A popularsteak chainhas come under fire after it was revealed it will be slashing the amount of theservice chargeits waiters receive.
Gaucho, which has 20 branches across the UK, sparked backlash over its new service charge scheme (tronc scheme) which was set up for them by WTM Troncmaster, a specialist company hired to distribute the service charge.
According toThe Guardian, Gaucho’s existing waiters will have their share of the tips cut from 37% to between 25.45% and 29.4%, while new waiters will get just 17%.
And bar staff are reportedly having their share cut too, going down to 17% from the previous 20% they were given.
Initially, it was claimed that some of the money from the fee would be going to staff in head office who ‘contribute to the restaurant experience’, however Gaucho has denied this is the case.
Instead the chain toldThe Catererthe fee will be ‘shared among 31 different roles within the restaurant teams, including chefs, receptionists and kitchen assistants’.
WMT declined to comment on the tronc scheme, however, a Gaucho spokesperson said: ‘The new Tronc distribution has been set by the independent Troncmaster following industry benchmarking across our Gaucho employees.
‘The new distribution takes into consideration all our front and back of house colleagues. It is an equitable solution for all of our excellent people.
‘The employee costs borne by the Gaucho business remain as before and the business itself does not benefit in any way from the amended Tronc system.’
The steak chain says the tronc scheme is fully compliant with the law, as it comes after the Employment (Allocation of Tips) Act 2023, which came into force at the end of last year.
As per the act, restaurants are required to give 100% of the money from tips and service charges to staff.
Do service charges ever go to people in head office?
The idea of a restaurant service charge being shared with people working in the head office caused a stir on social media this week, prompting some to say they’d ‘boycott’ a restaurant for doing this as they found it ‘disgusting’.
And while Gaucho might not be giving tips to head office staff, industry staff have claimed it could potentially be happening at other restaurants.
Independent restaurant owner Stuart Gillies, who owns Number Eight in Sevenoaks and Bank House in Chislehurst, says the wording in the Employment (Allocation of Tips) Act 2023 is quite ‘vague’ at times, which could allow for head office staff could be included.
Stuart, the former CEO of theGordon RamsayRestaurants, confirmed toMetrothat his establishments give 100% of the service charge to restaurant teams, but he wouldn’t be surprised if bigger businesses were splitting the money in this way.
‘The industry is under such pressure right now, so restaurants are looking at any way they can, within the letter of the law, support the business,’ he explains.
‘If you’re a big company, you’ll have a centralised cost which will be the head office and that really adds a huge burden.
‘But that head office has a massive part to play in the guest experience, potentially from private events, marketing and all other departments – HR included. So I can see why bigger companies might come up with a rationale that would mean they should also be part of the service charge.
‘We don’t do that in our business and whether the public think it’s morally correct, there’s a question mark, but I would say many other large companies will be doing this and it probably just hasn’t come out yet.’
How much is the service charge?
According to Gaucho’s website, a discretionary service charge of 13% is added to customer’s bills at Gaucho Broadgate, Charlotte Street, City, Chancery Lane, Covent Garden, Hampstead, Picadilly, Sloane Avenue, Tower Bridge and Richmond.
While a 12.5% service charge is added at Gaucho’s restaurants in Birmingham, Cardiff, Edinburgh, Glasgow, Leeds, Liverpool, Manchester and Newcastle.
In the UK we’re used to seeing between 10 and 12.5% tacked on our bills, but it’s actuallybecoming the norm to see as much as 15% service chargeadded.
And industry experts have claimed this amount could continue to rise, moving in-line with the 20 to 25% tipping rate that’s standard across the USA.
A number of popular restaurants have already started adding a 15% charge to bills, including Fallow, The Wolseley and Gordon Ramsay’s Lucky Cat, so it’s not difficult to see how this could quickly increase.
‘When costs rise, the staff suffer’
Hospitality operations specialist Jonathan Kleeman believes many restaurant businesses don’t see service charges as a ‘tip’ but instead use them to bump up ‘salaries’.
He claims that service charges have long been used as a way for restaurant staff to top up their salary, saying: ‘For example, someone might be paid a £30k basic salary and £20k in guaranteed service charge. If there isn’t enough service charge income the company makes it up through salary. This has been a common practice for quite some time.
‘This is also why the word “gratuity” has largely disappeared as that refers to a genuine tip.’
As such, Jonathan thinks thegovernmentand local councils need to do more to make life ‘easier’ for businesses instead of ‘harder’.
He adds: ‘When costs continue to rise in hospitality, whether energy, rent, or taxes, the first people to suffer are the staff, as businesses try to keep overall costs down.
‘That said, this isn’t true for all restaurants. Many do share their tips properly, though they are in the minority. Ironically, it’s often the more casual venues, like pubs and wine bars, that actually treat the service charge as a genuine tip.’
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What do diners think?
Onsocial media, some diners were baffled by the idea of their service charge or tips being shared with staff other than their waiter, and there was definite outrage over the idea of tips ever going to head office.
While @OwlsPolitics asked: ‘What’s the point of a service charge if it’s not going to the server???’
And @morealcrusadeinc felt similarly, writing: ‘100% of service charge should go to the workers who graft in there. Time for diners to vote with their feet.’
@EleanorNess posted: ‘When I leave a tip I have no objections to it being shared with the people in the kitchen etc in *that* particular location but I will not be leaving a tip in establishments who are giving a share to head office employees.’
Others shared that they would be removing optional service charge on restaurant bills from now on and instead leaving cash for those who had served them.
But according to Stuart, this wouldn’t necessarily mean restaurant staff get more money.
‘If you stop service charge and went for cash tips, maybe it would work out, but in reality some people just won’t leave anything as they don’t want to pay any extra on top of their bill, or they’ll spend £200 and then leave a fiver and think that’s ok.’
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