Is London’s tipping culture out of control?

The biggest tip 33-year-old restaurant manager Oliver* has ever received was from Taylor Swift. ‘Two bodyguards staked the place out before she arrived,’ he says. ‘She ate with some friends and was very polite. We treated her like we would any other customer and she left £200 cash!’ 

It’s not every day that one of the most famous people in the world comes to eat in a small neighbourhood restaurant in Stoke Newington, and just as rare is someone leaving a thick wad of notes as a tip. ‘Once in a blue moon will you get a tip in cash – let alone one as big as that,’ says Oliver.

In the not-so-distant past, most of us would stop at an ATM on our way to a restaurant so we could place a couple of crisp notes on the table after our meal. Nowadays, there’s no need for any physical money to pass through our hands when we go out to eat and drink. We tap cards on electronic readers, scan QR codes and click screens filled with options detailing different percentages of service we can add to our bill. But, even if the process of tipping is actually easier than ever, not everyone feels the same about it.

Type ‘#tipping’ into TikTok and you’ll find a slew of videos claiming ‘tipping culture is getting out of control’. Reddit feeds pop up all the time asking questions like ‘Do you ask to have your service charge removed when you eat out?’ and newspaper columnists have also hit out at tipping standards, with one Evening Standard op-ed earlier this year claiming ‘excessive American tipping culture has come to London’. 

In response to a Time Out Facebook post asking if people had ever refused to tip their waiter, many people took aim at the discretionary service charge on restaurant bills. ‘I’m happy to tip but not happy to be told how much,’ said Di Meredith. Jenni Martin Lawrence commented: ‘I was at a restaurant recently where you had to order on an app, and if you wanted water, it was self-service. The waitress literally carried the food to the table and when paying, again by app, it suggested a 12 percent tip. Insane.’ Terry Goldsmith added: ‘Please, let us not go down the American route of tipping automatically.’ Where has this all come from?

Footing the bill 

Most of the anger directed towards tipping concerns the 12.5 percent service charge that is now ubiquitously added to the bill at most London restaurants. Although it’s technically an optional charge, a survey of 1000 UK adults by the Hospitality Professionals Association (HOSPA) and UKHospitality found 53 percent of people felt anxious about requesting to remove it and 71 percent said they’d prefer no service charge so they could tip separately. Nineteen percent of people said they don’t tip at all. 

To understand how Londoners feel about tipping I went to my local park in Lewisham to question some passers-by. ‘I’ll usually only leave a tip at an independent restaurant. I’m not afraid to ask for it off the bill at a chain place,’ one middle-aged man tells me. ‘I don’t mind paying service charge but it can feel a bit much if it ends up being the same price as a starter on the menu,’ said a 23-year-old woman. ‘You end up dreading going out because you can’t budget for it properly.’ A 33-year-old man said: ‘I love eating out and always pay service, but it’s creeping up in price. A few years ago I’d pay £50 or £60 a head for a nice meal. Now it’s about £80 or £90 and sometimes when you see the chunk of it that’s the service charge it can feel eye-watering.’ 

71 percent of UK adults said they’d prefer no service charge 

But what about the people juggling pans in steamy kitchens and marching towering stacks of dishes across dining room floors? Well, it turns out a lot of the people who work in hospitality are on the same page as the punters. 

The new norm

For Mark Wogan, who co-owns Homeslice Pizza and presents the Spooning With Mark Wogan podcast, service charge has become ‘another tax on customer experience’. ‘Tipping has been standardised by the 12.5 percent service charge,’ he says. ‘By homogenising the whole process, you take the personality out of the experience.’ Alina Falconer who co-runs Ladywell restaurant Wilson’s and coffee shop Oscar’s, calls service charge ‘a mechanism on the bill’. ‘I understand why people don’t like it,’ she says. ‘You don’t tip your dentist, you don’t tip any other services. You just tip hospitality.’ Jane Pendlebury, the CEO of HOSPA, says service charge divides opinion: ‘Some people like being guided on how much to pay, it means they can leave without feeling they’ve been miserly or over-generous. Other people are utterly offended by it and won’t pay it on principle.’ 

Cultural norms also affect how much we’re prepared to tip when we go out. ‘European tables tend not to give you anything; British people are somewhere in the middle and if you get a table from the USA you’ve hit the jackpot,’ says 30-year-old Luka Hannan, who has worked in London hospitality for 10 years. In Europe, particularly in countries like France, Italy and Spain, tipping isn’t mandatory or expected: instead, customers might round up the bill if they want to leave extra. On the other side of the coin, tipping in the United States is anticipated and it’s not uncommon for service charge to be 25 to 30 percent of the overall bill – a state of affairs largely driven by the fact that many US waiting staff are paid as little as $2.13 (£1.69) an hour with tips topping up the rest of their wage, leaving them at the mercy of customers’ generosity. 

In the UK, however, Jesse Charlebois, landlord of The Prince Arthur pub in Shoreditch, argues that, unlike in the US where tipping standards have been ingrained since the mid-twentieth century, we’ve only recently adopted a tipping culture. ‘It’s not something that’s ingrained in us like it is in North America,’ he says. ‘It means there’s a lot more grey area and leeway for how we pay it.’ 

It’s thought that the recent explosion in 12.5 percent optional service charge being added to bills as standard began in the mid-Noughties. Prior to this, tipping was largely done in cash with the amount chosen by the customer. Charlebois says this change happened ‘around the same time as the small plates revolution’, while Wogan says it coincides with our increasingly cashless society. For Joel Falconer, it’s linked to the rise of chain restaurants in the UK. ‘Service charge started to become more ubiquitous between 2005 and 2010 and I don’t think it’s a coincidence that period overlaps with the private equity restaurant expansion boom,’ he says. ‘It’s a corporate finance, venture capital driven model that doesn’t exist anywhere near the same extent in other European countries.’ 

Take-home tronc

Every restaurant has its own system when it comes to service charge, but most collect it into a communal fund called ‘tronc’, which is then divided equitably between all the staff, both front and back of house. Unlike a normal salary, tronc is often exempt from National Insurance contributions, separating it from a worker’s basic wage. Ideally, tronc should be a reward for a job well done, but in reality its tax status makes it a helpful tool to boost employees’ wages in an industry where staff retention is low, vacancies are high and cash tips are becoming few and far between. 

It’s also a huge reason why – despite not being totally in favour of the system – restaurants continue to add service charge to bills. Jon Kaye, who co-owns The Duke Of Greenwich pub tells me: ‘Our wage costs are around 40 percent of our total operating costs. A lot of the staff are on London living wage, but it’s such a chunk of the operating costs already that service charge brings up people's wages more than we’d be able to pay them.’ 

Banks don’t give a sh*t about how much you’re earning in service charge

Replying to an Instagram post about tipping on the hospitality service platform Countertalk, Mandy Yin, who runs restaurant Sambal Shiok on Holloway Road, wrote:

‘Staffing costs already make up 40 to 45 percent of operating costs and this is with the majority of staff being on minimum wage. I have always passed on 100 percent of tronc to staff, which increases their ultimate take-home pay to over London living wage. Without it you’ll find that the vast majority of restaurants, even chains, will go bust. Yes the system is broken. But this is the truth of the situation.’ 

A broken system?

Essentially, service charge has become increasingly important in a landscape where hospitality margins are being stretched to breaking point, as businesses are faced with ever rising rents and business rates, sky-high utility bills and growing food costs. ‘I see service charge as a necessary evil,’ says Hannan. ‘I wouldn’t be able to do this as a career if I was just getting paid an hourly rate with no tips because it wouldn't be lucrative at all.’ 

But it’s not a perfect system by any means. Not only does it piss off customers, but tronc has also been abused by some nefarious employers – usually larger chains – who fail to give the entirety of it to staff. It was this behaviour that led the government to bring in a new law in October making it mandatory for workers to keep 100 percent of the tips they earn no matter if they are paid by cash or card. Already, dimsum chain Ping Pong has come under fire for scrapping service charge and introducing a 15 percent ‘brand fee’ to customer receipts to cover ‘franchise fees and other brand-related expenditure’. 

Another consequence of boosting wages with service charge is that it makes staff income more precarious. Things like getting a mortgage, a loan or putting a deposit down on a rental property, which is determined solely on someone’s base wage, is much harder. ‘A couple I worked with at a restaurant in Shoreditch were buying a house and the way the service charge was distributed changed abruptly,’ says Hannan. ‘Unfortunately banks don’t give a shit about how much you’re earning in service charge and they got screwed over.’ 

‘Putting staff on a low promised wage and then making up the rest of their pay packet with tips just prevents people from seeing hospitality as a serious career,’ explains Hussein Ahmad, a director at hospitality accountancy service Viewpoint Partners. ‘It’s incredibly archaic to be expected to tip your server and now it doesn’t even indicate that someone’s done a great job, it’s just an expected part of the system.’  

The ‘service-included’ movement

So if tipping is outmoded and transactionary, but wages still need to be paid by ever squeezed businesses, what’s the solution? ‘It would be much better if service charge was made illegal,’ says Ahmad. ‘If it was completely removed and restaurants built the cost of service into the menu instead, yes, prices would rise, but the bill at the end would effectively be the same.’ 

This sounds dramatic, but the ‘service-included’ philosophy is a growing movement. It began gaining traction in the USA around a decade ago, slowly reaching the UK – where London is leading the way. It involves restaurants increasing their menu prices to include the typical 12.5 percent gratuity in each item and is already in place at restaurants like Mangal II in Dalston and Perilla in Newington Green. ‘The concept of a ‘service charge’ is beginning to become outdated,’ says Mangal II’s website. ‘‘‘Service-included’’ is the fairest evolution for an industry that provides so much to the fabric of London, and indeed, the world. Hospitality workers deserve better than relying on the optional generosity of the consumer.’

But, without all businesses moving to this model at the same time, would people be willing to go to a restaurant where the menu looked far more expensive? ‘When we opened Wilson’s this year we discussed service included, but we were worried about people being shocked at seeing a £30 main on the menu rather than a £26 main,’ says Alina Falconer. ‘Even though the price of the bill would be exactly the same at the end, the perception would be that we were really expensive.’

Service included is even harder for publicans to visualise. ‘We already struggle to get people to pay £6.50 for our house lager, would people pay £7.20 with service included?’ says Kaye. ‘It’s a great initiative, but it’s hard to translate through beer and bar snacks.’ 

Hannan, who has worked in restaurants that use the service-included model, also worries that it doesn’t necessarily translate to better pay. ‘I wouldn’t say the wages were reflectively higher as a result of including service in the menu,’ he says. ‘There’s also a layer of transparency with service charge – at least you know that 12.5 percent is going to staff. If a restaurant jacks up its prices there’s no guarantee where that money would go. It could be used for anything.’

Eat out to help out

The reality is that the black and white receipt we get at the end of our meal only tells a fraction of the story. Restaurants, pubs and bars are delicate ecosystems with intricately connected chains of farmers, growers, cleaners, kitchen porters, chefs and front of house. Really, the price we pay in restaurants doesn’t reflect all the work being put in behind the scenes. 

Aman Lakhiani, the founder of Marylebone Japanese restaurant Junsei, thinks we need to urgently change people’s perceptions about how much we should be paying for good quality food. ‘People look at the number on the menu and decide whether it’s good value based on what they’re paying in a supermarket for that product, but restaurants are totally different,’ Lakhiani says. ‘A lot of thought and time has gone into each item and we have to promote that more than ever before. We have to explain to people why what we’re doing is valuable.’ 

It would be much better if service charge was made illegal

Ultimately, restaurants are ‘really, really quiet at the moment,’ says Hannan. ‘No one wants a world with no restaurants, so I hope this can be a career in the long-run, but things are bad’. From the demise of cash killing off ad-hoc tipping to the growth of profit-driven chains, there are myriad reasons why paying service charge at the end of a meal has become an annoyingly familiar part of going out. And it’s only set to become more ingrained as the economic landscape gets harder for restaurants and evermore cash-strapped businesses continue to rely on service charge to help pay staff costs. ‘No one who wants to make a career from hospitality does it for the tips,’ says Oliver. ‘But the reality is that without service charge, I wouldn’t get a proper wage. ‘‘Service-included’’ is a utopia until the economic pressure is taken off restaurants, which are on their knees right now.’ 

For Oliver, the best days at work are when the dining room is full and you can hear a happy din of chatter, laughter and cutlery enthusiastically scraping on plates. ‘Tips or no tips, you want to see people enjoying the food and having a great time,’ he says. ‘That’s when you feel proud.’ 

*Name has been changed