Back of House Staff | April 12, 2021, 05:42 PM CDT
Welcome to BOH Banter, an interview series designed to introduce our audience of independent restaurant operators to the Verified Vendors on our Solutions marketplace. Have suggestions for who we should interview next? Pitch us: firstname.lastname@example.org!
If you're a restaurant operator, you know that no-shows and turnover are a huge issue, and one that's hard to avoid. But the numbers may still surprise you. The average employment in the food and beverage space lasts just one month, says SnapShyft CEO Thor Wood, and last year turnover cost the average restaurant $146,000.
Does it have to be that way? No, SnapShyft posits. Gone are the days lackluster temp help and deficient HR. SnapShyft takes care of background checks and vetting to help the industry get labor and fill shifts quickly. Meanwhile the platform makes the workplace more accommodating to employees, ensuring they get shifts that are good fits.
Back of House spoke with Wood about SnapShyft's impact on workers, how SnapShyft works to reduce friction between workers and employers, and how the platform fills a previously wide-open hole in the industry.
This interview has been lightly edited and condensed.
Back of House: Let’s start with the basics — who you are and what you do.
Thor Wood, SnapShyft: My name is Thor Wood. I'm the founder and CEO of SnapShyft. We built a labor marketplace, specifically for the hospitality industry — bars and restaurants, hotels, hotels, catering, anything that touches food and beverage — and at its core, it's staffing as a service, predominantly [with] the mobile app, but we have a desktop platform as well. The whole idea is to eliminate the friction.
Labor has been a crux of this industry since I first entered it 23 years ago. Nothing's changed. The idea was: Let's get rid of the friction. Let's try and see if we can influence the elimination of bias and discrimination. There's inherent bias in almost every interaction that we all have in society, so how do we mitigate that and make it a more equitable environment for everybody? The idea was to cut down on the problems that we saw. It takes a month to replace any employee, and that's the average in the industry, but then there's a cost associated with that. It's approaching $6,000 as far as total cost for turnover and replacement. We believe that we can cut that in half, if not altogether.
To paint that picture a little bit more, the average employment in this space is one month, 26 days, and that was pre-COVID. I'm sure anybody that's actively trying to hire is seeing that it's two, three, four times as hard to get people to even show up to the interview. That's a part of that friction. Get rid of that old-school mentality, let somebody else who's got a background in the HR executive recruiting model screen and and qualify people to allow them to have access to the platform and hold them accountable. That's the X-factor in this business — employees don't show up, and it's the business that hurts. Employees are on to the next restaurant or bar. No one's holding you accountable, but we are. We don't tolerate such behavior. That's part of our terms — the workers are gaining access to freedom.
Typically it's higher pay, because they fill in on-demand roles, but also they're getting paid by us near instantly, so they're going home with actual cash in their bank account. They're not having to collect, and we can even process tips that way. But they also have access to benefits like paid time off, retirement, 401k, health insurance, dental, telemedicine discounts, and banking, through our partnerships. They can get access to things that most Americans, I wouldn't say take for granted, but benefits seem to be par for the course everywhere except for this industry.
BOH: Back up for a second. Tell us how SnapShyft came to be.
TW: We started diving in and really looking at market validation and commercial viability back in the summer of 2016. We wanted to make sure, okay, we recall things as we experienced them, but let's get out there and interview. So we did 115 interviews with prospective customers over a three, four month period to really get a sense for what they're doing now, what's working, what's not, kind of paint a picture of: What if you had access to certain tools?
That was enough for us to say, “Let's start building this thing.” We entered into a tech startup competition with a pitch deck, and we beat out 14 other companies — which have gone on to raise millions; some of these companies are legitimate enterprises now, and we beat them. That was that icing on the cake that this is legitimate. Not only does the industry indicate that they need us, the general population of investors are wanting to back us on this. So we started building, and it took about a year to build the technology and test it and get it out into the real world. It officially launched in central Indiana and Indianapolis predominantly in January of 2018.
BOH: From the operator's perspective, what would they be engaging with the most with SnapShyft? Is it an app? Is it a dashboard?
TW: Ideally, it's the app because we want to provide communications, notifications, and alerts throughout the process. We don't expect them to be staring at the app or being on a dashboard and watching to see progress made. It's designed to be a set it and forget it type of situation. For example, I need three servers, a cook and a dishwasher at 4 pm, what are the days, etc., and that's it. Spend two minutes entering that work order, and you can do that through your mobile app or desktop. It's all about preference, and that’s why we set it up like that. A lot of these bigger restaurant groups have dedicated HR teams that are actually managing the recruitment and training of workers, and they do that during typical business hours. But the mobile app is designed to be wherever you are, whenever you need it. I would say right now, 80% of the time, all users are using the mobile app.
BOH: How does SnapShyft vet the professionals that it has on the platform for operators to potentially hire?
TW: Resumes lie. They don't tell even a tenth of a story of where you've been, potentially. We only allow people that have actual verifiable industry experience to use the platform, so you're not getting temps. You're getting, potentially, your competitor’s chef who has a night off or needs some extra cash for the holidays who’s willing to wash your dishes. Once they enter their information, we collect everything so that we can do a full criminal background check, I-9 verification, sex offender registry, and if they meet muster on that regard, they can move on to the next step — industry references that are checked, like liquor license or safe food handling. We house that within the app, so they always got it on them, and there's no excuse like, “I lost my wallet" or "It got wet." And it's integrated in the wallet. It's in the app. And they of course indicate their experience, which is how we benchmark that with their references.
Once they're approved, they have to abide by our terms and our community guidelines. It boils down to: Play the part of the hero. Put your best foot forward, always, every shift, no matter if it's four hours or 12 hours, whatever it may be. You're going to show up on time, because we don't tolerate no-shows. You're completely removed from the platform with one no-show. So we're very strict. The time clock is built into the app, so when they arrive on site, the system knows. They clock in and clock out, and the manager is receiving these alerts, through either the desktop and mobile app, the tablet, or even the smartwatch. So whatever they've got integrated, those devices will let them know what's going on, and we actively monitor all shifts once they're in progress.
BOH: How do you attract those qualified laborers in the first place? What's the upside from the worker’s perspective?
TW: Good question. These stats that I give you are pre-COVID — they're constantly evolving, typically more precarious. That whole question about length of employment, one month: it's worse. The actual average cost, pre-COVID, for turnover per restaurant was $146,000 last year. What's crazy is okay, 1 million restaurants, that's $146 billion lost last year.
We're targeting people that are in the industry. Pre-COVID, two thirds of the industry was working for multiple employers, whether that was moonlighting once or twice a week at another location. Either way, they were juggling to get the hours and the cashflow they need. With us, they don't have to do that. They can have their main employment, but then use SnapShyft to offset their financial requirements. And that's attractive — there's no job application to fill out, there's no traditional screening process. It's done automatically through our system, and it's free, so it’s pretty painless — 15 minutes total to upload this information and go through the background check and all that.
We saw early on that executive chefs — and I'm not going to give names, but rockstars — were on our platform, and they were doing things that are beneath rockstar status, like showing up to wash dishes. You’ve got the rockstar chefs, but they'll go wash dishes for 18 bucks an hour, and the owner doesn’t know who that person is. They just see a body that knows what they're doing, scrubbing pots and pans. It’s designed to be like that. And then you've got police officers, firemen, and school teachers that used to be in the industry, and maybe still moonlight on the summers or weekends — they can use SnapShyft as well, as long as we can verify their experience and they have their licenses.
We got this review on the App Store. The person says “Love this app. In all honesty, I would have lost my house if it weren’t for SnapShyft. The work environments are usually, if not always, great. And the pay is always fair and promptly paid. Five stars.” I bring that up because that's not the first time we've heard that, that they've been able to feed their kids, they've been able to keep their lights on, keep their house. If we're making an impact, that spreads. The workers know that we have their backs. It goes back to zero tolerance for abusive behavior, no bias and discrimination. The workers are choosing where they want to work.
Businesses aren't necessarily scrolling through like Tinder, swiping left or right. They indicate their needs, and they put their trust in our system to match them up with a good person. And we have a fulfillment rate this year hovering between 96 and 98%. What that means is if a business had an opening, it actually got filled successfully through SnapShyft. The industry average for staffing is 34%, so if you turn to a temp agency or a staffing agency, your odds of getting what you needed when you needed it, are 34%.
BOH: Which is pretty low!
TW: Very low, yeah. That's also why, to restaurateurs, if you say "temp agency," they’re like, “Yeah, right.” They've all tried it at some point — they suck. They’re garbage, and you're paying out the wazoo. The average pay in Indianapolis was $24 an hour to the business, and the workers were getting $8. That's the type of markup that you were seeing in the temp world. We don't take a cut. If a business says, “We want to pay $15 an hour, $20 an hour,” it doesn't matter — the worker gets 100% of that, and the business is only charged a flat fee based on their membership level with us. Membership level goes from free — post your shifts but you have some paywalls you're limited in what you can do, all the way up to Premium Plus — where you have unlimited access to the full breadth of what our tech can do. The flat rate is typically $20 to $25 a shift. If you're paying, let's say, $10 an hour, 10 hour shift, $100 to the worker, the total charge of the business would be on average $120. So we make our $20 cut, and the rest goes to the worker. We do a line item booking fee only when a shift is worked, and that makes us cost neutral. We saw that, on average, the workers are making about 53% more per hour. That's based on the industry averages with claimed tips. Industry average was around $982, and with us, it's $1,531, and that's also excluding tip. You've got bartenders, mixologists, bussers that are taking home $80, $200, $300 a night in tips as well. But [from] the base rate itself, they're going home with more in their pocket.
BOH: It sounds like SnapShyft is trying to introduce more transparency. What are the limitations or challenges that you've experienced as you've been building this thing? What are the next steps?
TW: The idea is that we are providing peace of mind. We are the experts and the HR, the recruiting piece, not the manager. We're dealing with people, we have zero tolerance for no-call no-shows. We spend our time holding these workers accountable, kicking them off the platform, putting them through a path to get back on and earn their stripes again, but you know at the end of the day, that's our burden. That's something that the managers and the businesses don't have to worry about. Let us do that.
But what's next is what we had set out to do — it's not always about shift to shift. One thing that we learned early is [restaurant managers] don't want a mercenary coming in for one shift learning the operation, and leaving. Part of our membership allows them to have access to creating their favorites list. So you can actually have a solid pool of repeat workers that you turn to as needed on-demand. They're familiar with you, you're familiar with them, etc. So that provides peace of mind, but taking it a step further, you can actually find permanent hires through us.
We’re not a placement firm — we’re a tech company. What we do is akin to a match fee, but it’s also based on how often that person has worked for you. If they’ve worked for you 50 times, you can hire them outright. There are no charges. If you wanted to hire someone today, and it’s their first shift, there would be a fee associated — but it’s in line with what you’d pay a recruiting firm. We give that peace of mind that you don’t have to do it yourself — scouring resumes on Craigslist or Indeed or Facebook. The next step for us to really embrace that position, and that’s something we rolled out during COVID. We saw how tough it’s been for these businesses.
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