Labor Shortages Messing Up Seamless Deliveries

For the first time ever, I had a Seamless order cancel on me by a restaurant. Grubhub called moments later to explain the problem: the restaurant had a shortage of delivery workers.

Made we realize how reliant we are on unskilled labor to keep things humming especially in the restaurant biz. But it also brought home how hard it must be to maintain staffing levels for service industry jobs in general.

We’re basically at full employment and the economy can’t grow without:

  • immigrants (as Lin-Manuel Miranda sings in Hamilton, “we get the job done”)
  • young people who can pass a drug test (apparently half can’t) and on top of that, most teens opt out of work these days
  • boomers postponing retirement

In digging into this further, I found that the problem is the most dire in the fast-food industry where turnover runs at 150%. Panera is considered the “gold standard” within the fast-food industry because they’ve been able to keep their turnover at just under 100%.

Per CNBC, McDonald’s is spending close to $1 billion this year on DIY ordering kiosks. The industry’s inability to keep workers, is one of the key reasons experts believe fast food will be the first job sector ruled by robots (already happening in China).

I’ve also been hearing friends in hospitality talking about apps like Pared and Instawork that were created specifically for the restaurant industry. Staffing has become such a massive problem that all the big guns including Jean Georges Management are reliant on the on-demand apps, e.g., to get Jean Georges’ newest restaurant, The Fulton, opened, they had to reach out to Pared to hire a whole team of fish preppers.

Bottom Line.

Even as the economy slows down, staffing shortages, especially in the low-and-unskilled sectors, is going to prove to be a serious drag on growth.

The apps will help but I expect to see more small restaurant owners throw in the towel.

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