Barcats bags $2.4 million as COVID-19 continues to change hospitality

The COVID-19 pandemic threw the hospitality sector into turmoil, and with Sydney still in lockdown and snap-closures still very much a part of life, businesses in the space remain some of the worst affected by the crisis.

But the virus will likely have long-term effects for hospitality businesses — both good and bad.

Hospitality recruitment and training startup Barcats recently raised $2.4 million for its platform that connects prospective staff members to the venues that need them.

Despite the challenges of COVID-19, the platform is growing, with some 95,000 workers and 24,500 venues now on its books.

This has always been a difficult industry, founder and chief Jeff Williams tells SmartCompany.

Pre-pandemic, 55% to 60% of workers in the sector reported some anxiety around their job security, he says. But over the past 12 to 18 months or so, that has increased to 92%.

There’s a lot of casual work around, and a lack of confidence in the industry more generally, he explains. That’s something Barcats is striving to address.

“This is a great industry when it’s up and running,” Williams says.

“We really want people to enjoy and be part of it.”

The challenge in Australia is two-fold, he says.

Lockdowns remain a part of life, and the situation in Sydney proves we are not past the era of lengthy closures.

But we have also seen a “mass exodus” of about 25% of industry workers. Skilled foreign workers such as chefs, managers, baristas and more returned home.

There are also 147,000 fewer backpackers around, Williams notes.

So, even when venues are able to operate, staff shortages mean they’re unable to operate at capacity.

Barcats founder and chief Jeff Williams. Source: supplied.

Talent within reach

It’s this staffing issue that could be most damaging to the industry in the long run, Williams predicts. But there are creative ways to tackle the problem.

The borders are not likely to fully reopen for at least another 12 months, he notes, so the emphasis must be on the talent that is already here.

Barcats is working to create pathways to hospitality careers for people leaving school and university, and also to upskill older people to join this workforce.

The startup is also calling on the federal government to step in here, both in terms of more crisis support, and to help bolster the workforce.

We have “a country full” of working holiday and temporary visa holders, he notes.

One thing the government could do instantly is offer them some clarity on their right to stay.

“Giving them some more security around their long-term ability to stay in this country just means they will have a different attitude.”

That could drive them to upskill, to seek longer-term jobs and to start spending more themselves, too.

“Converting holiday visas to permanent residents I think is going to be really key, and will really help the sector.”

Seven hospitality trends

While there are clear challenges remaining in hospitality, a report from ordering and payment platform me&u suggests it’s not all doom and gloom.

Working with its venue partners, me&u has drawn out some positive trends that could ultimately help shape the industry for the better, post-pandemic.

From increased tech adoption to top-shelf spirits, here are seven tech trends to be mindful of:

Tech uptick

This report also notes that hospitality businesses are struggling to find staff. That means they’re increasingly adopting technology to help teams operate as efficiently as possible.

Indeed, since the onset of the crisis, we’ve seen startups such as Mr Yum, Ordermentum and HungryHungry all raise funds for their tech solutions for the sector.

me&u has seen a 643% increase, year-on-year, in the number venues using its platform, which it says shows business operators are embracing technology — and customers are too.

The me&u report also claims that customers who order through its own app spend an average of 27.5% more.

Big spenders

There’s no doubt lockdowns are rough for all involved. But me&u found that after Victoria’s lengthy 2020 lockdown ended, people were desperate to get out, and willing to spend more when they did.

That meant hospitality spending for the whole of Australia was up 28%, compared to pre-lockdown levels, despite capacity limits. We also became a nation of night owls, with orders made between 10pm and 11pm tripling.

Boozy sundays

There has also been something of a shift in the way people socialise. When restrictions eased in NSW back in June last year, Saturdays suddenly overtook Fridays as the busiest trading days, and me&u recorded increased trading on Sundays, too.

“Boozy brunches, long Sunday lunches and after-dark weekend drinks are where businesses should be focusing their attention,” the report said.

Supporting local

People are also more inclined to stay close to home and support their local bars and restaurants. Suburban pubs in particular have seen a spike in business.

The strong stuff

The report also found consumers are keen for a stronger tipple, with spirit orders up 400% in March 2021, compared to March 2020, with vodka, rum and whiskey leading the way.

Cocktails are also seeing a spike in popularity, now making up almost 20% of all drink orders on me&u.

The good stuff

The report also found that when it comes to spirits, consumers are more inclined to treat themselves, opting for more premium drinks. For example, some 70% of vodka orders through the platform request premium brands such as Grey Goose or Belvedere.

One Sydney venue reported that about a third of its customers ordering gin were also opting for a top-shelf brand.