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Analysis

Are we moving towards the end of tipping?

By James Evison , 11-Nov-2015

Are we moving towards the end of tipping?

The government consultation on tipping is ending – and the responses from industry bodies such as the ALMR has come in. James Evison looks at the UK’s tipping situation.

Maybe the problem with tipping comes down to the age-old cliché of British etiquette. The majority of pub operators now have a Chip & PIN payment machine which, as a customer, I always request at the end of my meal with a wave of my card. Then a member of staff presses the button, stands beside the table sheepishly, and a question arrives on the screen – ‘Gratuity?’. And at that point I’m sure that I’m not alone in having something of a crisis.

Anecdotal evidence among my thirty-something peer group suggests in fast-casual places, and in pubs, it’s an ‘I never tip’ attitude. I I don’t ascribe to this, but it would be interesting to know how a demographic breakdown of tipping across various venues looked. When my sister worked more than a decade ago for Whitbread’s Toby Carvery brand, in an area near to several retirement villages, her job was split between waiting tables and bar work. The tip reward of the table work was substantial.

Yet it was this same pubco, Whitbread, which also said that moving to a National Living Wage may have an impact on a cup of coffee that it serves in one of its venues.

Pricing

So the questions remains, and as posited by the ALMR’s chief executive Kate Nicholls in an article in the PMA , when and where to put up prices, is the key issue for the pubs industry. And what to do around tipping is crucial to this agenda.

But, pub-restaurant brands aside, are single-site licensees’ staff cleaning up with tips from serving large tables, especially in competitive metropolitan environments? I find it unlikely, but maybe I’m wrong. And even if there is a large and grateful table – do you give that wad of cash to the lucky waiter or waitress that got to serve that table, or is it shared among the team? And do you pocket a share as the licensee?

Liz Hore, the licensee of the award-winning Victoria Inn in Salcombe, told the PMA in September that she certainly believes in ensuring tips are distributed among the team.

“If the team work so well that they attract great tips, those tips should be evenly distributed amongst all staff. Our tips are fairly split according to hours worked, not status. They are taxed and given out on a monthly basis.”

USA

Until recently the situation in the USA had been a watertight ‘always tip’ policy. There was no discussion – and certainly when I have forgotten to tip during trips across the Pond, I’ve found management breathing down my neck only seconds after paying, asking what was wrong. Then my accent and those quintessential English words, ‘oh, yes, sorry’ puts them back at ease.

But even in the land of super-tipping things are changing. Joe’s Crab Shack, which is part of the Ignite Restaurant Group is ditching tipping completely. More and more large scale operators are coming out and looking at the issue with the typical culinary centres of New York and LA leading the way, including firms such as the Union Square hospitality group.

Back in the UK, it was the big fast casual food chains which blew the discussion up. Cote was accused of misleading customers when it was revealed that its 12.5% service charge didn’t go direct into waiting staff pockets. This followed several other food chains including Pizza Express, Strada, Zizzi and Ask Italian charging between 10% and 8% to staff to claim back their tips paid on cards, claiming it was needed to cover the costs of distributing the tips.

Legislation

As the discussion heated up two months ago, business secretary Sajid Javid launched an investigation into the issue of tipping. In its response, the British Hospitality Association (BHA) called for legislative changes to ensure transparency about the issue

This poses the question: does this require legislation or should it be operator-led? Submitting its response to the Government’s consultation into tipping practices, the Association of Licensed Multiple Retailers (ALMR) has welcomed it as a chance refresh the code of practice, but has also urged the politicans to proceed cautiously with any legislative changes.

Nicholls claims the association ‘found extensive awareness of the current code and compliance’ during its investigation into the issue.

She said: “Much of the reporting of tipping practice has been inflammatory, based on anecdotal evidence and unhelpful in its effort to address any perceived problems.

“We have found no evidence of poor practice but there is a clear misunderstanding from consumers, the media and some staff members as to how tips are redistributed.”

Modernisation

Instead, the ALMR see the consultation as an opportunity to ‘modernise’ the code and to reflect new consumer practices, such as cashless payment, as well as clearing up potential grey areas.

Nicholls continued that the ALMR wants the Government ‘to proceed cautiously with any legislative changes so as not to add to the confusion.’

“We would also stress that hospitality businesses facing shrinking margins require a degree of flexibility to reward their staff in the way that best suits their business model and there is little justification for large-scale intervention.” Nicholls continued.

“Intrusive regulation of employer practices regarding distribution of tips may well undermine the sector’s ability to push growth and inhibit investment.

“The system is in place to reward staff members who contribute to a great customer experience and wholesale changes may see those employees suffering as a result.”

And that final issue raises the important point: no-one surely wants the situation around tipping to make working in the pub sector a less enticing career choice.