Dinner Lab is laying off around 30 employees from their full-time positions as it shifts to a contract-based model for its events staff, the company confirmed to TechCrunch. Most of those layoffs consisted of on-the-ground events execution staff.
The crux of the issue was that these events staffers were being paid as full-time employees, which CEO Brian Bordainick said was not that sustainable for a startup. These employees were being paid between events, which can be a financial burden for the startup which has raised around $9.1 million in financing, including a $7 million round in August this year.
“Basically the way we built the company from day one was with full-time resources in almost every city,” he said. “That helps us create the brand we’ve created and a lot of institutional knowledge we had, however it’s very challenging to turn a profit on events. We’re a pop-up model, not a restaurant.”
Dinner Lab is a membership-based pop-up supper club, which throws dinner parties with up-and-coming chefs. It offers both a paid and a free tier (free members pay a slightly higher ticket price). The company throws dinner parties every week or so to once a month in its markets. Dinner Lab operates in 31 cities.
The company also has a business-to-business model, which hosts events for companies. While the consumer-facing product may be more of a luxury, corporate events can be a major logistical problem as companies scale up and host more and more events. Bordainick said that its B2B events business would be a significant focus for the company in 2016.
Employees are in the process of being moved to a contract-based model, though Bordainick was frank when he said that it might not be the right model for everyone. Under the new model, the company is able to pay more per hour, but it only pays during events, he said. That brings the model more in line with Uber, which pays drivers on a per-ride basis.
“What we’re doing historically is trying to run [an] Uber by owning the car and having the driver full-time, and it’s really challenging to turn a margin unless you’re banging out 300 events in a market, and we don’t do that in those markets,” Bordainick said.
As part of the layoffs, the company is centralizing a lot of roles to its main office, such as sourcing ingredients and finding venues. These were traditionally handled by on-the-ground employees, but are now being redirected to primary contacts.
Still, Dinner Lab not alone among startups that are finding themselves having to reorient their model — which can include layoffs. Gumroad, for example, found itself slimming the company down as it reassessed its direction and essentially looked to start from scratch when it came to the company’s staff.
Sarah Perez contributed reporting to this article.