There are few more emotive subjects in the restaurant industry than service charges. Whether you're someone who baulks at seeing the 12.5% charge on your bill or feels a sense of relief that you don't need a degree in calculus to add a tip, almost everyone has an opinion when the time comes to settle up.
Restaurants take one of three approaches to service charges. The first is to add a 'discretionary' charge - typically 10-15% - to the final bill, with the customer having the option of whether to pay it or not. The second is to impose a service charge only on larger tables (groups of more than six, for example) while the third is to leave any tip at the complete discretion of the diner. But which one is right?
The most common approach is the first. The principal driver for this is HMRC's rules regarding the distribution of tips to staff members. If a restaurant adds a mandatory charge it is treated as wages and tax and National Insurance contributions have to be paid on it. However, if it is discretionary is it regarded as a tip - and often shared among staff using a pooling system called 'the tronc' - and no National Insurance needs be paid. "Quite simply it's more tax-efficient for restaurant staff to receive this part of their pay through the tronc," explains Neil Gill, owner of Seasons Dining Room in London.
Against the charge
Indeed, Seasons Dining Room doesn't impose any service charge at all. "I incorporate this cost, as with all other restaurant overheads, into the price of the food and drink," says Gill. "From the guest's perspective this allows for less bill anxiety - avoiding the whole 'should I, shouldn't I?' process."
Furthermore, Gill believes that the practice of adding a discretionary charge, and asking the diner if the service was worthy of full payment, should be scrapped completely. "In any other professional engagement it would be absurd. Asking a dentist to fix your teeth and then deciding whether they were due full payment would seem preposterous."
Others in the industry have more forthright views on charging. "It's a surcharge, not a service charge," says Mick Dore, who runs The Alexandra pub in Wimbledon. "It should be up to the customer who gets it, and how much."
Galvin at Windows
Fred Sirieix, general manager at Galvin at Windows believes that diners shouldn't be charged extra for service.
Fred Sirieix, general manager at Galvin at Windows, surprisingly agrees. Despite overseeing the dining room at the Park Lane restaurant, Sirieix says customers shouldn't be charged extra for the sparkling service they receive there. "Service charge is like VAT, it goes up and down," he says. "No one really wants to pay or charge it."
Pro the charge
Many restaurants, however, regard service charges as an important part of their business. At Roganic, in Marylebone, 12.5% is added to the final bill, although head chef Ben Spalding stresses that it is discretionary. "Waiters and chefs are paid a wage to perform their duties. Service charge should only be paid if the service is fantastic. It is up to the customer whether they pay or not."
Ben Spalding, head chef at Roganic believes that diners should only pay the service charge if the service is fantastic.
Others believe the charge is an essential part of the industry. Barbecoa, the barbecue restaurant set up by Jamie Oliver and Adam Perry Lang, is an advocate. "We are staunchly pro-service charge as it drastically increases non-wait staff earnings," says a spokesperson. "But we are very aware that it relies on honest operators."
Tim Hayward, owner of Fitzbillies cafe and restaurant in Cambridge, currently imposes a mandatory service charge on tables of six or more, but is not against an outright charge. "We'd like to do it across the board because our punters are poor tippers and our staff are on minimum wage and tips," he says. "The problem is that the service charge is fully taxed where tronc isn't."
Mat Follas, former MasterChef winner and owner of The Wild Garlic restaurant in Beaminster, shares Hayward's sentiment. "As a business owner, it is almost impossible to operate profitably without the charge," he says. Follas doesn't currently charge for service, asserting it should be the diner's choice, but says he is about to change this policy for the good of the business.
Barbecoa is an advocate of the service charge as it "drastically increases non-wait staff earnings".
Nor is it just restaurateurs that welcome the charge. "I breathe a sigh of relief when I get a bill with 12.5% added on," says prolific food blogger Chris Pople. "It saves me worrying about it. Dining in New York [where the customer decides what to pay] is fraught."
More contentious maybe is the cover charge imposed by some restaurants, including at the newly opened restaurant The Delaunay in London's Aldwych. Here a £2 dining room charge is levied, of which Pople is less forgiving. "It's mean-spirited, counterproductive and pointless. It isn't worth annoying people," he says. "Just put 10p on everything else I order, don't add on an unavoidable cover charge."
Charlotte's Bistro in Chiswick, however, is pro the cover charge, providing it gives customers something extra. "We were one of the first restaurants in the UK to ditch tap water and offer filtered instead," says owner Alex Wrethman. "For this and fresh bread we charge £1 per head, and we give people the choice not to pay. Particularly in this time of austerity, restaurateurs have a duty to make menus and billing practices clearer.
"Our £1 cover charge works for our business model, our customers like the value for money it offers, and it means we can keep our main menu prices at a great price."
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Pay proper wages and stop ripping people off.....
If the price is a pound I don't expect to pay a guinea for it..
Firstly, you enter, say, a fashion shop and select an item with a price tag of £25-00. If you analise this price, you realise that it consists of the original cost of the product plus the retailer's profit. The retailer's profit pays for the provision of the selling environment (shop) including rent, rates, insurance, heating, lighting, staff and a margin which enables the retailer to remain in profitable business. You leave the shop, having paid your £25-00 to an employee of the retailer. Transaction complete.
Secondly, you enter a restaurant and select an item from the menu with a quoted price of £25-00. If you analise this price, you realise that it consists of the cost of the ingredients, preparation and cooking plus the restauranteur's profit. The restauranteur's profit pays for the provision of the selling environment (restaurant) including rent, rates, insurance, heating, lighting, staff and a margin which enables the restauranteur to remain in profitable business. YOU ARE THEN SUBJECTED TO AN ADDITIONAL 'SERVICE CHARGE'.
Both are retail business transactions. 'Service Charge' is simply a 'back door' device to increase net profit for the restauranteur and is, at best, a deceipt. We should not tolerate it.
I do, however, differentiate between this rip-off and voluntary gratuities, which should always be made in cash to the serving staff.
I have been working in the Hospitality & Catering Industry for the past 37 years,I cannot believe that the tipping/service charge issue is still being debated,the solution is simple,pay the staff that work in the sector decent Professional salaries and abolish tips and especially service charge that is mostly collected by owners not the staff.
Tips need to be earned and not expected, rewarded for receiving excellent service,which alas is too often lacking.
My wife and myself recently had a meal at Francos on Rupert Street in London. They charge a £1 cover charge and the menu states that 12.5% will be added to the bill. When we tried to confirm that it was discretionary the waiter just said it would be added to the bill.
They then served us undercooked calzone with a raw egg in the middle. When we complained they took it away without apologising and brought us another one (cooked this time) - again without apologising. Perhaps unsurprisingly we deducted the Service Charge when paying.
When we left we were chased through the restaurant by the waiter who said we had "short-paid" the bill! They fully expected that we would pay the service charge, even though the service was appalling!!
PS. Never use your credit card here - have a look at Trip Advisor . . . . . .
I admit that I do tip more often than not - just because I feel ashamed and mean if I don't.
Here is the only example of a time when I didn't:
1) We have to stand waiting for 15mins before being shown a seet.
2) More than half an hour passed before our orders were taken (inc. drinks).
3) After that it was an astonishing 1 and a half hours until the food arrived.
4) The word food was the loosest possible description for what was placed on the plate. My steak and chips turned out to be a stone cold piece of coal that the chef had somehow inserted a bone into it served with some sort of of darkened hard twigs and a putrid green slime that may have been a vetgatable before it was boiled overnight (at least the slime was hot). And don't get me started on what they placed in front of my partner.
I personally wanted to demand my money back and write a strongly worded letter to the owners of this establishment, but my partner wouldn't let me and I had to content myself with denying them a tip.
I have never been able to get my head around the "Service Charge" imposed if there is a larger numbers of diners in one party, say eight or more. The menu will state 10-15% Service Charge for parties greater that 8. Surely if eight diners or more are dining at the establishment at one siting this increases the numbers/profit for the establishment, if anything the party of eight or more should actually be entitled to a discount because of the volume of business??? Yes/No??
The Service Charge/Tip for smaller number parties should most definetly be discretionary but should be stated "Boldly" on the menu and should also state all "Tips" go to the staff. This encourages the staff to be attentive and observant to their customers.
Restaurants charge a lot for their food and even more for their drinks and because of this service charges should not be applied as a compulsory measure regardless of how many people are eating at the table.
The service in this country is at best 5 out of 10 in 90% of places so having a service charge is an insult.
restaurants require customers in the same as any other business does, they employ the staff required to run their business in the same way as any other business does , therefore why should a service charge be levied or tip be given just because its a food industry business , i dont tip the girl on the checkout at tesco just because she gave good service , that is part of his/ her job in the same way as its part of the job for restaurant staff to provide good service , i think its just another way for employs to pay less wages and expect the customer to make up the difference via way of tips , if i choose to give a tip in a restaurant i expect it to go to the person serving me not pooled in a pot , because i think its unfair if someone is getting a cut of someone elses rewards for good service from a customer, if that person gets to keep the tips they are given they are more likely to give consistently good service , and other staff are likely to try to follow in the footsteps of someone who always gets tips for good service , and the amount i give is at my discretion , although i usually allow 10% at all restaurants but i refuse to eat in a restaurant that tells you there will be a service charge of x amount on the bill at the end , i think that is insulting the customer
I could not agree more with Norman.
I have worked in the restaurant & bar industry for more that 15 years. 'Back in my day' you had to work hard for your 'tip' or 'service charge', these days service staff have come to expect this as a right. Coupled with the national minimum wage service staff can made a good salary for not a lot in return and for those who do still choose to work hard are rewarded.
Things have changed a little however as the industry did used to use, certainly credit card tips, to top up staffs wages to the minimum wages rate. This was always unacceptable. Cash tips should be given only if the service deserves it. So this is a step in the right dicrection.
This debate has been raging for years and opens up many a can of worms......Why is it ok to tip a taxi driver when you are already paying a premium rate for his/her service and not a bus driver who is doing what is essentially the same thing but on a much larger scale?
We all provide a service, so doesnt that mean we should all get a service charge?? so why should services of this kind get them???
I eat out 4-8 time a month and always tip where the service is good, normally 10-15%, but when I see on the bill, service charge included, I normally deduct this and pay a cash tip. I DO NOT tip for poor service but I DO always explain why.
Note to Tim Hayward at Fitzbillies, the reason why your punters are poor tippers is probably because the service is not up to scratch.
We all have a choice when accepting or going for a Job, why should lazy people who work in restaurants think they deserve to be tipped? does any one tip an Air Hostess when flying ?