At Their Discretion: London Restaurant Gratuities

A few days ago, I went with a friend to a restaurant in the Kings Road. It was fairly modest & middle-range – not one of those expensive, upmarket places. Before ordering, I asked one of the staff to clarify the ‘10% optional gratuity’ written in small print at the bottom of the menu. “Oh” ,she retorted, “ That means the manager has the option of asking you to leave if you don’t agree to pay”. She left us in no doubt that this was exactly what would happen. She also knew perfectly well that despite the initial show of defiance, I would meekly succumb, if only to avoid embarrassing my companion. At the end of the meal, she returned to our table triumphantly waving the bill – with, inevitably, the extra amount included.

Most restaurants in London now bluntly inform prospective diners that they intend to levy a ’12.5% discretionary service charge’. This of course is something of a contradiction. How can they know in advance whether this will be agreed to or not? In practice, customers are faced with a dilemma. If they display any signs of rebellion when selecting their pasta, they risk being classified as ‘difficult’ and having to wait at least 30 minutes before their (less than steaming hot) food is dumped in front of them. If they protest after they’ve finished, its too late. They’ve already made the commitment. The alternative is to hunt around for one of the few places where service is still ‘not included’.

It would perhaps look a bit more acceptable if the restaurants just dropped the ‘discretionary’ or ‘optional’ bit. For tax reasons, though, they have to maintain the fiction that the customer has a choice. If it is clearly obligatory (ie: not what HM Customs & Revenue define as ‘spontaneous’) then the payment usually falls within NIC & PAYE regulations. They can avoid this by appointing a trusted senior member of staff as a ‘troncmaster’ to distribute the ‘surplus income’ to their colleagues. The employer is then in theory not involved. The tax authorities have unsuccessfully tried to clamp down on this arrangement. They view it as an ingenious way of observing the National Minimum Wage. Some restaurants state on their websites that “ all gratuities are shared among the staff”. Generally ,however, customers have no idea whether (or not) they are simply retained by the proprietor and go no further. If they want to tip the waiter direct , they have to do so in cash – ideally, when the manager isn’t looking. This also increases the overall cost of the meal.

Back in the 16th century, the word ‘tip’ apparently meant ‘to give unexpectedly’. It has sometimes been regarded as an acronym for terms such as ‘to improve performance.’ What does seem evident is that most people don’t really like these additional charges (in restaurants or anywhere else) being imposed on them, but are not sure what (if anything) they can do about it. The public perception is that they are being used mainly to cover overheads or boost profits. Also, if deserving employees are not being suitably rewarded, there is less incentive for them to improve their quality of service. Eating out regularly in London is becoming prohibitive for all but the well-off. The restaurants might yet find themselves re-considering their (and our) options.

Filed under: Society | Posted on February 1st, 2008 by Colin D Gordon

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