Future of Payments
April 2, 2024

Why Hospitality Talent is Flocking to the Gig Economy—and How to Win Them Back

It’s no secret that the hospitality industry has been suffering from a steadily-dwindling talent pool over the past several years. In 2022 alone, an average of 700,000 hospitality workers quit each month. Current reports show that 62% of restaurant operators feel understaffed and more than 87% of hotels report shortages, too. 

Just where are all of the hospitality workers going? It turns out that some are eager to leave W-2 employment behind entirely, setting their sights on gig work instead. A plethora of new restaurant staffing platforms have emerged, for example, that place restaurant talent at temporary gigs. These provide hospitality talent with a way to have greater control over their shifts and earning potential. Some former hospitality workers are even exploring options like rideshare platforms as a way to still take home same-day earnings (as they’re used to collecting end-of-day tips), but with the added flexibility gig work can provide. 

Restaurants and hotels looking to shore up their W-2 talent pools will need to act fast in order to maintain enough staff and deliver a positive guest experience. Let’s delve more into the root cause of this hospitality worker turnover and what your business can do to recruit and retain top talent.

Why some hospitality workers are waving goodbye to W-2 employment 

The fact that hospitality workers are flocking to the gig economy is indicative of a larger trend referred to as “the gigification of work,” a phenomenon that’s happening within many industries. Born of pandemic-fueled burnout and changing worker expectations, the next generation is no longer willing to put up with inflexible work environments or outdated processes. Though restaurant workers cite different reasons for leaving the industry, here are three that top the list when it comes to leaving W-2 hospitality jobs: 

  • Schedule inflexibility. For many in the hospitality industry, their schedule is set for them by a manager or supervisor, often without much advance notice. If you have a personal or childcare need, it can be hard to take last-minute time off or get your shift covered—and the ongoing staffing shortages have made this even harder to deal with. 
  • Wage stagnation. As the cost of living climbs, hospitality wages have stayed relatively stagnant, leading to feelings of underappreciation and resentment. Gig work can offer the potential for higher earnings and more flexibility to set your own hours and rates.
  • Burnout and workload. The hospitality industry is notorious for falling short on work/life balance. Whether you’re a front desk manager at a hotel or a server at a restaurant, these are physically and mentally demanding jobs that require long hours. Plus, having to work nights, weekends, and major holidays can exacerbate burnout even further. Many hospitality workers simply tire of the high-stress demands and odd hours of the industry, seeing that gig work may provide better balance and flexibility. 

How to keep your hospitality talent from checking out

In order to retain your restaurant or hotel staff, it pays to take a page out of the gig economy’s playbook. Here are three ways to address these reasons for hospitality worker turnover and shore up your staffing strategies instead. 

1. Embrace flexibility whenever possible

The gig economy allows people to choose their own hours and projects—something that’s become increasingly attractive to the next generation of workers. The hospitality industry may not offer as much flexibility as other careers, but that doesn’t mean you can’t try to be more agile with your hospitality scheduling whenever possible. Consider offering split shifts or choosing a shift scheduling software that allows employees to pick up and swap shifts on their own.

This offers a level of independence that today’s workforce is searching for; according to one survey, 33% of Gen Zers said they would never work for an employer who didn’t offer them a say in their work schedule. However you’re able to provide that empowerment or flexibility within your hospitality scheduling, you should—even if it starts with baby steps.

2. Empower with clear paths to success

One of the draws of joining the gig economy is that you become an independent contractor and essentially work for yourself. This may be particularly attractive to the next generation of workers who crave the independence and flexibility mentioned above. 

In order to compete with the gig economy’s promise of entrepreneurship, it’s important to provide clear paths for career advancement right from the start with restaurant talent. Establish plans for when and how promotions are earned, and lean into upskilling and reskilling in order to provide advanced training to your staff while also filling any labor gaps. Providing this mentorship and empowerment can go a long way in making workers from all backgrounds and industries feel more connected to their career.

Related: Use this checklist to onboard new restaurant employees

3. Create a fast, fee-free payments experience

When you can’t fork over a server’s tips quickly enough—either because you hold them until their next paycheck or need to make constant trips to the bank—you come up short in the eyes of today’s hospitality talent, who want fast, digital-first access to their earnings. In fact, 83% of employees believe they should be able to access their pay at the end of each day.

Similarly, when you pay your hotel or restaurant staff using fee-laden paycards, what’s supposed to be a financial benefit soon becomes a financial burden. Outdated payments technology will drive away top hospitality talent, who would rather pick up shifts and get paid right from their smartphone than have to deal with the hassles of cash or paper checks. 

Modernizing and accelerating your payments experience can keep your talent from searching elsewhere for flexibility and faster pay. Instant tip payouts, fee-free paycards, and earned wage access are all payment solutions you can leverage to stay competitive and keep hospitality talent happy. 

Are You Ready for the Future of W-2 Hospitality?

From fast-casual restaurants to five star hotels, the hospitality industry needs to adapt to the changing needs of its workforce if it wants to stay afloat. By offering increased flexibility, clear paths to success, and fast, fee-free pay, traditional hospitality businesses will be better equipped to compete with gig platforms for talent—and better able to solve the industry’s ongoing staffing shortages once and for all. 

Get a demo

Continue reading