There continues to be a lot of press around service charges. At COUNTER we have always had two principles around paying our staff:
1) All staff members deserve fair pay. All our staff members have a basic hourly pay rate above the minimum wage, in most cases significantly so
2) Service charges cover the cost of credit card processing and tips to staff. Nothing else. So over 90% of service charge go to our staff, distributed amongst all team members through a transparent tronc system.
We are aware that some guests dislike paying service charges, and see it as a way for restaurants to make more money. However, given the way HMRC are treating restaurants it is the best way to ensure all employees who were involved in your experience get fairly paid. The two alternatives which we did not follow were:
1) Increase prices and pay a higher base salary. Given the tax difference between higher prices and higher wages and a "discretionary" service charge given to staff we would have to increase prices by over 20% to give staff a pay increase equivalent to the service charge.
2) Rely on voluntary tipping. While we would all love to do that, it makes it very hard to know if waiters collecting the tips are actually sharing them with bussers, reception, bar or kitchen. And by the way, as it is often undeclared income HMRX aren't too happy about it either.
We do not encourage our staff to ask for additional tips and we do not set our credit card machines to ask you whether you want to leave an additional tip.
If you are in a large party, please keep in mind that staff have to work extra hard to get all your food and drinks out together and to look after you. Asking us to remove the service charge means that the staff serving you will face a 25-30% pay cut for the time spend serving you. Please think about it.
So we welcome any moves by the government to ensure that service charges are fairly distributed amongst all staff in all restaurants, like we do. However, we think that any moves to ban service charges will lead to either much higher prices in an already over-taxed sector or lower take-home pay for staff. Neither can the right outcome.