Sigh

No, I don’t support this but still:

An upmarket steakhouse at an exclusive London hotel is being accused of topping up managers’ salaries by handing them tips intended for waiters.

Trade union Unite claims four senior managers at STK London in the ME London Hotel on the Strand had their pay boosted to around £50,000 a year.

It has calculated that nearly two thirds of the 15% service charge added to every bill was handed to managers rather than serving or kitchen staff. The union says the company also siphons off 6% of the service charge paid by customers as an “admin fee”.

Unite national officer Rhys McCarthy said: “Restaurants and bars were banned from using tips to top up staff wages to the legal national minimum back in 2009, but that clearly hasn’t stopped STK from finding a nifty loophole to subsidise managers’ wages above and beyond the national minimum wage.

“It is the ultimate kick in the teeth for customers and staff alike, if restaurants are allowed to dip into tips and the service charge without a shred of transparency of how the money is being used or who is benefiting from it. If managers are not prepared to reveal what portion of the service charge and tips they are pocketing, then they should leave them alone.”

The definitions here: tips belong to the staff, they’re legally their money.

The service charge belongs to the business, it’s legally the company’s money.

Yes, yes, yes, maybe it shouldn’t be this way but it is. That’s why tips do not pay VAT nor NI and a service charge pays VAT and the distribution of it pays both NIs.

Necessary to get this stuff right while complaining about it.

24 thoughts on “Sigh”

  1. I worked as a waiter in 2010. The cash tips went straight to our (the waiters’) pockets. The ones going through the electronic system never seemed to materialise in our paychecks. Cash tips would typically double our pay for an evening’s work whilst the service charge pay would amount to maybe £5 a week. Since then I always make sure I tip the waiters with cash and avoid any service charge additions onto the bill.

  2. Not often I agree with Unite but customers tip the frontline staff not managers

    With the system they’ve put in place there’s no incentive for the staff to go out of their way to look after the customers

    What we don’t know is how the staffs take home income compares to similar businesses that have a Tronc system

    But some people tip even when there’s a service charge

    http://www.collinsdictionary.com/dictionary/english/tronc-master

  3. Is there any law regarding a ‘service charge’? I see it a lot in menus and hotels that all prices are subject to a 15% service charge, always wondered if it’s enforceable.

    Here in China it’s not worth arguing about but I believe this awful practice is also happening in countries that actually have a rule of law.

  4. In Australia minimum wage of waiter is $15.96, 1.5x times of that on Saturday and 2x times on Sunday and PH.

    Do I need add anything else ?

  5. “So how about we abolish tipping?”

    Tinpot tyranny suggestion of the week. Going to make it a criminal offence?

  6. Might a magistrate, on renewal of the liquor licence, require publication of the tipping policy? At the moment it’s so opaque most diners think a tronc is something you take on an ocean liner.

  7. “Since then I always make sure I tip the waiters with cash and avoid any service charge additions onto the bill.” Me too. Any other policy is a damned poor show.

  8. mr Ecks. You’d be surprised how well the “no tipping” works if you simply pay your staff decent wages…
    And how well tipping works if it’s just used as an actual compliment for the service, not as an expected addition to whatever the Boss fails to pay as a decent wage.

    No need to “ban” the practice at all.

  9. The basic rule for operating a restaurant used to be:one third materials;one third running expenses including staff; one third profits.The service charge would appear to be in addition to the third already charged for running expenses.

  10. A local restraunt stopped tipping, pays waiters a decent wage, if you want to make a contribution to a local food bamk charity they support instead you can

  11. In the US, waiters are exempt from the minimum wage. There is not typically a service charge, except that sometimes they will add one for a large party (6 or more). You can tip either in cash or on your credit card, and my understanding is that the service charge, if levied, is treated like a tip on the credit card: taxes are withheld, but otherwise (or so I believe — but then again did most of the assembled company in the current question) go to the wait staff (who very often share tips). However, there is more and more a movement for restaurants, especially at the high end, to pay waiters more and forbid, or at least discourage, tipping.

    If there is going to be an obligatory 15% service charge on top of the bill, why not just raise prices by 15% and eliminate the service charge? What’s the point of the separation? You could argue that it’s to make people think that it’s going to the waiters. But since people don’t know how much the waiters are paid anyway, I still don’t see the point.

  12. The appearance of “service charge n%” will usually get me out of a restaurant smartish. Even if I’ve booked. if they want to play silly buggers with their pricing, I’ll do similar with their reservations. I don’t have to suffer this shit, anywhere else. Means I don’t often eat out in the UK & that’s a distinct relief..
    Tipping? if it’s deserved. If they won’t pay the staff enough, they have to be on the customer’s earhole for a supplement, seems an excellent reason not to use the place.
    And, these days, I seem to have acquired an interest in a small restaurant & bar. Where tipping is occasional, small change & not expected. Strange furrin’ customs.

  13. “The basic rule for operating a restaurant used to be:one third materials;one third running expenses including staff; one third profits.”
    Profits?
    That must be another of the endless list of ways to earn an honest crust you’ve never attempted, DBC.

  14. Yes, quite, Given DBC’s thing about rent you’d think he would get it right. One thirds materials, one staff and running costs, one rent. And the profit is whatever you can pare off any of the three. 2-4% of turnover, if you’re good at it.

  15. Oh, I’d imagine the bit where the proprietor gets to serve drinks, cook & serve food, go down the cash & carry, come back & clean, do the books, pacify the bank manager whilst subsisting on whatever the customers didn’t fancy ordering that day, is what DBC regards as ruthless capitalist exploitation of the masses.

  16. So Much For Subtlety

    bloke in spain – “The appearance of “service charge n%” will usually get me out of a restaurant smartish.”

    Absolutely. I don’t mind paying the 15% extra or whatever it is, but I want to see the prices up front. I don’t want to be jerked around and, presumably, they think I will feel some level of guilt and be happy to pay it.

    “If they won’t pay the staff enough, they have to be on the customer’s earhole for a supplement, seems an excellent reason not to use the place.”

    It seems a good reason to boycott the place.

    “And, these days, I seem to have acquired an interest in a small restaurant & bar. Where tipping is occasional, small change & not expected. Strange furrin’ customs.”

    It will never catch on. Waitresses ought to be told that the job involves them doing things promptly and politely. For which they will be paid appropriately. If they think they need more cash than that there are probably other jobs they can be doing.

  17. Bloke in Costa Rica

    Yep, not a fucking inkling. The usual breakdown is: 20% ingredients, 30% wages, 20% utilities, 15% business rates, 10% cleaning and maintenance, 5% profit if you’re lucky. You probably have to make the slices of that pie smaller to shoehorn in cost of capital as well. It’s murder running a restaurant and maybe in in ten is still going after a decade.

  18. Those paltry profits probably explain why in the UK many restaurants are chains/franchises and in France most are run by individuals or families. There doesn’t seem to be much scope for anything in between.

  19. @TimN
    It’s worth looking at the: http://togrp.com/restaurant/stk-london/ website. It says so much about Brit dining out habits. Food as entertainment. I can’t imagine any of the French I know being seduced by the concept of “energetic vibes” & participating in “swank”. “Dress to impress…you never know who you might meet.” it demands. Total wankers like yourselves?

    In France a restaurant would create a reputation for the grub & would become ” a place to go” because of it. The “never know who you might meets” would be going there to be fed, not to be seen. So any “energetic vibes” would arise because of the clientele, not in design planning meetings.
    Four senior managers on £50k? Four? Managing a restaurant on job-share? What happened to a very overworked one?
    (Quite like the mulata wapa with the locks, though. Pretty high on my list of “never know who you might meets”.)

  20. BiS,

    Indeed, the French are spectacularly good at keeping eating and entertainment well separated, where they belong. I suspect the Brits want to distract you from the food and/or prices.

  21. So Much For Subtlety

    Tim Newman – “Those paltry profits probably explain why in the UK many restaurants are chains/franchises and in France most are run by individuals or families. There doesn’t seem to be much scope for anything in between.”

    I had an interesting chat with the owners of an Asian restaurant once. We got on to the subject of taxes and the conversation went something like “Bwwaahahaahhaha, you mean people pay those?”. Added to which, of course, the family always ate the food. They did very little grocery shopping. They ate the food that theoretically was going to go off but actually just folded their personal food shopping into their business expenses.

    These things are not open to Chains, nor are they to law abiding people who pay their taxes.

    I expect the French do not pay their taxes.

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