I just read this article on the latest issue of Caterer and Hotelkeeper. Although there has been some discussion already on this topic I just would like to share my experience and I think this should be made known (somehow to the wider public).
This article mentions a cover charge...well this should really be a thing of the past and I won't dwell on this.
As to the service charge (SC) I think there are different views. As said in a previous post one of the hotels I used to work for used to retain 75% of the SC and use it to subsidise staff's salaries. Now I don't want to discuss whether this is appropriate or not, but rather discuss the fact that diners should know about it.
Nowadays we are seeing more and more restaurants stating on their menus that all tips go 100% to the staff and maybe all restaurants (and bars) should state what happens to the SC too.
In the article the writer tells when he is handed the PDQ machine there is an option on the screen to leave tips. Although this is preset on those machine I would like to make it known that there are a lot of staff that would just skip this as they feel embarassed "asking for a tip" although they know they won't see any of the SC. That's what we used to do at this hotel's restaurant and what many of my friends and colleagues do.
One dear friend of mine and hospitality professional once told me that in London you should just factor in the service charge in the price of your meal as when you go out it is pretty much a given. On the other hand we should not forget that the service charge is discretional and the writer could have opted to not pay it and live a tip instead.
At this hotel I talked about above, we had a very regular guest that would often come for dinner. Although we never said anything, one day he had dinner with a person that pointed out that most likely we would not get any of the SC. When asked, I told him the truth and from that day onward he always refused to pay the SC and left a tip instead.
I was in a restaurant on Friday night and was surprised when - as the waiter handed us the PDQ machine - he pointed out that he only got 60% of the tip if we added it to the bill at that point. As a result, we left cash instead for him. In the future, I think I'll always try to to that.
This is the very reason I don't tip via the PDQ machine. I was never really sure where that money went, and now I know!
Just to make it clear, in the hotels I have been working for some of the service charge was retained, but gratuities (the tips you leave when paying with your card) where entirely allocated to staff.
My restaurant charges both service and a cover charge, personally I don't agree with the cover charge as I find it rather old fashioned, if the receipt says that 100% of the sc goes to staff and doesn't make the definition that it actually subsidises the wages, is that ethical? That always confused me...
I think it is not ethical. You should get your basic salary and then SC and tips/gratuities on top.
It's certainly illegal to use tips and service charge to subsidise the pay of workers that are on National minumum wage.
How many restaurants declare 'cash tips' to HMRC? Lots of them I'm sure, but I read that HMRC have targeted restaurants with regard to undeclared revenue and have successfully prosecuted.