What I think was interesting about the tips story is that things really do seem to be very very tough for restaurants and it doesn’t seem to be special pleading. Squaring increased staff costs with customers who are guided by the list price on dishes leads to additional charges after the event to make up the difference, or a financial loss. Obviously things are different if you’re Richard Caring and your clients barely even glance at the bill.
The admin charge looks like 'drip pricing' - a prohibited practice since the Consumer Protection Regs 2008. Additional compulsory charges should be communicated at the 'invitation to purchase'.
Its because customers are guided by the list price that this is banned. Something for trading standards or the CMA.
God I hate this shit, as a bartender I rely on service charge to pay rent. After the law went through to guarantee service charge going to staff a lot of venues dropped their wage to below London living wage and instituted a “guaranteed service charge” system to make the difference. I know wage costs are high but staff also need to be able to afford this city
Restaurant prices are essentially a collective action problem. As things stand, pretty much every restaurant feels impelled to have misleadingly low menu prices, because every other restaurant does the same. So we end up with a vicious circle of increasing information distortion which doesn't really benefit anybody.
The only way I can see of breaking away from that would be a coordinated move to the system applying to pretty much everything else we buy, where the price you are shown is the price you pay. The only way that could ever happen would be through legislation to bring prices for services much more into line with prices for goods, where these kinds of sharp practices have long been forbidden.
The increase in wages at the low end and therefore more expensive services seems to be a deliberate policy. If you’ve ever been to a Scandi nation you’ll know what this ultimately does to prices. I think a lot comes down to “if you’ve going to push up costs for those that play by the rules, at least enforce the law on the restaurants that dodge the rules”.
The policy of improving wages at the low end is a good one. For that and other reasons, costs really are increasing. So I would add that much also comes down to, "if you have to push up prices, at least present them in way which is as transparent and consistent for consumers as possible."
This was a useful list of restaurants run by greedy, cynical arseholes that I can now avoid - thanks!
If they’re wondering why they’re struggling to get enough covers to keep expanding - I dunno, an “ambience fee” might be egregious enough to ensure anyone not dining corporate literally never comes back?
In all seriousness, I’ll now be checking the wording of the 12.5% on my bills more closely and carrying cash for tip. When I was a bartender, my cash tips were basically what fed me - my measly hourly wage covered rent and my Oyster card and that was about it.
Restaurant owners - it’s very simple, upset your customers by adding extra non-optional fees and customers will eat elsewhere. It’s London, we have lots of choice. Just put up prices and be transparent - cover charges, admin charges etc will make me not come back to your restaurant. I’m lucky I eat out 2-3 times a week, those who price transparently will get my business.
Having seen how busy L'Antica in Hampstead usually is then if they are doing this either they're run incredibly badly/inefficiently, things are way worse than I thought or that is some truly egregious greed on show
So, is the old advice to decline the service/admin charge and give cash directly to the server still valid? Can this be done via some alternative method like Venmo (since so many no longer carry cash)?
Turbonick seems to overlook that the "admin fee" may provide nothing at all for staff. So while it may be relatively transparent for those who notice (US tourists will have no idea) that would indicate he's fine with the staff getting nothing
I am absolutely fine with that, because the term “admin charge” does not imply anything goes to the staff. It’s the same as the admin fee you often get charged buying concert or film tickets online or through an agency. It may be annoying but I never assume it’s going to staff. It’s just an extra fee to bring in more revenue for the company. If you don’t like it, go elsewhere.
Understood. But pedantic. Given that London restaurants are frequented by many non-locals, surely the subtleties of the substitution of an "admin charge" in lieu of a "service charge" will be lost on most. And no doubt most will pay it, thinking the staff will share. Yet simply by this enterprise deciding to switch the charge, most likely nothing will go to the staff. And I, for one, am not "OK" with that
I'd only agree with you if there was a prominent display (on the menu and bill) that the admin charge is NOT for staff. In (let's say) English, French, Spanish and German
I don’t have a problem with an admin fee. It doesn’t imply that it is going to staff as a tip (unlike a service charge), and I definitely don’t agree with the union that this is against the spirit of the legislation. It isn’t. It is an extra charge to provide revenue for the restaurant. And that’s fair enough in my view since as you say, life is hard for restauranteurs. £1 or even £2 per head will make very little difference given even a meal down your local Indian will normally be at least £30. And there is a level of overheads incurred by everyone who eats at a restaurant independent of what they order. This is just the free market operating; if you don’t like it, go somewhere else.
I strongly disagree. Even if you don’t think it’s going to the staff, it’s a sneaky way of charging more. If they weren’t trying to smuggle it past paying customers, they would simply put up the price of dishes, which is much more transparent. And 15% isn’t necessarily trivial. I know times are really hard in the restaurant business but these bullshit non-service charge, non-voluntary fees are a dreadful and fundamentally dishonest tactic. Just put up the prices on the menu.
I think it’s completely legitimate to charge a fixed fee per customer to cover certain fixed costs. (This used to be fairly common under the term “cover charge”.) Arguably a fixed fee is fairer than adding it to menu items if you want to cover fixed overheads. It shouldn’t be sneaky - it should be clearly displayed on the menu.
I do think adding a percentage is more likely to be misleading - first as you say adding 15% is likely to be a substantial sum unlike £1 or £2 per customer, and secondly it’s more likely to be misunderstood as a service charge. But would it be natural to assume that an admin fee of £1 or £2 per person went to staff? I don’t think so.
According to the 'Code of practice on fair and transparent distribution of tips', a service charge is "An amount added to the customer’s bill before it is presented to the customer". You can call it an admin fee, you can call it a branding fee, but in the end it's a service charge.
Is it the increased national insurance or just that they never gave service charge tips to staff and now they legally obliged to, have come up with a new way to rip both staff and customers off?
What I think was interesting about the tips story is that things really do seem to be very very tough for restaurants and it doesn’t seem to be special pleading. Squaring increased staff costs with customers who are guided by the list price on dishes leads to additional charges after the event to make up the difference, or a financial loss. Obviously things are different if you’re Richard Caring and your clients barely even glance at the bill.
The admin charge looks like 'drip pricing' - a prohibited practice since the Consumer Protection Regs 2008. Additional compulsory charges should be communicated at the 'invitation to purchase'.
Its because customers are guided by the list price that this is banned. Something for trading standards or the CMA.
https://www.gov.uk/government/publications/unfair-commercial-practices-cma207
God I hate this shit, as a bartender I rely on service charge to pay rent. After the law went through to guarantee service charge going to staff a lot of venues dropped their wage to below London living wage and instituted a “guaranteed service charge” system to make the difference. I know wage costs are high but staff also need to be able to afford this city
I am constantly being surprised by the lengths greedy amoral F***kers go to to avoid paying even a tiny bit of tax.
What I like about this comment is I have absolutely no idea which of about five things it could be referring to.
Restaurant prices are essentially a collective action problem. As things stand, pretty much every restaurant feels impelled to have misleadingly low menu prices, because every other restaurant does the same. So we end up with a vicious circle of increasing information distortion which doesn't really benefit anybody.
The only way I can see of breaking away from that would be a coordinated move to the system applying to pretty much everything else we buy, where the price you are shown is the price you pay. The only way that could ever happen would be through legislation to bring prices for services much more into line with prices for goods, where these kinds of sharp practices have long been forbidden.
The increase in wages at the low end and therefore more expensive services seems to be a deliberate policy. If you’ve ever been to a Scandi nation you’ll know what this ultimately does to prices. I think a lot comes down to “if you’ve going to push up costs for those that play by the rules, at least enforce the law on the restaurants that dodge the rules”.
The policy of improving wages at the low end is a good one. For that and other reasons, costs really are increasing. So I would add that much also comes down to, "if you have to push up prices, at least present them in way which is as transparent and consistent for consumers as possible."
This was a useful list of restaurants run by greedy, cynical arseholes that I can now avoid - thanks!
If they’re wondering why they’re struggling to get enough covers to keep expanding - I dunno, an “ambience fee” might be egregious enough to ensure anyone not dining corporate literally never comes back?
In all seriousness, I’ll now be checking the wording of the 12.5% on my bills more closely and carrying cash for tip. When I was a bartender, my cash tips were basically what fed me - my measly hourly wage covered rent and my Oyster card and that was about it.
Can I refuse this admin charge? Because I want my tip or service charge to go to the staff.
Restaurant owners - it’s very simple, upset your customers by adding extra non-optional fees and customers will eat elsewhere. It’s London, we have lots of choice. Just put up prices and be transparent - cover charges, admin charges etc will make me not come back to your restaurant. I’m lucky I eat out 2-3 times a week, those who price transparently will get my business.
Having seen how busy L'Antica in Hampstead usually is then if they are doing this either they're run incredibly badly/inefficiently, things are way worse than I thought or that is some truly egregious greed on show
Is that a legal loophole to save them from giving it to the staff?
Thank you Jim, we love any snail tale.
So, is the old advice to decline the service/admin charge and give cash directly to the server still valid? Can this be done via some alternative method like Venmo (since so many no longer carry cash)?
Turbonick seems to overlook that the "admin fee" may provide nothing at all for staff. So while it may be relatively transparent for those who notice (US tourists will have no idea) that would indicate he's fine with the staff getting nothing
I am absolutely fine with that, because the term “admin charge” does not imply anything goes to the staff. It’s the same as the admin fee you often get charged buying concert or film tickets online or through an agency. It may be annoying but I never assume it’s going to staff. It’s just an extra fee to bring in more revenue for the company. If you don’t like it, go elsewhere.
Understood. But pedantic. Given that London restaurants are frequented by many non-locals, surely the subtleties of the substitution of an "admin charge" in lieu of a "service charge" will be lost on most. And no doubt most will pay it, thinking the staff will share. Yet simply by this enterprise deciding to switch the charge, most likely nothing will go to the staff. And I, for one, am not "OK" with that
I'd only agree with you if there was a prominent display (on the menu and bill) that the admin charge is NOT for staff. In (let's say) English, French, Spanish and German
Great article again Jim.
I don’t have a problem with an admin fee. It doesn’t imply that it is going to staff as a tip (unlike a service charge), and I definitely don’t agree with the union that this is against the spirit of the legislation. It isn’t. It is an extra charge to provide revenue for the restaurant. And that’s fair enough in my view since as you say, life is hard for restauranteurs. £1 or even £2 per head will make very little difference given even a meal down your local Indian will normally be at least £30. And there is a level of overheads incurred by everyone who eats at a restaurant independent of what they order. This is just the free market operating; if you don’t like it, go somewhere else.
I strongly disagree. Even if you don’t think it’s going to the staff, it’s a sneaky way of charging more. If they weren’t trying to smuggle it past paying customers, they would simply put up the price of dishes, which is much more transparent. And 15% isn’t necessarily trivial. I know times are really hard in the restaurant business but these bullshit non-service charge, non-voluntary fees are a dreadful and fundamentally dishonest tactic. Just put up the prices on the menu.
I think it’s completely legitimate to charge a fixed fee per customer to cover certain fixed costs. (This used to be fairly common under the term “cover charge”.) Arguably a fixed fee is fairer than adding it to menu items if you want to cover fixed overheads. It shouldn’t be sneaky - it should be clearly displayed on the menu.
I do think adding a percentage is more likely to be misleading - first as you say adding 15% is likely to be a substantial sum unlike £1 or £2 per customer, and secondly it’s more likely to be misunderstood as a service charge. But would it be natural to assume that an admin fee of £1 or £2 per person went to staff? I don’t think so.
Yes - bring back transparent, fixed cover charges.
According to the 'Code of practice on fair and transparent distribution of tips', a service charge is "An amount added to the customer’s bill before it is presented to the customer". You can call it an admin fee, you can call it a branding fee, but in the end it's a service charge.
Unless it says that such charges are ALWAYS service charges that must go to staff, I don’t think that solves the problem
Is it the increased national insurance or just that they never gave service charge tips to staff and now they legally obliged to, have come up with a new way to rip both staff and customers off?