportunities Center D.C., which is sponsoring the ballot initiative.
“If you know that you are getting a base wage from the employer, and a customer is acting inappropriately with you, you don’t have to put up with that behavior anymore to make a good tip,” she said.
Restaurant owners and some workers who earn much more than the minimum wage on the basis of tips oppose the measure, saying it will eat into restaurants’ already thin profit margins and force them to raise prices, cut jobs, and perhaps abandon tips altogether in favor of a flat hourly wage.
Restaurateur Danny Meyer, the founder of Shake Shack and CEO of the Union Square Hospitality Group, is already famous for his employee-centered approach to restaurant management: By eliminating tipping in favor of higher wages and offering restaurant staff benefits like paid parental leave, he has broken the mold in an industry typically associated with high turnover, unpredictable incomes, and little in the way of job security or growth opportunities.
Meyer’s vision, which Aaron Hurst explored in an in-depth profile at Fast Company last week, is much bigger than simply abolishing tips. He’s looking to fundamentally transform the culture of his businesses, in large part by giving employees both a literal stake in the success of the restaurant and a greater sense of ownership toward the business and their careers:
When I asked Meyer how the change has turned out, he says when you make such a sweeping move across your business you have to make sure everyone is listened to, including your customers and your staff, “Our first priority was engaging and educating our own team in this conversation through a series of internal townhalls, so that they could be genuine ambassadors of the change. We started the conversation about “Hospitality Included” with our own people months before we made the news public or implemented it in any of our restaurants.” …
How do you persuade your waiters to forgo a 20% tip on each table they serve? Meyer says they never wanted to hire people who would only have been nice to you if they assessed it out of the four tables in their section, you were the richest or you were the most generous. “I would never want someone on our team who would go through that calculus. To say, “Who should I bring the food out for first?”
Now, the Wall Street Journal reported on Sunday, Meyer is taking his campaign to change beyond his own restaurants and even beyond the restaurant industry, launching a $220 million private equity fund called Enlightened Hospitality Investments LP to back companies that share his values of pursuing growth by taking the best possible care of their employees. Restaurant industry observers say the fund will likely get favorable terms on many of its investments because businesses want to be associated with Meyer’s brand.
McDonald’s announced this week that the company and its franchises would hire about 250,000 employees across the US this summer, which is usually the busiest season for the fast food restaurant chain, the Chicago Tribune reports. This year, however, the chain is introducing a new twist on the hiring process and will be accepting short video applications through the social media platform Snapchat:
The chain started accepting “Snaplications” in Australia last month, allowing potential employees to make video submissions with a special filter that shows them wearing a McDonald’s uniform. The video audition can then be submitted to McDonald’s Snapchat account. After that, McDonald’s will send back a link to the application and digital careers page. …
McDonald’s said allowing applications through Snapchat will aid hiring efforts because many of its applicants are between the ages of 16 and 24. It will direct marketing about the application process to select Snapchat users nationwide starting Tuesday. The company also is using other platforms like Spotify and Hulu to reach potential job seekers.
Using Snapchat to target a younger pool of candidates makes sense, as the platform’s user base is overwhelmingly in McDonald’s target age range. According to Hootsuite, 37 percent of Snapchat users are 18 to 24 years old, 60 percent of its users are under 25, and 23 percent have not graduated high school.
Wendy’s, which began installing self-service ordering kiosks at its restaurants last year, plans to add them to over 1,000 stores this year, the Los Angeles Times’ Shan Li reported this week:
At Wendy’s, Chief Information Officer David Trimm said that customers and franchisees have taken a liking to the kiosks. “You will see customers deliberately going to those kiosks directly, bypassing lines,” Trimm said during the company’s investor day Feb. 16. “Some customers clearly prefer to use the kiosks.”
There’s “a huge amount” of demand among franchisees, who will shell out about $15,000 for three kiosks, Trimm said. Wendy’s has estimated that the cost will be recouped in less than two years, he said.
Automated ordering is also a way to help cut labor costs in the face of rising minimum wages throughout the US, ostensibly supporting the argument often made by critics of the minimum wage that these hikes merely encourage employers to automate low-wage roles:
In the long term, many chains are looking toward kiosks as a way to reduce their employee headcount, especially as wages rise. … For Wendy’s, kiosks are part of an overall move into automation that could cut labor costs, said Robert Wright, chief operations officer. He called 2016 a “tough” year, with wages rising 5% compared with 2015.
Yet Greg Miller at Wall Street Daily argues that focusing on minimum wage increases as the cause of this trend is misguided—these jobs are getting automated regardless:
Toni Genes / Shutterstock.com
In response to years of pressure from labor unions and other activists, a growing number of US cities and states have embraced a $15 per hour minimum wage, and some large employers have followed suit, imposing internal wage floors to show that they share the public’s concern over income inequality and the financial hardships of low-income Americans. Critics of minimum wage hikes have long maintained that they destroy jobs in low-skill fields like retail and food service, especially at a time when employers have the option of automating many of the roles traditionally filled by unskilled employees.
Customer service robots are already appearing on the floors of large retail establishments, but restaurants have proven more resistant to automation, even in the face of rising labor costs. Reuters‘ Lisa Baertlein and Peter Henderson explore some new research showing that minimum wage hikes haven’t displaced many restaurant workers after all:
In spite of improvements in technology, minimum wage hikes between 2000 and 2008 caused little immediate displacement of workers by technology, especially in kitchens, according to a study by economists at the Federal Reserve Bank of Chicago and DePaul University. There were slightly more workers per restaurant in 2015 than in 2001, according to data compiled for Reuters by the National Restaurant Association, which opposes minimum wage hikes. And the U.S. Bureau of Labor Statistics has projected leisure industry jobs, a broad category that includes restaurants, will grow at 0.6 percent annually, keeping pace with the national average through 2024.
Why isn’t automation happening as quickly in this sector as it is in so many others? Quite simply, robots aren’t very good at this kind of work, at least not yet: