Restaurant tipping: a very British affliction

The recent furore over gratuities exemplifies Britain’s low-skill, low-investment political economy

Matthew BishopThere is an infamous scene in the Quentin Tarantino movie, Reservoir Dogs, where Mr Pink, played by Steve Buscemi, refuses to proffer a tip after a meal.  He argues that this should not be automatically expected for simply doing one’s job, particularly when distinctions are arbitrarily drawn between different groups of deserving and undeserving poorly paid workers.  In short, he says: ‘I don’t tip because society says I have to’.

After much cajoling, he eventually contributes a dollar into the collective pot.  The scene illustrates the deeply contextual and socially constructed nature of tipping: he does not ultimately succumb to reason, but rather emotional pressure from the big-hearted gangsters with whom he is dining.  It also highlights the ways in which a gratuity has taken on cultural meanings with political and economic consequences.

Indeed, in the United States, tipping culture is well-embedded legally and politically: ‘servers’ are different to other poorly paid workers, earning a tiny federally-mandated ‘tipped wage’ of US$2.13 an hour, though some states specify more, with the additional gratuity – at least 15% of the cost of the meal – making up their pay.  There is plenty to dislike about the American approach: customers having the power effectively to dictate wages; staff bearing the burden when tips are not forthcoming; and the intrinsic problem that the tip – supposedly a reward for good service – does not fulfil that function since it is essentially compulsory and even racially discriminatory.  Still, despite its many faults and increasing opposition, at least the system is consistent and well-understood; people view tipping generously as a public duty; and restaurant staff tend to earn good wages overall.

In Britain, by contrast, we have an extremely dysfunctional relationship with tipping.

Some restaurants operate the old-fashioned way: they pay staff the minimum wage or something close to it, and let them keep tips, whether individually or collectively.  Elsewhere, some add an optional service charge to a bill (usually around 12.5%) and no tips are expected.  However, a service charge is different to a gratuity, and belongs to the restaurant, not the staff.  This is not inherently problematic.  Elite restaurants generally train their staff extensively and use the service charge to pay them proper salaries, such that they don’t rely on tips: kitchen porters at Michelin-starred Locanda Locatelli in London earned £11.10 per hour a decade ago and, in the celebrated steak restaurant, Hawksmoor, the service charge is explicitly distributed to all kitchen and front-of-house staff on top of their normal wages.

However, as a series of recent revelations have highlighted, a number of high-street chain restaurants – including Côte, Las Iguanas, Turtle Bay and Gaucho – are now apparently profiteering from their staff by dispossessing them.  Abusive practices include: paying under minimum wage and using gratuities/service to make wages up to the minimum; charging staff administration fees well beyond the cost of doing so (as much as 10%) to receive tips paid by credit cards; forcing them to ‘pay to work’ by taking a percentage of their sales from their tips; and recycling tips back into staff competitions in order – in truly Orwellian fashion – to ‘incentivise’ them!

So, how do they get away with it?  In contrast to the US, there is in Britain no uniform or widely accepted system, significant legal ambiguity, and the consequent existence of real-world practice that diverges from our cultural norms and instincts.

At the risk of being presumptuous, I think most of us would agree with Mr Pink.  A tip should be a small something offered unexpectedly to show gratitude (hence ‘gratuity’) for personal services rendered: a few pounds given to a hairdresser for their first drink of the weekend; a fiver for the paperboy at Christmas; or ‘one for yourself’ for the bartender.  It should come on top of wages paid by employers, not be expropriated by them.  However, Britons also exhibit another distinctive cultural characteristic: a deep-seated, idiosyncratic antipathy towards discussing, spending or displaying money, along with an outsized ability to suffer in silence in lieu of making a fuss.  Don’t believe me?  See the VeryBritishProblems Twitter feed, which documents our enduring angst perfectly.

This in turn can make the moment when a bill arrives in a restaurant both excruciating for us and potentially extremely lucrative for them.  Essentially, many chain restaurants are adept at exploiting the considerable space that exists between legal and regulatory failure, on the one hand, and British cultural bewilderment, on the other, in order to victimise their workers.

Moreover, this problem is nothing new: in 2009 the Labour government, in typically mealy-mouthed fashion, introduced a voluntary ‘code of best practice’ after a series of similar scandals enveloped companies like Pizza Express and Carluccio’s.  Yet this is widely perceived to have failed.  It neither had teeth nor did it resolve the ambiguity between service charges (again, legally the property of the restaurant) and tips (a greyer area).  So, while some firms are believed to have cleaned up their act – insofar as clarifying their policy, if not necessarily changing it – many still charge staff huge administration fees before returning their tips or use them to bring wages up to the minimum.  In the worst cases – such as Bella Italia and Café Rouge, both owned by private equity firm, Tragus – reports suggest that staff are coerced into encouraging customers to pay service charges on credit cards (which accrue to the company), rather than tips in cash.  In some instances, waiters are even forced to lie to customers about the destination of their gratuity.

All of this points to three enduring pathologies in Britain’s political economy.

First, despite the widely proclaimed food revolution of recent years, the mid-market epitomises the country’s skills and productivity crisis.  As The Guardian’s restaurant critic, Marina O’Loughlin, put it a couple of years ago, ‘eating out on our sceptred isle is still something of a lottery, one where the winning numbers are 3663’.  The reference here is to chain restaurants and pubs that do little more than pay unskilled staff low wages to reheat bought-in food from a ‘massive foodservices company’.  Just about every household name on the high street does this to some extent.

Second, the whole tipping game reflects the dysfunctional, short-term nature of British capitalism writ large, embodied in increasingly soulless, homogenised high streets.  The vast majority of chain restaurants are owned by highly-leveraged private-equity firms; the aforementioned Tragus has itself been the subject of continual debt restructuring.  This explains the brutal attempts to sweat assets, mercilessly cut costs and reduce meaningful investment in skills and product quality in the pursuit of executive paydays.

Finally, in such a context, it is clear that corporate actors will exploit every loophole available to maintain revenue streams, even if it means overstepping the bounds of decency to rent-seek on the backs of their already long-suffering staff.  Amongst New Labour’s worst legacies has been the naïve belief that corporate actors can simply be exhorted to behave themselves.  The Victorians didn’t stop young children working in mines by pleading: the Factory Act (1833) and the Mines Act (1842) were needed to eliminate that evil practice.  Legislation to protect the 600,000 or more people working in British restaurants, as well as to clarify what exactly happens when we leave a tip, is now long overdue.

In the meantime, our only option is to do what Mr Pink did, and try to buck the social pressure to participate.  As he found out, though, this is easier said than done.