I’ve tipped for some truly terrible restaurant service in my time. Why? Guilt, I think. I figure that if a waiter or waitress doesn’t deliver, there’s probably a reason behind it. Maybe their boiler broke that morning. Or their partner dumped them. I’d like to be given the benefit of the doubt on a similarly one-off confrontation. Equally, as a customer, I’d like to be given the choice to reward great service with a tip, and while the service charge added to most bills, typically 12.5 per cent, is officially optional, it never really feels up for debate.
We’ve all changed the way we eat out – cheers to crazy prices for that – for those who don’t go to restaurants regularly, just opening a menu and seeing the prices could bust an artery. But one thing about eating out remains stubbornly the same, confusion over tipping. How much is right? What’s the etiquette? And where is the cash ending up: In the pockets of wait staff or the boss?
My position has always been: I tip knowing that the person serving me is not only on a low wage, but that their employer might also be screwing over their tips – paying a basic rate topped up with ‘tronc’ (service charge) is widespread. Another reason I never quibble is because I can’t face confrontation – I’d rather just pay. But for the first time in my life, I’ve heard of a charge I might refuse to cough up for.
The dimsum chain Ping Pong, which has five branches across the capital, has announced it will scrap service charge and replace it with a 15 per cent ‘brand charge’. Excuse me while I choke on my char siu. This is supposedly in line with a new law – coming in on 1 July – the Employment (Allocation of Tips) Act 2023, which will protect all employees’ right to receive their tips in full, whether paid by cash or card, even if they’re on a zero-hours contract.
The Government claims that around two million workers will take home an extra £200m a year thanks to the new law. In other words, your tips will go directly into staff pockets. “We’re pleased to support this new piece of legislation,” said UK Hospitality chief executive Kate Nicholls. “Fantastic hospitality experiences don’t happen without a huge effort from both front and back of house, and tips are a generous way of customers showing their gratitude, while providing a welcome boost to employees’ earnings.” But instead of simplifying things, some employers are making an already baffling system even more opaque.
The so-called ‘brand charge’ has been invented so customers can continue to fund wages via the service charge. Ping Pong points out that its rates, which start at £12.44 an hour, are £1 more than the National Living Wage (if 71p less than the voluntary London Living Wage) – a fact that in no way sweetens me up to shell out. An end-of-meal debate over who does or doesn’t want to fund company-wide wage rises surely marks the end of conviviality.
“The brand charge covers additional costs related to operating a franchised brand, but being discretionary, our customers do have the option of removing or reducing the amount,” the restaurant explained. While the charge is currently optional, by June it will become mandatory, or the menu prices will increase instead.
When I began to ask other businesses how they planned to respond to the incoming law, I was met, broadly, with a terse silence. Many owners and operators already feel unsupported by the government in other areas, such as high VAT and business rates. But this hasn’t been sprung upon them. The new law has been under consultation since 2016. Expect to hear of more convoluted tipping strategies. Restaurants have been hiding the way they pay staff for so long, they need to find clever ways to fund the change.
One independent restaurant came forward to explain why they don’t ask for an optional service charge at all, instead rolling it all into the menu prices to fund higher wages and salaried jobs. “Service charge is widely abused across the industry,” says Matt Emmerson, co-founder of north London restaurants Perilla and just-opened Morchella, where all staff are on salaried positions. The high menu prices reflect this, but at least there are no surprises. “In no other sector are skilled staff reliant on tips to make their living… we shouldn’t have to rely on this historic system.”
Emmerson’s business made the choice to pay full salaries to attract long-term staff who needed payslips to fully engage in the economy. While tax-free tips may appeal to young or transient staff, those who want to stick at a job might also want a mortgage. Emmerson says the switch was expensive at first but beneficial in the long-term by reducing staff training costs, for example. The menu explains that any service charge is incorporated into the price of each dish.
Do diners still tip on top? “If they feel their service was exceptional. We don’t get many tips, and distribute them twice a year. I think the system as it was is broken, and I really hope that the changes help staff get what they should.”
This new approach is how they do it in Japan, and in France where, thank goodness, le service est compris. On a recent trip I tipped and was always thanked for it. Emmerson tells me this approach isn’t universally successful, though. When some high-end restaurants in New York – the US is known for expecting tips of at least 20 per cent, even on a beer – tried to roll tips into the prices shown on their (very expensive) menus, it didn’t work and they reverted.
The beleaguered hospitality industry needs support. News of new closures arrives every day, from big names such as MasterChef’s Monica Galetti to medium-sized chains like Wildwood and Dim T. In 2023, 2000 businesses announced an end to trading. Higher rents, staff scarcity and spiralling food and energy costs have all contributed to a perfect storm for food and drink outlets. Even those with a steady supply of willing customers cannot always balance the books.
Those who have been paying staff properly or fairly distributing tips before now shouldn’t further suffer from this change, but all the others, who now need to fund a shortfall of 12.5 or 15 per cent, will struggle. Ping Pong and others need to roll all costs into their menu prices, like at Perilla and Morchella. The risk? Another significant price hike might keep us from eating out altogether.
But there’s a potential reward, too. Putting an end to tipping madness could help diners to trust the system again, and encourage us back to Britain’s brilliant pubs and restaurants.