Service charges in the Hospitality industry

[Ivor]

Just wanted views please on service charges in Hospitality which if the service is good I don’t object to at all.

I stayed at a well known London hotel chain this week & with a family member we ate in the bar. At the end of the meals I went to the bar to sign off to my room number which showed the food/drink cost then a line underneath stating ‘TIP’ so on the bill I added a tip of 10%

Booking out next morning it had been charged to my card & I asked for a receipt to be told we email it to you (won’t agree that again) as when it came through I thought it was too high.

After a little investigation I found their bar menu on line which at the bottom mentioned in small print allergies etc & a discretionary service charge of 12.5% (I had missed it) so at the end of the day I’ve tipped 22%

I suppose the argument could be the service charge the staff don’t benefit from but I’m not sure, I would like to think they do.

I ordered at the bar, no table service so once prepared it was only brought to the table.

I just feel putting tip on the sign off slip is sharp practice if there is a service charge added, you may feel otherwise. I emailed the hotel stating my point & the manager has replied saying the bill is correct, very helpful (not)

 

[Huntergreed]

This is definitely becoming more common, particularly in major cities (London seems particularly bad).

A lot of restaurants know they can get away with it as many people won’t ask for it to be removed (as is their right), but for them to expect a tip as well as a service charge seems over the top.

I’m always happy to leave a tip if there is no service charge added, provided the service was good. If there is a service charge added, I simply don’t tip (and if it is excessive, I have asked for it to be removed in the past, with varied reactions).

Thankfully we’re nowhere near as bad as the US for this (where there’s often a mandatory service charge and the expectation to tip 15-20%), but it is getting worse (at least in my experience).

 

[Howardh]

I rarely eat out; so can't comment about restaurant tips, but notice at bars the card reader has (a) nothing about tips at all (b) tip/no tip option - which generally finds the barman ticks "no tip" when you've just had a drink, so thanks for saving me the embarrassment, and (c) what I've read is happening but haven't come across it yet - then cover up the "no tip" option with a sticker that says "Thank You" so all you see is "tip". Has anyone experience of that?

 

[Ivor]

A lot of restaurants know they can get away with it as many people won’t ask for it to be removed (as is their right), but for them to expect a tip as well as a service charge seems over the top.

I have known friends & colleagues on the rare occasion in the past after shocking unfriendly service have still paid the service charge as they feel embarrassed to ask for the removal

I rarely eat out; so can't comment about restaurant tips, but notice at bars the card reader has (a) nothing about tips at all (b) tip/no tip option - which generally finds the barman ticks "no tip" when you've just had a drink, so thanks for saving me the embarrassment, and (c) what I've read is happening but haven't come across it yet - then cover up the "no tip" option with a sticker that says "Thank You" so all you see is "tip". Has anyone experience of that?

Not seen (c) as yet

I on occasion visit a Youngs Pub in London, no I haven’t got a drink problem For just a drink I don’t tip as I’m ordering at the bar but when eating there when I pay I have to ask can I add a tip? They then go into the card reader to set up that facility with the member of staff last week thanking me very much as he said the majority of people don’t ask or even leave a few quid but then again we seemed to have been weaned off cash in this country, don’t start me on that one, that’s for another day

 

[Howardh]

I have known friends & colleagues on the rare occasion in the past after shocking unfriendly service have still paid the service charge as they feel embarrassed to ask for the removal

Not seen (c) as yet

I on occasion visit a Youngs Pub in London, no I haven’t got a drink problem For just a drink I don’t tip as I’m ordering at the bar but when eating there when I pay I have to ask can I add a tip? They then go into the card reader to set up that facility with the member of staff last week thanking me very much as he said the majority of people don’t ask or even leave a few quid but then again we seemed to have been weaned off cash in this country, don’t start me on that one, that’s for another day

At a bar if the drink's £5.80 (sheesh...not up here!!) if I like the place (ie quiet music, no karaoke!!) then I'll ask them to round it up to £6. Question is, when I do that, who gets the extra 20p as there's no distinction between payment and tip. But they often say "thank you", so can it eventually register what's been paid for and overpaid and the staff get the difference?

 

[Gloster]

I presume that it stops you doing what I did once in France. I was stuck facing the wall in a largely empty restaurant, suffered slow service as the waiter was too busy chatting up a couple a couple of girls, and the food (except the excellent onion soup starter) average and only just warm. When I finally got the bill, I left a tip of ten centimes, the smallest coin I had, in the middle of the plate and left. I left the ten centimes just to make clear that I knew that a tip was normal. It is not my normal habit to do something like this, but this was bad.

 

[azt]

Just wanted views please on service charges in Hospitality which if the service is good I don’t object to at all.

I stayed at a well known London hotel chain this week & with a family member we ate in the bar. At the end of the meals I went to the bar to sign off to my room number which showed the food/drink cost then a line underneath stating ‘TIP’ so on the bill I added a tip of 10%

Booking out next morning it had been charged to my card & I asked for a receipt to be told we email it to you (won’t agree that again) as when it came through I thought it was too high.

After a little investigation I found their bar menu on line which at the bottom mentioned in small print allergies etc & a discretionary service charge of 12.5% (I had missed it) so at the end of the day I’ve tipped 22%

I suppose the argument could be the service charge the staff don’t benefit from but I’m not sure, I would like to think they do.

I ordered at the bar, no table service so once prepared it was only brought to the table.

I just feel putting tip on the sign off slip is sharp practice if there is a service charge added, you may feel otherwise. I emailed the hotel stating my point & the manager has replied saying the bill is correct, very helpful (not)

Yes, nowadays, I always check the bill for a service charge. I give the staff an option to remove it, if they do they get a good tip, always greater than the service charge, if they don't then no tip.

In my view it's just another hidden tax or more money for the owner. I have asked staff in a few places where they have told me they don't get all the service charge, e.g. 20% of the service charge goes to the owner, shocking!

It's even worse in the US, the "service charge" can be 20%, they don't really tell you, and one is expected to pay AND leave a tip

 

[Peter Mugridge]

If there is no warning on the menu of a service charge, nor any notice elsewhere saying there is a service charge, meaning the first you know of it is when you see the bill... can they legally add it?

 

[Ivor]

If there is no warning on the menu of a service charge, nor any notice elsewhere saying there is a service charge, meaning the first you know of it is when you see the bill... can they legally add it?

It was there at bottom of the menu in small print along with allergy warnings. I didn’t notice but my gripe was when signing bar slip to my room account there was a tip section & at that point service didn’t show so I added 10%, only when I checked final hotel bill it registered to me bar meals cost too high. Just a bit of sharp practice I thought.

 

[johntea]

A chicken takeaway opened near my work (Pepe’s)

Had some good reviews so I thought I’ll download the app, browse the menu, click and collect

That was until they added a mandatory 99p ‘service fee’ onto the order at checkout…app deleted and I won’t bother!

 

[PupCuff]

If they're going to try and double dip a tip by adding a service charge and also ask for a tip on top then I'm the sort of person who'd insist on both being 'zero'.

If it's a sit down meal, and the service is decent, I'll be generally agreeable to adding a tip/"service charge" of 10% or rounding up, minimum £3. For a drink if the service is good, or I'm paying cash and don't want to mess around with coinage, I'll do a keep the change kind of arrangement.

The latter backfired on me once in Germany where the bar chap with stereotypical German efficiency educated me that they don't do "keep the change" there and you either give a sufficient tip or none...

 

[Trackman]

If there is no warning on the menu of a service charge, nor any notice elsewhere saying there is a service charge, meaning the first you know of it is when you see the bill... can they legally add it?

It wasn't, but it is now.
There's been a thread about tipping on here before.
About 25 years ago, about ten of us of went on a meal out in north London. (Mexican or something similar, I think), The service charge was something extortionate like 20%. We asked for a new bill, and asked the waitress who attended to us all night if the tips were pooled. They were not. So we all threw cash in for the waitress, which was actually more than the service charge! Moral is, if we want to tip, let us decide.
Tourists suffer the worst as in some countries its compulsory and will cough up.

 

[GRALISTAIR]

Even in the USA people are saying tipping culture has gone too far - way too far.

 

[jon0844]

Look out for the new 'brand charge' trick to ensure the restaurant can keep all the money for itself and give staff nothing.

If I saw that on my bill, I am absolutely 100% demanding - loudly - that it gets removed and I won't be giving them my business until they change their policy. I know it isn't actual fraud, but it would feel like it.

I also find hotels that charge a service charge of 12.5-20% when ordering at the bar a bit cheeky. I've never tipped in a pub when I order and wait for a drink to be served directly to me.

I'm sure some tourists do but I've only tipped when getting table service.

Hotel drinks are always considerably more expensive, so unless they're very bad at finding a good supplier, I'd assume they're easily able to pay staff a decent wage from the high margins.

 

[Ivor]

Look out for the new 'brand charge' trick to ensure the restaurant can keep all the money for itself and give staff nothing.

This I’ve not seen. If these businesses want to introduce these type of charges then rather than annoy the customer with this they need to increase the price of their offerings to hide additional costs, such as if the pie & mash is £16.50 then make it £17.50 then we would be none the wiser & wouldn’t perceive the business negatively with these charges.

 

[ChrisC]

I never really know what to do about tips if I am staying in a hotel at an inclusive dinner, bed and breakfast rate where you don’t have bill a bill to pay at the end of the meal. It’s not very often that I do this because, having had breakfast I prefer to eat out late afternoon. I only stay at an inclusive rate if it’s somewhere like a country hotel in winter. If I’ve stayed for a number of nights and had very good service from the same staff I have just given a reasonable sized tip on my last night.

 

[Mcr Warrior]

This I’ve not seen. If these businesses want to introduce these type of charges then rather than annoy the customer with this they need to increase the price of their offerings to hide additional costs, such as if the pie & mash is £16.50 then make it £17.50 then we would be none the wiser & wouldn’t perceive the business negatively with these charges.

Some VAT savings to be potentially had by the business by not increasing the meal price?

 

[takno]

Some VAT savings to be potentially had by the business by not increasing the meal price?

I doubt they'd get away with not charging VAT on a brand charge - it's a non-financial "service" so there's no reason for it to be zero-rated or exempt.

 

[Mcr Warrior]

I doubt they'd get away with not charging VAT on a brand charge - it's a non-financial "service" so there's no reason for it to be zero-rated or exempt.

Was thinking (using the pie and mash example) keeping its price at £16.50, rather than £17.50, so that any additional money can instead be charged as tips. Maybe the business has to pay VAT on tips + service charges?

 

[takno]

Was thinking (using the pie and mash example) keeping its price at £16.50, rather than £17.50, so that any additional money can instead be charged as tips. Maybe the business has to pay VAT on tips + service charges?

There's no VAT on tips and service charges if they're distributed to the staff. If the restaurant keeps them then they ought to be taking off VAT, but then they're arguably stealing the whole amount from the staff anyway.

 

[jon0844]

It seems like the Brand Charge 'trick' is an attempt to get around the new rules that started in July, stating the service charge had to go to staff. So rename it and you can keep it.

Clearly laws are often required to be followed perfectly, allowing such loopholes. It's an added on fee that isn't food or drink, so you'd hope that the law would refer to any such add-on. However, if it refers to something as a service charge, some places are hoping they can argue this isn't a service charge.

I mean, they might as well call it a SVC CHG and say that isn't 'Service Charge' so all good.

It's disgusting and not many have tried it yet, but if the ones that have get away with it you can be sure the other private equity owned chains will give it a go.

London restaurant chain adds ‘brand charge’ as it bans tipping by card

Ping Pong criticised for introducing optional 15% months before new law will ensure workers get 100% of tips

www.theguardian.com

A London restaurant chain has banned customers from paying a tip by card and introduced a “brand” fee instead, just three months before new legislation makes it compulsory to give all tips to staff.

Ping Pong, which operates five dim sum outlets in the capital, said the new optional 15% charge would go towards “franchise fees and other brand-related expenditure”, and replace a 12.5% service charge, 90% of which went to staff.

 

[GRALISTAIR]

It seems like the Brand Charge 'trick' is an attempt to get around the new rules that started in July, stating the service charge had to go to staff. So rename it and you can keep it.


It's disgusting and not many have tried it yet, but if the ones that have get away with it you can be sure the other private equity owned chains will give it a go.

Absolutely. When I retire back to the UK I will have to be mindful of tricks that are now being pulled.

 

[Senex]

Why do we have such things as tips, service-charges, brand-charges, etc at all? Surely a café/restaurant/hotel should calculate the total cost of providing its service, add an appropriate profit-margin, and then work out a firm end-price to charge users. And the users (as long as they themselves behave decently) are entitled to expect competent and pleasant service from the staff with whom they come into contact (certainly not fawning excess).

If the person who delivers you a service is to get an additional payment, why do we not tip the accountants/lawyers/medics we deal with, or, and perhaps a clearer comparison, why do we not tip the person in the hardware store who gives us really good and careful advice about which product to buy and how to use it, the person in the bookshop who spends time advising us on whether or not we might enjoy such and such a work, or the person in the furniture store who gives us thoughtful and careful advice on which bed to buy? In all these cases we might well receive far better service than we do from the staff in many a restaurant or hotel, but no tips are expected.

Aside: In reply to PupCuff in #11 above on rounding up in Germany, when I was working in East Germany a good many years ago the expected custom was to round to the next mark up. If that meant only 10 Pfennig, so be it, but it could also mean 90. And waiters would normally have their purses out before you sought your own cash, not waiting to see first what notes/coins you were going to shew before indicating that they were ready to offer change.

 

[Kite159]

Tipping/Service Charges is one thing I would ban. If the restaurants paid a decent wage then there will be no need to tip to top up wages of someone doing their job. One thing I found refreshing when I went to Japan many years ago.

Afterall you don't tip the supermarket worker at the checkouts, the train staff or other retail workers who serve you. Tipping a dollar to a bartender to grab a glass and put some liquid in it is just wrong, only if it was a complex drink they were making but for a standard pint of beer.

 

[alex397]

I like the culture in places like Czechia or Slovakia (and probably many others). There tends to be no service charge but in pubs/bars and restaurants it’s common to round up. Plus the service tends to be quick and friendly so I don’t mind rounding up or more than that.

 

[jon0844]

Some USA self checkouts now ask for a tip. I've always assumed the tip goes to you as a discount given you did the work!

 

[Ivor]

Some USA self checkouts now ask for a tip. I've always assumed the tip goes to you as a discount given you did the work!

That’s a disgrace, world has gone mad but I suppose we all know that

 

[Trackman]

Some USA self checkouts now ask for a tip. I've always assumed the tip goes to you as a discount given you did the work!

Read about this, it goes to the employees but doesn't state that, so you think you are tipping the machine itself!

 

[jon0844]

Read about this, it goes to the employees but doesn't state that, so you think you are tipping the machine itself!

I would hope it would go to staff, but it seems crazy to tip when checking out yourself! There's no guarantee that the company won't keep some of it.

McDonald's invites you to make a donation to charity, perhaps rounding up to the nearest pound, and that's fair enough as they've traditionally supported charities for decades. Again, when you order from a kiosk and go and pick up, you don't generally expect to tip.

I am a firm believer that if a retailer can't afford to pay its staff or sell items for the price they sell at, without adding service charges that for all intents and purposes are part of the bill (few people will ask for it to be removed, and those that do often find staff come out from everywhere to want to know why and try and shame you), or expecting you to leave a 20% tip (as in the USA) then they don't in fact have a business.

We are nowhere near as bad as the USA because we do at least pay staff at least minimum wage, and some states get away with paying just a few dollars per hour, but nor do I want to see us move in that direction. Pay staff a fair wage, and monitor their performance as you would any employee. Happy staff will usually be better anyway.

 

[Cloud Strife]

Just wanted views please on service charges in Hospitality which if the service is good I don’t object to at all.

I point blank refuse to pay them. The only time that I find it acceptable is if there's a large group and it's a mandatory service charge, as I understand the economics behind serving a big group who will occupy more space for a longer period of time.

A friend actually got into a fight with a restaurant manager a few years back over this, as he demanded that the (optional) service charge was paid. My friend told him (not so nicely though!) to get stuffed and went to walk out, the manager physically blocked him, so my friend just threw him to the ground as he's a trained judoka.

I find that these service charges are relying on the British psyche of 'not wanting to cause a scene'. I, for one, have no problems with causing a scene if someone wants to insist that it's paid.