Reports emerge of customers refusing to pay optional service charge “probably because their disposable income has gone down”

Top tip: service charges are often seen as an integral part of employees’ salaries   (Krutarth Shah/Unsplash)
Top tip: service charges are often seen as an integral part of employees’ salaries (Krutarth Shah/Unsplash)

An increasing number of customers are deciding against the optional service charge on restaurant bills, according to hospitality network Countertalk.

Countertalk’s Instagram account posted on Thursday that pub and restaurant workers have reported “more and more” diners are taking off the discretionary sum, “even when their experience has been great” — framing it as a cost-cutting measure for diners.

The post, which can be viewed here, is a video of a quote that reads: “Over the last couple of months I’m seeing more and more people ask to take the service charge off their bill, even when their experience has been great. They view it as an optional way to make a saving.”

A spokesperson for Countertalk told the Standard: “We’re hearing this in places with quite high volume. It’s not something happening across the industry, but it’s a warning sign — if it’s going on even in two or three places, it could continue to rise.

“Our view is that customers are being more difficult generally. They’re going out, but they want to save, probably because their disposable income has gone down.”

The spokesperson continued: “Obviously, it happens more in a high volume environment because service might be more casual. It’s hard because there’s generally a minimum of 10 per cent across the industry today, and in some places, where you order at the till and food is simply brought out, it might not be warranted. But then it’s up to businesses to pay workers properly.”

In London, chefs and restaurateurs told the Standard they’ve not experienced these problems, but conceded times are becoming more challenging.

Native’s Imogen Davis said: “We are keeping our prices as competitive as possible and haven’t yet experienced our guests requesting to remove the service charge, but numbers are down, and there is definitely a feeling of nervousness for the coming months.

“I’m very much on the side of a VAT reduction in hospitality to help placate the inevitable strains.”

George Dean, manager of The Barley Mow in Mayfair, said customers often forget that a service charge is to acknowledge a customer’s overall experience, in which employees play an integral part.

“I’m not seeing a reduction — but that’s because we offer a proper experience,” he said. “People are paying for food, drink, and the service.”

That said, outside London things appear to be somewhat different. The chef Daniel Burrell, of the Montagu Arms in Dorset, told the Standard he has seen customers ask for the service charge to be taken off, adding that diners were expecting it back “even for the slightest complaint.”

At present, it is up to business owners to decide how to distribute the money; many use a system called Tronc, which allows the pooling of funds. These can then be spread across the year, ensuring staff earn a regular salary each month in an industry that traditionally has many peaks and troughs. Tips are especially valued by those in hospitality businesses as they are, if discretionary, exempt from VAT.