Danny Meyer's equity group invests $21.5M in 7shifts' labor technology

Dive Brief:

Restaurant labor management platform 7shifts secured $21.5 million in Series B funding led by Enlightened Hospitality Investments, the growth equity fund affiliated with restaurateur Danny Meyer's Union Square Hospitality Group, according to a Tuesday press release.
7shifts will use the funding to scale its team and expand its product offerings, including scheduling and employee communication platforms. Currently, the technology is implemented in more than 18,000 locations around the world, including across Union Square Hospitality Group's 18 concepts.
Labor pressure is one of the biggest challenge facing restaurants as COVID-19 restrictions continue to ease, and this funding round suggests 7shifts' technology has been effective, at least for USHG, in navigating a shrinking employee pool.

Dive Insight:

As labor shortages persist, scheduling has become more critical than ever to ensure peak volume shifts are covered over non-priority shifts.

According to new data from the Bureau of Labor Statistics, restaurant employment remains well below pre-COVID-19 levels. In five states and the District of Columbia, restaurant employment was down more than 20% from February 2020 as of last month.

Data from the National Restaurant Association also shows that most operators are well below normal staffing levels and expect to stay that way for the near term. In May, 72% of restaurant operators said recruiting and retaining employees was their biggest operational challenge — an uptick from 57% in April. In April, 82% of operators said they had job openings that were difficult to fill.

7shifts provides shift scheduling based on machine learning to effectively control costs and increase profitability. It also enables workers to directly communicate with management about their shifts via their mobile phones. This could help operators optimize their existing labor, since job openings that are difficult to fill are hurting profitability just as diners are returning for on-premise eating in droves.

Earlier this month, Meyer said the industry's biggest challenge is finding talent, adding that he has seen a "dramatic" shortage of employees, saying that some may still feel uncomfortable returning to work until vaccination rates are higher, he told Yahoo! Finance. Customers can expect to see new front-of-house staff as many fled the unstable industry or big cities during the pandemic. They could also encounter smaller menus, he said.

Technology could help restaurants overcome these challenges.

"The restaurant and hospitality industry is about to experience one of the biggest periods of growth and hiring we've ever seen, and having the right technology in place to manage this process will be a crucial component to succeed," Meyer said in the press release.