Why the tables are turning on tipping at restaurants
Lockdown has afforded businesses an opportunity to rethink the service charge, says
We’ve all been there. You’re at a restaurant, the bill arrives, you’re not sure if service is included or not. You make a decision – and then leave fretting about whether it’s right or wrong, or if the staff will even see it. Tipping in the UK has been a grey area for some time, but has been thrown into sharp relief since lockdown started, not least because of the Government’s decision to exclude gratuities from its furlough scheme – leaving some restaurant workers on less than a third of their normal pay.
The payment system left out of the Coronavirus Job Retention Scheme is known as tronc – a fund into which customer tips and service charges are pooled to be distributed among the staff. The name may be archaic, derived from church alms boxes (in French, tronc des pauvres), but the practice is widely used across the industry to top up staff wages. Payments aren’t subject to National Insurance contributions – tax efficient for restaurants and workers. But by not being able to declare these payments as part of their salary, employees have been left shortchanged in the furlough scheme, sparking calls for change. A petition for service charges to be included has already received more than 30,000 signatories and has been backed by MPs and the industry trade association UKHospitality.
Restaurants are rethinking the tipping system altogether, with many planning to scrap the common 12.5 per cent discretionary service charge and instead raise their staff ’s basic wages – and potentially menu prices, too. Luca Mathiszig-Lee, owner of the London butcher and cookshop Hill & Szrok, which by night operates as a restaurant, says lockdown “laid bare” an unfair system. “As businesses, we’ve been
Higher wages
and menu prices may be the way forward cashing in on a system that’s meant to be a gesture of gratitude,” he says. “Tips should be a way for customers to say thanks to staff for looking after them, not to pay them for coming to work.” London’s Oklava has taken the same decision, attributing it to the “sharp focus” brought by the furlough scheme.
Restaurateur Charles Tyler, founder of Paladar, admits it’s difficult for customers to know where they stand when it comes to service. “Some restaurants add no service charge and hope customers will be kind,” he says. “Others add 10-12.5 per cent discretionary service to the bill, while some impose it only for groups of more than a certain number of people.”
For many restaurants, the introduction of a service charge in the first place wasn’t undertaken lightly. MathiszigLee says he never intended to when Hill & Szrok opened in 2014, but did so about two years ago after it became clear that diners assumed service was included, so stopped leaving voluntary tips. He guarantees his staff ’s monthly payments regardless of tips, but says that doesn’t solve bigger problems such as employees wanting to get a mortgage if their basic salary is low.
Ryan Blackburn, chef patron of The Old Stamp House in Ambleside, has never operated a service charge. “We’ve always ensured that we pay a good basic wage,” he says. Tips, he explains, are a bonus for the entire team, but shouldn’t be counted on as income. “Reward experiences” – wine tasting, clay shooting and 4x4 driving days – are given to the staff, too. “We see it as a long-term investment based on the belief that a team with good rates of pay, an additional reward scheme and excellent working conditions will be in a better position to provide a great customer experience.”
Ed Thaw, owner of Leroy in London, which is also doing away with its service charge, believes it will lead to “better staff, better experiences and happier customers.” That some restaurants are revisiting the issue is a positive sign the industry isn’t “just returning to the old normal,” says Kate Nicholls, chief executive of UKHospitality.
Mathiszig-Lee points out that workers may have to pay more tax on higher salaries and that menu prices might go up. But, he argues, “if you’re going to pay £200 for a meal, does it matter whether it’s £200 that includes 12.5 per cent service, or £200 based on slightly higher prices on the menu?”
With restaurant lovers allowed back to their favourite haunts, many may even tip greater amounts, as has been seen at reopened restaurants in the US. And a more transparent system for customers and staff will welcomed by all.