Saskatoon-based 7shifts plans to launch new hiring and pay tools and raise a Series B round this year, with the restaurant labour-management software maker anticipating a revival in dining out as the pandemic recedes.
The firm responded to COVID-19 by developing a new health-screening feature, furloughing nearly a quarter of its staff and taking on $9 million in additional funding from investors. With revenue growing again, the company is looking to extend its platform beyond scheduling and communication. “The ramping up of summer hiring in restaurants paired with the vaccine being widely [administered] will be a really great thing for the industry, and the economy in general,” said CEO Jordan Boesch, and the firm plans to have “products that are ready to be a part of that growth.”
Talking Point
When the pandemic closed many of its client restaurants’ doors, revenue growth cooled at 7shifts, which makes scheduling and communication software. The Saskatoon-based firm built new health-care features, furloughed some staff and raised fresh funds from investors. Now it’s preparing for the hospitality industry’s recovery with plans for new hiring and pay tools and an up to $25-million Series B round.
Boesch founded 7shifts in 2014, after working at his family’s two Quiznos sandwich shops. Just over 16,000 restaurant locations currently use the firm’s software to schedule and communicate with staff, while workers use a companion app to log when they’re available and swap shifts.
At the start of the pandemic, 7shifts provided billing relief—as many as 2,500 locations stopped paying for a time—and built new tools for clients that were still operating. Restaurants can use a health-check feature in the time-clock application to require workers to complete a screening questionnaire about COVID-19 symptoms before starting their shifts. 7shifts also added sanitization-checklist templates to its task-management feature, a paid add-on to the core platform subscription fee that has seen strong uptake.
Revenue dropped in March and April, but recovered to pre-pandemic levels by September. “We lost about six months of growth,” Boesch said. 7shifts laid off 40 staff in April, but it’s since brought back most of them.
Over 80 per cent of clients who cancelled or put their accounts on hold due the pandemic have also resumed paying, and others are signing up for the first time. The pandemic spurred many existing restaurateurs to adopt software to manage operations and communicate with staff remotely—including those laid off, whom they hope to rehire—said Boesch, while those opening new eateries are setting up with such technology from the start. 7shifts’ “growth rate during a pandemic, in the hospitality sector, has been just tremendous,” said Alex Baker, a 7shifts board member and partner at Toronto-based VC firm Relay Ventures. (Relay is an investor in The Logic.)
The company is now working on new products for both its restaurant clients and the 1.4 million workers—400,000 of them active—on the platform. In the second quarter, it will launch a hiring feature, tested with some clients during the pandemic. Boesch ultimately envisions a system that matches workers to openings based on particular characteristics for which managers are looking, such as already being trained on the location’s point-of-sale system, being punctual or regularly picking up shifts for co-workers. The firm could also build training or assessments into the application process. 7shifts has “a lot of data around the worker” it can use to pair them with a “restaurant where we know [there are] labour needs,” says Boesch, in turn giving employees more choice of where they work.
Michael Meehan heard about his current job as a server and bartender at a Pittsburgh gastropub from a friend, and typically finds openings through word of mouth or traditional job sites. The restaurant uses 7shifts, but he said he’d be wary of using the same app for communicating with a current employer to apply to a new one.
The pandemic has hit restaurant workers hard. As of December 2020, food-services and drinking places in the U.S. had nearly 2.4 million fewer people on their payrolls than a year earlier, while in Canada, employment in accomodation and food services was down by 321,000. Meehan is currently furloughed, but worked similar hours in the summer and fall as the pre-pandemic period. “My actual weekly income compared to last March is a different story,” he said, adding that he’s “making about half of what I was … pre-shutdown,” mostly due to tip pooling. The 7shifts worker app estimates weekly earnings, but “I’ve never really paid much mind to that feature,” Meehan said, because of “how erratic our paychecks can be.”
Still, 7shifts plans to build more financial tools for workers. This quarter, it’s working on the management and distribution of tip pools, which some restaurants have instituted during the pandemic. The company also plans to give workers earned-wage access—they’d be able to cash out at the end of a shift, say, rather than wait for the next scheduled payday. Workforce-management giants like Ceridian have launched similar features. “We can add value to help … employees get paid on time [and] pay their bills,” said Boesch, while such options lower missed shifts and turnover for restaurants.
The company says workers use the 7shifts app for eight minutes a day. “Once you have a direct relationship with the employee, you can imagine a host of services that [they] would need [including] financial services—a full suite of products to help them manage their life better,” said Baker.
7shifts itself now has 148 employees, nearly two-thirds of whom work in Saskatoon, along with a Toronto office and some staff in the U.S. The firm was preparing for its Series B raise when the pandemic hit. Instead,the company closed a $9-million round—US$6 million in equity, and $3 million in debt financing—in June 2020 with existing backers Relay, Darien, Conn.-based Ten Coves Capital, and the Saskatchewan-focused Conexus Venture Capital Fund. Export Development Canada contributed $1 million through its pandemic investment-matching program.
The company has raised about $30 million to date. 7shifts plans to return to the funding market this quarter, targeting a Series B round of up to $25 million. It meets the criteria of investors at this funding stage, according to Baker, including consistently hitting expansion targets, sales and marketing efficiency, high customer retention and strong management. For his part, Boesch is looking for backers who “can see the upside in restaurants, and that this pandemic is not something that’s going to last forever.”
