April 18, 2024 • 38 mins
Ever been caught at the end of a meal, wallet in hand, wondering just how much to tip - or if at all?
That's the exact conundrum we unpack in today's lively podcast, where we navigate the new Employment Allocation of Tips Act 2023, set to revolutionise UK's service industry. Join us as we delve into the principles of fairness and transparency in tip distribution, sharing tales from across the globe that highlight just how varied tipping practices can be. We've got the latest guidance for businesses too, ensuring they're on track with the upcoming legal standards.
Now, let's talk about the money side of things. Have you ever pondered why that bottle of wine at dinner seemed pricey, only to find out about the hefty service charge, on top of that mark-up, later? We're pulling back the curtain on the economics of tipping within the restaurant scene, from how service charges might fatten up revenue, to the ongoing debate over menu pricing that includes it all. We even sprinkle in some personal experiences and cultural contrasts between UK and US tipping habits, seasoning our discussion with a little global flavour.
For a heartier serving of insight, we recall those standout moments in customer service — both the dazzling and the dismal. Like that time when the absence of lemon in a lemon chicken dish had us questioning the very essence of gratuity. Or the awkwardness of contesting a service charge in sunny California, where tipping expectations had us tangled in a social and financial faux pas. Through these stories, we explore the intricate dance of respect and reward in the service industry, leaving you with a taste of the emotional and economic layers of tipping.
The new rules are going to shake things up – and adds increased complexity to this emotional subject. Please listen and share!
For more info, free resources, useful content & our blog posts, please visit realitytraining.com.
Reality Training - Selling Certainty
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Good afternoon listeners and good afternoon
Bobby, and we're both delightedthat the sun is upon us.
Speaker 2 (00:08):
I'd like to first of all say apologies to anybody
listening to this podcast in themorning, because Jeremy's
chosen the afternoon becausethat's when we're recording it,
but of course you could listento this podcast at any time.
Speaker 1 (00:20):
Well, no, I would say .
If you've started, you must nowpress pause and you have to
wait till tomorrow afternoon.
If you're ahead.
Speaker 2 (00:28):
No, I'm sorry.
I think we must allow ourlisteners to listen any time to
the podcast that they want to,and not be so fascist about
timings.
Speaker 1 (00:39):
Some people may have only just got up, so instead of
actually greeting them with goodmorning, we could still say
good afternoon and get away withit.
Speaker 2 (00:46):
Well, that's true, but again we are alienating
anybody who's listening before12.
Hmm, bob and Jeremy's Conflapthe Reality Podcast.
(01:11):
Bob and Jeremy's Conflab thereality podcast.
So welcome to Bob and Jeremy'sConflab.
We are going off in anotherdirection today, but it does
actually link back to some ofthe podcasts that we've done a
little while ago on service andthinking a bit about behaviors,
and also we did some stuff aboutbad management and there's a
(01:32):
lot of subject matter flyingaround at the moment.
I've just been listening to thetoday podcast, all about
economics, and there's a lot ofstuff there which is slightly
depressing about our agingpopulation and what have you and
the cost of things and verylittle wriggle room, and that's
within the economy as a whole.
So if you now bring that downto the world of customer service
in restaurants and of courseyou could extend this to barbers
(01:56):
and taxes and things like thatas well there's a whole new law
coming in to manage the way thatwe are charged and in
particular we're talking abouttips and service charges and
many of us will have seen at thebottom of our bills 12.5%
service charge added, and thenew law is coming in to right a
(02:20):
historic wrong and I think it'sprobably fair to say, jeremy,
that many people didn't realisethat it was a wrong, did they?
Speaker 1 (02:32):
When you say they didn't realise it was a wrong,
you mean the owners of therestaurants, the owners of the
establishments.
Speaker 2 (02:36):
No, they knew it was a wrong, I think customers made
a huge assumption that theservice charges would be split
amongst the staff.
Speaker 1 (02:47):
Let's explain what it is.
It's called the EmploymentAllocation of Tips Act 2023.
So the Act was raised, but itdoesn't come into effect.
Till the 1st of July this year.
We'll make it unlawful foremployers to withhold tips from
workers.
The new law will introduce anumber of changes to tipping
practices in the UK and, if notadhered to, could have
(03:10):
substantial financialconsequences for employers, with
awards of up to 5,000 peremployee to reflect losses
suffered.
Now it protects tips paid bycash and cards.
So I don't know if you're likeBob's saying, consumers not
realizing this.
I would often say to a waiterooh, will you get it if I put it
(03:31):
on the card?
Do you need it in cash?
So it ensures that tips arepassed on to employees without
any deductions that's the pointfrom their employer and they
should be allocated fairly.
And all workers are protectedby the new law, including those
on zero hour contracts.
You know those famous HRassassins who come in and try
and save companies money bycreating zero hour contracts.
(03:55):
So hotels, bars, restaurantswhat you're actually going to
have to do and this is a Iactually refer listeners to this
site very good law firm We'vejumped on this called Walker
Morris walkermorriscouk.
They will help you with the bitof the law that's tricky.
You have to create a sort ofdistribution document if you
(04:17):
were checked, because it willalso be knocking on the door of
employment and immigration.
If you're not doing thatproperly, you see it could
expose other things and you haveto fairly disperse your tips
and prove that you have a properdisbursement policy.
So that's all the boring bit.
To kick off the podcast.
I don't think we need to sayany more about the law.
But July 2024, bobby and I willbe sitting in a restaurant.
(04:42):
We'll have this is an imaginaryworld momentarily would have
received extraordinary serviceand we'll want to tip the waiter
waitress and we'll have thefull confidence that he, she,
will be keeping that cash orthat cash will be going into a
pool for fair disbursement.
Speaker 2 (05:02):
Okay, so let's just go back to a fundamental
question.
Really, why do we have to tip?
Speaker 1 (05:08):
well, my research and I know you've done some too
doesn't really give us thatanswer.
I think the most interestingresearch I have is from germany
and france.
In the language of tipping, soin germany a tip is called a
trink geld and, yeah, in frenchit's a poor boy and if you
(05:33):
translate this it just meansdrinking money.
So trink geld is a bit of geldfor the, and poor boy, boy,
boisson boy.
The verb to drink.
It's for you to have a drink,so I give you a little bit of
money and that means that youcan have a drink on me later.
So I think it's cultural thatwe well, you worked in a pub
(05:54):
growing up.
I'll have one later.
Let me buy the barman a drink.
And that extended ashospitality grew.
This is me imagining intorewarding people with a little
bit of something to have a drinkoff, so I can't place it
historic.
Speaker 2 (06:08):
So there's a lot of stuff online when you look at
this subject, which says thatwe're becoming more and more
americanized because, of course,tipping is endemic across
america for so many things, uh,to the point where it is
actually assumptive.
Yeah, it's in no waydiscretionary in america in
certain places.
I remember the first time youand I went, jeremy, we got to
(06:29):
newark airport after landing innew jersey and a gentleman told
us what our fare was going to beto our hotel, what the charges
were and what the tip was.
They just added it all together.
There was no moment where wewere thinking we weren't going
to be paying that tip.
Speaker 1 (06:46):
We had to pay that tip well, if listeners don't
know, the usa, canada andcolumbia are right up in the
higher ranking.
It's expected to be 15 to 20percent of your bill, so that's
like paying more thancorporation tax on your on your
thing.
So 15 to 20 percent, so that is, as you just said, standardized
(07:08):
and what you're also callingabout this rocketing is nice
little word called tipflation soit's the inflation of tips.
There was a survey carried outin the us.
I think you you used the wordassumptive just then yeah.
Yeah, they asked US consumers doyou think that tipping is an
(07:29):
obligation or do you think it'sa choice?
Well, 29% believed it was anobligation.
Okay, 21% a choice.
And that ridiculous thing theother percentage went.
Oh, it depends.
But what we're saying is mostpeople in the US believe it's an
obligation that you pay it.
They don't really have thechoice.
Speaker 2 (07:46):
But you see, isn't that interesting?
15 to 20%.
So let's say you've got a dishwhich is $20.
Yeah, okay.
So let's say you know there's aplate of food for $20.
You could add $4 to that dishand have no tip.
Okay, and just say tips areincluded, just make it $24
(08:07):
instead.
Now, psychologically then thepeople think, well, it's quite
expensive for that, but actuallywhen the bill comes you're
paying it anyway, so why notjust include it?
Now, that's a big thing thatI've been reading about is
there's now a movement incertain restaurants to all
inclusive.
Everything is included, grgratuities.
(08:27):
This is not a tippingrestaurant.
I've been to one of those inAmerica.
Actually, I haven't been to onein the UK yet.
Speaker 1 (08:33):
I think, just coming in on that yeah, if you were to
have the dish for $20 and let'ssay it's a fish dish or whatever
it is, if you thought that'snot comparable, that I'm paying
$24 for that fish dish in otherplaces, the challenge you'd have
is you're marking up, you'retrying to get a $24 dish to
compete against $20 dishes.
Speaker 2 (08:52):
But the point is that if you signposted early doors
in this restaurant there are nogratuities, Everything is
included you would expect to paya little more for the food, but
you know there's not going tobe a a 40 addition at the bottom
of your bill.
It's a change in thinking.
It is.
Speaker 1 (09:11):
It's the same money yeah, but we're a couple of
brits speaking.
If I said that to an american,they might go.
I think that would take a whileto change that behavior because
I prefer to know the fish iscosting me 20.
It's up to me to to reward thewaitress.
Speaker 2 (09:23):
But it isn't up to you because that service charge
is there.
It's not up to you becauseyou're paying it anyway, and I
think this is the odd thingabout it.
Now, the difference is this,and I think we've really got to
make this point we, as manyother consumers have thought,
believe that the service charge10%, 15% was the tip was going
(09:43):
to the waiting staff, was goingto the chef or whatever, and
maybe some of it was.
But if actually it's just anadditional charge and I heard a
guy being interviewed about thisthe other day on a podcast and
he said restaurants only makemoney from wine and service
charges.
The markup on food is tiny andtherefore they only make money
from wine and service chargesWell, if that's the the case,
(10:04):
then they're going to have toput their prices up because
great, we've got more pricesgoing up great, brilliant your
service charge has to go to yourstaff.
Now, you have no choice there.
So if you're going to have aservice charge, you're going to
have to give it to the staff.
And and as for the wine, well,I found out some stats on wine.
They make your hair curl.
I mean it's absolutelyridiculous what they charge.
There is a whole thing aboutthis, because I've also thought
(10:27):
for a while if alcohol is sohugely marked up in restaurants,
why do we tip against it?
Speaker 1 (10:35):
well, because it's bundled in, isn't it?
Speaker 2 (10:36):
it's bundled in.
You're already making a fortuneon that bottle of wine, so why
don't I just pay you apercentage of the food cost as a
service charge?
Speaker 1 (10:45):
Because, the bill is run up.
Speaker 2 (10:46):
You've just opened yeah, but you've just opened a
bottle of wine which a childcould do, yeah.
So you know, it's aninteresting.
That's another perspective onit.
Speaker 1 (10:55):
Well, I think the other thing we should talk about
right at the outset, eventhough we're well into this
episode now, is, I think I feelthat I'm rewarding good service
with a tip absolutely right ornot rewarding with no tip yeah,
absolutely right.
Speaker 2 (11:12):
Yeah, and they're still being paid.
By the way, they're stillgetting the person just you're,
you're serving, you is beingpaid regardless.
Speaker 1 (11:18):
Well, let's talk about our experience.
Just the other night, which Ithink would bring it into focus.
We went to a curry house inlewis.
Yep, his service was nowherenear as good as the buckingham
fort, no, and so therefore, whenwe came to tip, I thought we've
had to call you loads of timesand there's no one in here.
You're late with this, latewith that.
I didn't feel I wanted to tipas much as I would do for
(11:40):
another curry experience Itotally agree.
Speaker 2 (11:43):
So for the tip is saying thank you for speediness,
friendliness, chat, whatever,recommendations, knowledge,
skill, humour, all of those kindof things which are part of the
experience, but that's why,when we got to know those
waiters in Princeton all thoseyears ago, they said to us
that's why we know that wheneverthe English come over, we know
(12:05):
they never tip because we thinkthey're a bunch of tight asses.
Well, they didn't want ourtable, do you remember?
Speaker 1 (12:09):
No, it was only because we knew the girl We'd
met a girl from another placewho was friendly.
She then talked to the waiterand said these guys are friends
of mine.
Now they're fine, but no onetook our table of Brits over
there.
Who wants them?
We're not going to get our 20%out of there.
There you go.
Speaker 2 (12:24):
So, again, that's cultural, isn't it?
Yeah, so, whereas you know, ifwe have amazing service and
actually in America the serviceis by and large way better than
we get over here so of courseyou're going to reward it in
some form, which again is an oddone, why do we actually do that
?
But then over here, almostautomatically in the last 15
(12:45):
years, the service charge comesin 10%, 12.5%, 15%, they're
going up, and one chain inLondon have brought in to
circumvent this new law.
They brought in a thing calleda brand charge, which is 15%,
already brought it in, which isalready percent, already brought
(13:08):
it in, and that will be.
And they're being criticizedfor that, because they're being
explicit that this is anadditional charge on top of your
food, which is not a tip.
So you're being charged thisservice charge and it's it's
just a charge for you, for youto be, to actually be there, and
I suppose if you want to tip,you have to either tip someone
directly you know, have morefascinating the marketing
(13:29):
director there, using the wordbrand charge, young people could
brand.
Speaker 1 (13:33):
It's a good brand you know I'm part of, I mean
outrageous.
Speaker 2 (13:36):
I'm at the behest of the brand I've experienced the
brand.
Yeah, oh, that makes my stomachgo a little, I think well, again
, what you're doing is you areblatantly saying there is an
additional charge for you to eathere because business rates are
high, employment costs,electricity, power, energy is
high.
To run a restaurant of any typethese days is extremely
(13:59):
expensive and, rather than itbeing an additional income
stream, actually for some itwill be.
I think for many it is alifeline, and there's a huge
amount of concern that this isgoing to drive many restaurants
out of business and pubs andothers who are already
struggling.
Speaker 1 (14:19):
Thompson was quite vociferous.
This will be going back 20years.
In one of the other roundups ofminimum wage increase he was
arguing against the minimum wageincrease across his restaurants
because he was saying I can'tafford to pay any more to my
waiters and bar staff and busboys and so on, and if they're
(14:41):
prepared to do the job for that,I throw in some other stuff.
They all get fed such and such.
I don't really want to pay themanymore.
And he was quite strong insaying that the amount of money
they're already receiving isenough for that.
Yeah, extraordinary, isn't it?
Temporary period of time and soon.
Speaker 2 (14:59):
Well, at the same time, there is a question mark
over.
You do these jobs.
Why?
Because you're good in front ofpeople, you enjoy it, you enjoy
the interaction, you getsomething out of it, you're
motivated to do it.
In many cases in other sorts ofestablishment, you do the job
because there's nothing else youhave to do it, you're on the
(15:20):
lowest hourly rate and any tipsyou get on top make up your poor
hourly rate to a slightlybetter hourly rate.
That's what we're talking abouthere and that's where I think,
at the lower end, this is really, really dodgy, because I think
what's going to happen is thatyou've got people who are paid,
you know, £8.50, £9 an hourmaybe, and if they're under 21,
(15:43):
by the way, or under 18 eventhen it's even lower.
So there are very, very lowrates of pay, and that
additional tippage might giveyou an extra pound or two an
hour.
Speaker 1 (15:55):
We're saying that's vital, but you're also saying
some of those jobs may be lost.
Oh yeah, Because the restaurantcan't carry the additional loss
of income.
Speaker 2 (16:05):
I can't see how they can.
Yeah, Now it's interesting.
There's a restaurant opened inLewis recently.
I haven't been in there yet.
It's a very nice lookingrestaurant with some amazing
wines in the window.
They've got a beautiful shelfof wine and I'm sorely tempted
to go in there.
However, I've done someresearch today on wine in
restaurants and the percentages.
(16:26):
You just think I can't see howthey can justify it really.
Let me ask you this questionwhat do you think the average
markup is in percentage termsagainst the retail cost of a
bottle of wine in a restaurant?
46%, Okay, If it was that low,you'd be out of business in a
few days I've gone high.
(16:48):
Okay, the average markup on abottle of wine against retail is
300%, so a tenner bottle ofwine will be 30 quid.
Okay, on average.
Speaker 1 (17:01):
God, aren't I naive.
Speaker 2 (17:02):
There we go.
Speaker 1 (17:03):
I'd sell that for 15 quid.
No, no chance, Okay there yougo.
Speaker 2 (17:06):
Now it's even worse.
Just to make you realize thatof course the £10 is the retail
price.
If I'm buying in bulk, I'mgoing to get it for six or seven
, Okay.
So I'm making even more on thatbottle.
And I read about one chap whohad varied wines in his place,
(17:28):
but everyone asked formarlborough, new zealand,
sauvignon blanc.
Sauvignon blanc, sauvignonblanc.
Okay.
He found a bulk supplier whocould give him a bottle of four
dollars, okay, and he wasselling it for 50 nice now
that's a huge markup and he saidhe had other wines that were
better value, nicer, uh, lowermarkup, but people just wanted
(17:49):
the new zealand, and it was justand and fifty dollars.
What the hell?
They were just doing it and hewas making a fortune.
Now let's think about that as asingle premise, that you're
making 300 on your wine.
Okay, and actually so for me togive you 15 on that.
30 quid, that's another fourpound, 50 on top, you've just
(18:10):
made 215 percent yeah, it says315 percent for a single bottle
of wine yeah, that's ludicrouswhy are we tipping the wine?
I don't get that.
Speaker 1 (18:20):
I just don't get I I don't, I don't know we where
we've had these arguments before.
I remember during the pandemic,when restaurants were closing,
everyone looked at the largeowners of shopping centers who
were renting to Strada andJamie's Italian and all that
kind of mid-range market, yeah,yeah, and how they were shutting
(18:40):
down like nobody's business.
Well, they were relying onquite healthy numbers of people
adding it into their shoppingexperience mid-market, mid-range
, but british land and all thepeople who own these kind of
buildings were still chargingpretty healthy rental sums and
the whole thing just tickedalong it.
(19:01):
It worked, so the markups weregood.
So I don't fully back andbelieve when they all say
they're going to go bust withthis.
I think I think there's.
I think there's a pyramidinvolved.
Reality Training was created in2001 by Bob and Jeremy, both
(19:24):
actors who met at drama school.
In 2001, by Bob and Jeremy,both actors who met at drama
school, reality deliverstraining that is effective,
memorable and entertaining, witha touch of theatricality to
bring it to life.
We now have a company oftrainers, actors and coaches who
you can work with to createchange programs across your
business.
Please contact us viarealitytrainingcom.
Please contact us viarealitytrainingcom.
Speaker 2 (19:51):
Let's imagine that you have got one of these big
restaurants in a nice position,maybe in an airport, and let's
imagine it turns over a milliona year and some of them will
turn over way more than that.
Yeah, okay.
So a million a year, you've gotyour 12.5% on top.
That's £120,000 in servicecharges on that million turnover
.
Okay, that's essentially freemoney.
(20:11):
Okay, so you've got all thecosts you've just been talking
about, all your rates, all yourstaffing costs, etc, etc.
But you've got 120 a year cashinjection simply from
transactions.
That's just free moneyessentially.
And people already paid themarkup on the booze They've
already made.
You've made some money on thefood, it's you know.
(20:31):
In that sense it's a hugeamount of money.
And then you go into a chainwho are turning over 10 million.
Then 1.2 million a year is inservice charge money, 1.2
million just in credit cardtransactions.
Speaker 1 (20:44):
Okay, it's mad money 1.2 million just in credit card
transactions.
Okay, it's mad.
So, interestingly enough, thechains that have multiple
investors wanting their moneyback don't own their own
buildings.
This seems possibly more vitalto a family-owned mortgage-free
yeah.
(21:05):
So there might be someindependents that come through
this quite nicely and some ofthe chains that had well, I
don't know, it's going to bevery interesting.
I think one thing that's goingto bound to happen is they've
already got the percentage onthe booze that can't move too
much, but they're all going tomark the food up.
The food's going to rocket, thefood's going to have to go up,
(21:33):
but then, in which case, lesspeople will go, then you create
you're in the same pressure onthe sector.
Yeah, it's poor historically.
When I worked at cafe bohemthere, was no minimum wage law.
I kept all of the tips, sothat's one thing he did do is we
kept every red cent of it, butit was all cash.
Speaker 2 (21:41):
It was a cash economy oh, I agree, and I was the same
.
When I worked at the swan intunbridge wells, I used to do
saturday nights in the hotel bar.
It was very faulty towers, youknow, and I was, you know,
bowtied up and, uh, you know,all the usual bum flufferies and
I was often handed cash tipsfrom people who I was serving.
(22:02):
All I was doing was servingthem drinks.
It wasn't a cocktail bar, itwas no, you know, it was no skin
off my nose, I was was beingpaid anyway, but there was a
feeling that they wanted toreward my joie de vivre with a
few quid, and I was delighted toaccept it, of course.
But again, I think we've reallygot to make a distinction
between personal reward.
(22:22):
Here's a lovely guy get you a,a drink.
Back to your original point now, of course, when I worked in
pubs and you worked in pubs, ifsomebody bought you a drink and
they were buying around, youcould have it yeah, okay, so
I'll have a half with you.
Don't mind if I do yeah, that'sor you know now, these days
nobody drinks behind the bar,which I think is absurd yeah and
so you, you take the money, doyou.
Speaker 1 (22:43):
How does that get?
You're not meant to?
Speaker 2 (22:44):
you're not meant to.
Speaker 1 (22:45):
You're meant to run the money you're meant to run
the money through the till.
Let the owner make the profitmargin on the beer and you pour
the beer it's extraordinary,isn't it?
Speaker 2 (22:53):
have it at the end of your shift.
My grandfather, joe morel, thelate great joe morel.
He worked in a series of pubsaround clark and well, and
whenever he was bought a drinkhe would take the money and put
it in a little pot.
Speaker 1 (23:07):
It was a tip.
Speaker 2 (23:07):
That's great okay now again, that's a personal thing
and I think many of ourlisteners will think well, okay,
if I go to a barber's, if I geta taxi and the guy's efficient
and quick and a good laugh andwhatever personal reward, yep,
I'll physically reward thisperson in some way with some
money.
But I think this idea of nowthe way the service charge has
(23:30):
come in, I think what it's doneis actually it's now biting back
at the people who brought it into use it as a revenue stream,
because they're now thinkinghang on a minute, oh no, I've
got to give all of this to thestaff.
So maybe if they worked on it ina slightly other way, they
might have had a halfway houseor called it tips, for your
(23:51):
server actually called it thaton the on the thing that might
have made a massive difference.
Service charge sounds likereally what on top of everything
?
You want me to pay this on topand I will never forget.
I won't.
We won't say where this is.
We went for a Christmas partyonce to a very, very top
restaurant and it should havebeen wonderful and the service
(24:12):
was average to poor.
There was a huge service chargeand this was a couple of weeks
before Christmas and they wantedus out before 9.30 so they
could give the table to somebodyelse.
Now do you really think I'mgoing to give that brand a tip
and be happy about paying theirservice charge when actually the
(24:33):
service is appalling andthey're hurrying us along?
That's outrageous.
That's absolutely outrageous.
And what happens is this youjust don't go back.
Speaker 1 (24:43):
Well, that's right, you just vote with your feet.
I mean, there's some we're acountry that has this sort of
odd relationship with that.
The us are much further downthe road of sort of obliged
brazil, chile, around 10.
The netherlands publish it all,so it's all in print saying
exactly what's going to happen.
So you know, japan, none ofthis, there's none of this.
(25:04):
It's all part of the game.
There's no culture.
It the price is the price.
That's where it is.
Iran if you really have beencharmed, you leave a gift for
the person who served you, youdon't?
It's nothing about money.
What a little, a little trinket.
I don't know whatever key ringsyou notice they didn't have one
.
I think the wider debate thatappeals to me is if you are
(25:28):
wanting to earn money by beingbrilliant in customer service.
Restaurants have been afantastic ground for you to go
into, because you know you getfood.
You, you can be a low incomebut work your way up, and then
then you're you get food.
You, you can be a low incomebut work your way up, and then
then you're in hospitality andthen you're managing people and
so on, so on.
If they don't get this right,this will be another sort of
point of journey into work beingcut off or reduced.
Speaker 2 (26:01):
Yes, I is an interesting one because and then
you structure your menu sothere's no tips and no service
charge, it's just decide on thepricing.
I was just thinking back toyears ago.
There were two restaurants Iliked, one in london, one in
bristol that were Italian andevery server in that place was
(26:23):
way over 50.
Okay, and male they were allmale and the service was just
off the charts friendly, funny,quick, efficient, knew all about
the dishes, personality andcharm, you know, just fantastic.
Now, in that kind of scenario,of course they would have
(26:45):
benefited from tips and servicecharges, I'm sure.
But I wonder whether when that'syour full time job, you're a
pro.
You've been doing it for 20 or30 years.
Of course you're on a salary.
You're already on a salary,you're on a salary per year.
The standard of your service isnot going to deviate.
You're always going to bebrilliant and people are going
to go to that restaurant becauseof you.
(27:06):
Absolutely Not much emphasis isput on that.
That you know if you've got areally good server.
People come back every week.
Let's go and see that lovelyguy you know, which is actually
brilliantly lampooned in theleague of gentlemen when this
couple who are unhappy.
Go to see an italian restaurantwith luigi because he lifts
their spirits they're sodepressed until he comes in
(27:28):
luigi, luigi, and then it turnsout his name isn't luigi, but
wonderful, you know, that's thepoint that if you've got a
really, really good level ofservice, then you are the custom
is going to be, then the customis going to be such, your
regular custom is going to besuch.
And come back to Indianrestaurants.
We go back to the same Indianrestaurants when the service is
amazing all the time, becausethat's the reason, that's how
(27:52):
they absolutely lock in theirrevenues and they lock in their
longevity, because they'reabsolutely brilliant.
And I think we have a realdisconnect between those two
things with this service charge,with this new law that actually
, if your service is poor, nowthis law has come in, everybody
is going to be way much moreconscious and I hope that the
(28:15):
places that are brilliant andhave great people, people flock
to them because that's going tomake everyone work harder.
Speaker 1 (28:23):
You talked about the top restaurants that have
employed waiters permanently.
Maybe the kind of casualrelationship with staff will
change and they'll say look, wewant to make a commitment to you
.
If you make a commitment to us,maybe you'll have more places
deciding that actually justbeing brilliant.
Having the volume of customersis now going to be more
(28:43):
important than the tip.
There's going to be such a sortof spotlight held over this
tipping principle.
Right, let's do, let's do.
Three is the magic number.
Speaker 2 (28:51):
Three is the magic so nice, easy one.
Speaker 1 (29:01):
What's the best customer service you've ever had
when it comes to bars,restaurants, hospitality?
Speaker 2 (29:08):
I think I've mentioned this before, but it
was in new york.
It was in the grammer seatavern, which is not a low-cost
restaurant.
We went in.
All of the servers are women ofa certain age, all wearing
beautiful outfits and theirknowledge of each individual
(29:29):
cocktail, each individual dish.
The best way to go through themenu is just amazing and you
have an amazing meal.
And then the bill comes at theend.
This is not a tippingrestaurant.
Our service is included.
We hope you had a wonderfultime.
They do not want to tip.
Now, that was shocking becauseit was in America, but it was
(29:51):
also a great example ofexemplary service that wasn't
hustling for tips.
They were just that goodbecause they chose to be.
And my question to you is whatis the best customer service
you've had?
Speaker 1 (30:04):
I think I possibly am in California and it's two
summers ago and I wish I couldremember the place.
It was a California town, atraditional US restaurant.
We looked, we didn't understandthe menu in any way and the
prices were very high to us asUK foreign travelers.
And this woman in her 60s cameover and just said oh, it looks
(30:28):
complex.
Start small, work your waythrough it.
Don't don't order as you go.
Our chefs are quick, don'tworry about spending a fortune
on these mouths because youdon't know the portion sizes.
You, you just start small andwe'll work.
And it was like took all thepressure off and we tasted
different things and then somekids were more hungry than
others and we added dishes as wewent, which was a really nice
(30:50):
way.
Rather than what's your starter, what's your main, what's your
put, lock it in.
It was just come and go as youplease that that was.
That's the most recent goodexperience, and I will try and
find out what the place wascalled yeah so worst service for
you.
Speaker 2 (31:03):
Well, my question to you is similar.
Is it?
Can you remember a time whenyou didn't tip because the
service was so bad?
So that's a slightly differentquestion.
I've had lots of bad service,but I'm just thinking about a
time where it was soparticularly poor that we you or
I, or whatever we didn't feel atip was was warranted, didn't
think it was was worth I knowone with tash when we were on
(31:26):
holiday in torquay.
Speaker 1 (31:28):
I ordered the lemon chicken and there was no lemon
in it.
It was just a dry piece ofchicken.
I said there's no lemon, isthere some lemon?
It's a lemon chicken dish.
And he went.
Other people have had it andthey haven't complained.
Speaker 2 (31:39):
So we didn't give him a tip no, have you ever, on
that, removed a service chargebefore paying the bill?
Speaker 1 (31:47):
possibly not just being too bloody english and
what you just said earlier justcrossing it off the list and not
going there again I'm surethat's the more default habit
for a bit disgruntled off we go.
We're not going back thereagain.
Speaker 2 (32:01):
I can't remember a time where I I don't think I've
ever done that, but I'm justtrying to think of a time that
there have been times when I'vebeen away on business where the
service has been average orbelow average and I haven't
tipped because I just think noyou know, please give me, me
(32:23):
something to to reward you ifthere's nothing to reward, yeah,
vacant.
Speaker 1 (32:25):
Looking around doing the Michael winner thing, waving
the napkin yeah, yeah, exactly.
Speaker 2 (32:32):
It's funny.
My son, charlie, has justrecently started a job serving
at a wedding venue, and I'm notsure what the tipping scenario
is there, but he says what'squite interesting is that people
, when they see you behind thebar or they see you serving
something, they naturally feelslightly sorry for you, and I
(32:52):
don't know whether this is partof the deal.
People go, oh, look, this poorguy's having to work behind
there.
Speaker 1 (33:00):
He must be poor, he must be struggling a bit and
actually I think there is a bitof that there was.
There's a hotel in buckinghamthat's now part of the
buckingham university.
I don't know if you know this.
You remember that thing calledbuckingham beals on the
roundabout.
It then became a best western.
Do you know the one I mean?
Out on the roundabout that's?
Speaker 2 (33:18):
now part of Buckingham University campus.
Speaker 1 (33:19):
But there was a guy who worked behind that bar there
who, when you looked into hiseyes, you felt you shouldn't
have ended up doing this.
And so you feel slightly and hehad sort of no busyness and
he'd take ages to pour a pintbecause he had ages and it was a
bit depressing and you thoughtwhere's he scuttling back to?
There is something about that.
(33:40):
You shouldn't have to be doingthis.
Speaker 2 (33:42):
No, my third question we've actually talked about is
I was going to ask you whetheryou remembered when we had to
play an assumed tip, and thatwas, of course, in America.
When we first went there, wewere told what the tip was that
we were going to be paying.
That was so bizarre.
Yeah, can you remember anothertime when you've had to pay
(34:03):
someone?
Speaker 1 (34:03):
said, oh, and with the tip?
Yeah, that's again aCalifornian trip with Tash and
the kids in a pizza place.
We paid the bill and we didn'ttip because we were just rushing
.
And we were called back in witha manager having a conversation
with us saying Chelsea's beenyour server.
You really need to give her 20.
That's how it works here and asbrits you may not understand
this.
I'm going to take you throughit and I need you to cough up
(34:25):
and give her some money.
She ran out for us and broughtus back into the restaurant to
tip yeah, I've never heard about.
Yeah, that was extraordinary andshe was folding napkins,
scowling in a sort of ante roomand we sort of looked at her and
she sort of looked back at usand was sort of doing that face
like oh, and the manager wassaying, look, look at Chelsea,
(34:45):
she's over there.
You haven't tipped her.
And I went.
What she said let me explain toyou, because you Brits just
don't get this.
And Tash and I go what?
How much was the bill?
She wanted us to put downanother 40 quid.
And we were talking and we wentwe're not doing that when it's
chelsea's been off and hardlyattentive and these have been
pizzas that have already, youknow, a pete.
That pizza was 29 and then wellthat's what it is here in this
(35:09):
part of burbank or wherever wewere, and I remember us just
leaving ten dollars or somethingand walking out and her going
unbelievable and chelsea comingback in as we look back through
the windows, chelsea and themanager talking, and I just
thought your service has beendesperately average.
Why should I tip you?
Speaker 2 (35:26):
god, I mean there's a whole drama, right there, you
can imagine Chelsea's face,can't you?
Yeah, absolutely.
I mean, I made sure to facelike a smack backside.
Speaker 1 (35:34):
Yeah, absolutely so my last question to you is
you're running a four siterestaurant group.
You're the owner of it.
You and your fellow directorhave just got this news.
You're not very big, but you'requite ambitious.
You may be in your forties andthis little restaurant business
of yours, what are you going todo?
What are you going to talk toyour staff?
What's your plan to deal?
Speaker 2 (35:55):
with this.
It's a really good question.
I I think maybe maybe were-institute something which you
you don't see in manyrestaurants these days you get
managers and things like that.
I think if you had a permanenthead waiter or permanent head
assistant head waiter whosalaried people who were there
(36:18):
most of the time, then you wouldhave an exemplar to use that
awful word a fantastic servicethat would in each place, would
carry a higher salary cost butwould absolutely show the
standard.
Then you could have howevermany waiting staff you need to
run the evening, who will be onan hourly rate, but I think you
(36:42):
you absolutely make sure thatthe head waiter and the
assistant okay are running theservice level so that you, as a
restaurant, keep gettingcustomers, because now you're
losing your tips yes, yeah,correct, and actually it shows
that you've got to.
Speaker 1 (36:56):
Then I up.
I'm with you on that.
I think I would do nothing withmy prices.
I would prove that we're goodand that we're happy to go along
with the law because it's a lawand that everyone's going to
keep their tips.
We're not going to get it, andbecause we're so good, I would
then be able to inflate myprices in due course.
Speaker 2 (37:15):
And actually the other thing I was thinking.
There are certain restaurants.
Nothing happens before 7, 7.30.
And then at 9.30, the chef'sgone, I think you and.
I have, you know, traveled andgot to places and turned up at
restaurants.
We've missed the chef and it's,you know, chicken salad or
something.
And I think maybe there'ssomething about extending the
(37:42):
hours slightly that you're open,because that's, you know, means
you get a bit more passingtrade.
But regardless of solutions, Ithink this new law over the next
two or three years is going toshake out a lot of poor service
restaurants and pubs and I don'tthink there's anything that's
going to change that.
Speaker 1 (37:57):
It's a very interesting thing.
So, instead of us giving youtips, today it's been more about
tips.
Speaker 2 (38:04):
One other thing I was going to mention just very
quickly.
If you ring a contact centerand the person you speak to is
amazing, wouldn't it be lovelyif you could just say, yeah, I'm
going to give you an extrafiver?
That's very funny, really.
Yeah, we don't do that that,but the guy's incredible.
I, I could buy something for 50quid.
I, I could easily spend that ona, on a meal somewhere.
(38:26):
Why can't I?
Why can't I tip the guy fiveron the phone.
Interesting, isn't it?
That's funny.
There we are.
Think about that.
Thanks for tuning in.
Cheers, bobby.
Thanks guys, bye.
Thanks guys, bye.
Good afternoon listeners and good afternoon
Bobby, and we're both delightedthat the sun is upon us.
Speaker 2 (00:08):
I'd like to first of all say apologies to anybody
listening to this podcast in themorning, because Jeremy's
chosen the afternoon becausethat's when we're recording it,
but of course you could listento this podcast at any time.
Speaker 1 (00:20):
Well, no, I would say .
If you've started, you must nowpress pause and you have to
wait till tomorrow afternoon.
If you're ahead.
Speaker 2 (00:28):
No, I'm sorry.
I think we must allow ourlisteners to listen any time to
the podcast that they want to,and not be so fascist about
timings.
Speaker 1 (00:39):
Some people may have only just got up, so instead of
actually greeting them with goodmorning, we could still say
good afternoon and get away withit.
Speaker 2 (00:46):
Well, that's true, but again we are alienating
anybody who's listening before12.
Hmm, bob and Jeremy's Conflapthe Reality Podcast.
(01:11):
Bob and Jeremy's Conflab thereality podcast.
So welcome to Bob and Jeremy'sConflab.
We are going off in anotherdirection today, but it does
actually link back to some ofthe podcasts that we've done a
little while ago on service andthinking a bit about behaviors,
and also we did some stuff aboutbad management and there's a
(01:32):
lot of subject matter flyingaround at the moment.
I've just been listening to thetoday podcast, all about
economics, and there's a lot ofstuff there which is slightly
depressing about our agingpopulation and what have you and
the cost of things and verylittle wriggle room, and that's
within the economy as a whole.
So if you now bring that downto the world of customer service
in restaurants and of courseyou could extend this to barbers
(01:56):
and taxes and things like thatas well there's a whole new law
coming in to manage the way thatwe are charged and in
particular we're talking abouttips and service charges and
many of us will have seen at thebottom of our bills 12.5%
service charge added, and thenew law is coming in to right a
(02:20):
historic wrong and I think it'sprobably fair to say, jeremy,
that many people didn't realisethat it was a wrong, did they?
Speaker 1 (02:32):
When you say they didn't realise it was a wrong,
you mean the owners of therestaurants, the owners of the
establishments.
Speaker 2 (02:36):
No, they knew it was a wrong, I think customers made
a huge assumption that theservice charges would be split
amongst the staff.
Speaker 1 (02:47):
Let's explain what it is.
It's called the EmploymentAllocation of Tips Act 2023.
So the Act was raised, but itdoesn't come into effect.
Till the 1st of July this year.
We'll make it unlawful foremployers to withhold tips from
workers.
The new law will introduce anumber of changes to tipping
practices in the UK and, if notadhered to, could have
(03:10):
substantial financialconsequences for employers, with
awards of up to 5,000 peremployee to reflect losses
suffered.
Now it protects tips paid bycash and cards.
So I don't know if you're likeBob's saying, consumers not
realizing this.
I would often say to a waiterooh, will you get it if I put it
(03:31):
on the card?
Do you need it in cash?
So it ensures that tips arepassed on to employees without
any deductions that's the pointfrom their employer and they
should be allocated fairly.
And all workers are protectedby the new law, including those
on zero hour contracts.
You know those famous HRassassins who come in and try
and save companies money bycreating zero hour contracts.
(03:55):
So hotels, bars, restaurantswhat you're actually going to
have to do and this is a Iactually refer listeners to this
site very good law firm We'vejumped on this called Walker
Morris walkermorriscouk.
They will help you with the bitof the law that's tricky.
You have to create a sort ofdistribution document if you
(04:17):
were checked, because it willalso be knocking on the door of
employment and immigration.
If you're not doing thatproperly, you see it could
expose other things and you haveto fairly disperse your tips
and prove that you have a properdisbursement policy.
So that's all the boring bit.
To kick off the podcast.
I don't think we need to sayany more about the law.
But July 2024, bobby and I willbe sitting in a restaurant.
(04:42):
We'll have this is an imaginaryworld momentarily would have
received extraordinary serviceand we'll want to tip the waiter
waitress and we'll have thefull confidence that he, she,
will be keeping that cash orthat cash will be going into a
pool for fair disbursement.
Speaker 2 (05:02):
Okay, so let's just go back to a fundamental
question.
Really, why do we have to tip?
Speaker 1 (05:08):
well, my research and I know you've done some too
doesn't really give us thatanswer.
I think the most interestingresearch I have is from germany
and france.
In the language of tipping, soin germany a tip is called a
trink geld and, yeah, in frenchit's a poor boy and if you
(05:33):
translate this it just meansdrinking money.
So trink geld is a bit of geldfor the, and poor boy, boy,
boisson boy.
The verb to drink.
It's for you to have a drink,so I give you a little bit of
money and that means that youcan have a drink on me later.
So I think it's cultural thatwe well, you worked in a pub
(05:54):
growing up.
I'll have one later.
Let me buy the barman a drink.
And that extended ashospitality grew.
This is me imagining intorewarding people with a little
bit of something to have a drinkoff, so I can't place it
historic.
Speaker 2 (06:08):
So there's a lot of stuff online when you look at
this subject, which says thatwe're becoming more and more
americanized because, of course,tipping is endemic across
america for so many things, uh,to the point where it is
actually assumptive.
Yeah, it's in no waydiscretionary in america in
certain places.
I remember the first time youand I went, jeremy, we got to
(06:29):
newark airport after landing innew jersey and a gentleman told
us what our fare was going to beto our hotel, what the charges
were and what the tip was.
They just added it all together.
There was no moment where wewere thinking we weren't going
to be paying that tip.
Speaker 1 (06:46):
We had to pay that tip well, if listeners don't
know, the usa, canada andcolumbia are right up in the
higher ranking.
It's expected to be 15 to 20percent of your bill, so that's
like paying more thancorporation tax on your on your
thing.
So 15 to 20 percent, so that is, as you just said, standardized
(07:08):
and what you're also callingabout this rocketing is nice
little word called tipflation soit's the inflation of tips.
There was a survey carried outin the us.
I think you you used the wordassumptive just then yeah.
Yeah, they asked US consumers doyou think that tipping is an
(07:29):
obligation or do you think it'sa choice?
Well, 29% believed it was anobligation.
Okay, 21% a choice.
And that ridiculous thing theother percentage went.
Oh, it depends.
But what we're saying is mostpeople in the US believe it's an
obligation that you pay it.
They don't really have thechoice.
Speaker 2 (07:46):
But you see, isn't that interesting?
15 to 20%.
So let's say you've got a dishwhich is $20.
Yeah, okay.
So let's say you know there's aplate of food for $20.
You could add $4 to that dishand have no tip.
Okay, and just say tips areincluded, just make it $24
(08:07):
instead.
Now, psychologically then thepeople think, well, it's quite
expensive for that, but actuallywhen the bill comes you're
paying it anyway, so why notjust include it?
Now, that's a big thing thatI've been reading about is
there's now a movement incertain restaurants to all
inclusive.
Everything is included, grgratuities.
(08:27):
This is not a tippingrestaurant.
I've been to one of those inAmerica.
Actually, I haven't been to onein the UK yet.
Speaker 1 (08:33):
I think, just coming in on that yeah, if you were to
have the dish for $20 and let'ssay it's a fish dish or whatever
it is, if you thought that'snot comparable, that I'm paying
$24 for that fish dish in otherplaces, the challenge you'd have
is you're marking up, you'retrying to get a $24 dish to
compete against $20 dishes.
Speaker 2 (08:52):
But the point is that if you signposted early doors
in this restaurant there are nogratuities, Everything is
included you would expect to paya little more for the food, but
you know there's not going tobe a a 40 addition at the bottom
of your bill.
It's a change in thinking.
It is.
Speaker 1 (09:11):
It's the same money yeah, but we're a couple of
brits speaking.
If I said that to an american,they might go.
I think that would take a whileto change that behavior because
I prefer to know the fish iscosting me 20.
It's up to me to to reward thewaitress.
Speaker 2 (09:23):
But it isn't up to you because that service charge
is there.
It's not up to you becauseyou're paying it anyway, and I
think this is the odd thingabout it.
Now, the difference is this,and I think we've really got to
make this point we, as manyother consumers have thought,
believe that the service charge10%, 15% was the tip was going
(09:43):
to the waiting staff, was goingto the chef or whatever, and
maybe some of it was.
But if actually it's just anadditional charge and I heard a
guy being interviewed about thisthe other day on a podcast and
he said restaurants only makemoney from wine and service
charges.
The markup on food is tiny andtherefore they only make money
from wine and service chargesWell, if that's the the case,
(10:04):
then they're going to have toput their prices up because
great, we've got more pricesgoing up great, brilliant your
service charge has to go to yourstaff.
Now, you have no choice there.
So if you're going to have aservice charge, you're going to
have to give it to the staff.
And and as for the wine, well,I found out some stats on wine.
They make your hair curl.
I mean it's absolutelyridiculous what they charge.
There is a whole thing aboutthis, because I've also thought
(10:27):
for a while if alcohol is sohugely marked up in restaurants,
why do we tip against it?
Speaker 1 (10:35):
well, because it's bundled in, isn't it?
Speaker 2 (10:36):
it's bundled in.
You're already making a fortuneon that bottle of wine, so why
don't I just pay you apercentage of the food cost as a
service charge?
Speaker 1 (10:45):
Because, the bill is run up.
Speaker 2 (10:46):
You've just opened yeah, but you've just opened a
bottle of wine which a childcould do, yeah.
So you know, it's aninteresting.
That's another perspective onit.
Speaker 1 (10:55):
Well, I think the other thing we should talk about
right at the outset, eventhough we're well into this
episode now, is, I think I feelthat I'm rewarding good service
with a tip absolutely right ornot rewarding with no tip yeah,
absolutely right.
Speaker 2 (11:12):
Yeah, and they're still being paid.
By the way, they're stillgetting the person just you're,
you're serving, you is beingpaid regardless.
Speaker 1 (11:18):
Well, let's talk about our experience.
Just the other night, which Ithink would bring it into focus.
We went to a curry house inlewis.
Yep, his service was nowherenear as good as the buckingham
fort, no, and so therefore, whenwe came to tip, I thought we've
had to call you loads of timesand there's no one in here.
You're late with this, latewith that.
I didn't feel I wanted to tipas much as I would do for
(11:40):
another curry experience Itotally agree.
Speaker 2 (11:43):
So for the tip is saying thank you for speediness,
friendliness, chat, whatever,recommendations, knowledge,
skill, humour, all of those kindof things which are part of the
experience, but that's why,when we got to know those
waiters in Princeton all thoseyears ago, they said to us
that's why we know that wheneverthe English come over, we know
(12:05):
they never tip because we thinkthey're a bunch of tight asses.
Well, they didn't want ourtable, do you remember?
Speaker 1 (12:09):
No, it was only because we knew the girl We'd
met a girl from another placewho was friendly.
She then talked to the waiterand said these guys are friends
of mine.
Now they're fine, but no onetook our table of Brits over
there.
Who wants them?
We're not going to get our 20%out of there.
There you go.
Speaker 2 (12:24):
So, again, that's cultural, isn't it?
Yeah, so, whereas you know, ifwe have amazing service and
actually in America the serviceis by and large way better than
we get over here so of courseyou're going to reward it in
some form, which again is an oddone, why do we actually do that
?
But then over here, almostautomatically in the last 15
(12:45):
years, the service charge comesin 10%, 12.5%, 15%, they're
going up, and one chain inLondon have brought in to
circumvent this new law.
They brought in a thing calleda brand charge, which is 15%,
already brought it in, which isalready percent, already brought
(13:08):
it in, and that will be.
And they're being criticizedfor that, because they're being
explicit that this is anadditional charge on top of your
food, which is not a tip.
So you're being charged thisservice charge and it's it's
just a charge for you, for youto be, to actually be there, and
I suppose if you want to tip,you have to either tip someone
directly you know, have morefascinating the marketing
(13:29):
director there, using the wordbrand charge, young people could
brand.
Speaker 1 (13:33):
It's a good brand you know I'm part of, I mean
outrageous.
Speaker 2 (13:36):
I'm at the behest of the brand I've experienced the
brand.
Yeah, oh, that makes my stomachgo a little, I think well, again
, what you're doing is you areblatantly saying there is an
additional charge for you to eathere because business rates are
high, employment costs,electricity, power, energy is
high.
To run a restaurant of any typethese days is extremely
(13:59):
expensive and, rather than itbeing an additional income
stream, actually for some itwill be.
I think for many it is alifeline, and there's a huge
amount of concern that this isgoing to drive many restaurants
out of business and pubs andothers who are already
struggling.
Speaker 1 (14:19):
Thompson was quite vociferous.
This will be going back 20years.
In one of the other roundups ofminimum wage increase he was
arguing against the minimum wageincrease across his restaurants
because he was saying I can'tafford to pay any more to my
waiters and bar staff and busboys and so on, and if they're
(14:41):
prepared to do the job for that,I throw in some other stuff.
They all get fed such and such.
I don't really want to pay themanymore.
And he was quite strong insaying that the amount of money
they're already receiving isenough for that.
Yeah, extraordinary, isn't it?
Temporary period of time and soon.
Speaker 2 (14:59):
Well, at the same time, there is a question mark
over.
You do these jobs.
Why?
Because you're good in front ofpeople, you enjoy it, you enjoy
the interaction, you getsomething out of it, you're
motivated to do it.
In many cases in other sorts ofestablishment, you do the job
because there's nothing else youhave to do it, you're on the
(15:20):
lowest hourly rate and any tipsyou get on top make up your poor
hourly rate to a slightlybetter hourly rate.
That's what we're talking abouthere and that's where I think,
at the lower end, this is really, really dodgy, because I think
what's going to happen is thatyou've got people who are paid,
you know, £8.50, £9 an hourmaybe, and if they're under 21,
(15:43):
by the way, or under 18 eventhen it's even lower.
So there are very, very lowrates of pay, and that
additional tippage might giveyou an extra pound or two an
hour.
Speaker 1 (15:55):
We're saying that's vital, but you're also saying
some of those jobs may be lost.
Oh yeah, Because the restaurantcan't carry the additional loss
of income.
Speaker 2 (16:05):
I can't see how they can.
Yeah, Now it's interesting.
There's a restaurant opened inLewis recently.
I haven't been in there yet.
It's a very nice lookingrestaurant with some amazing
wines in the window.
They've got a beautiful shelfof wine and I'm sorely tempted
to go in there.
However, I've done someresearch today on wine in
restaurants and the percentages.
(16:26):
You just think I can't see howthey can justify it really.
Let me ask you this questionwhat do you think the average
markup is in percentage termsagainst the retail cost of a
bottle of wine in a restaurant?
46%, Okay, If it was that low,you'd be out of business in a
few days I've gone high.
(16:48):
Okay, the average markup on abottle of wine against retail is
300%, so a tenner bottle ofwine will be 30 quid.
Okay, on average.
Speaker 1 (17:01):
God, aren't I naive.
Speaker 2 (17:02):
There we go.
Speaker 1 (17:03):
I'd sell that for 15 quid.
No, no chance, Okay there yougo.
Speaker 2 (17:06):
Now it's even worse.
Just to make you realize thatof course the £10 is the retail
price.
If I'm buying in bulk, I'mgoing to get it for six or seven
, Okay.
So I'm making even more on thatbottle.
And I read about one chap whohad varied wines in his place,
(17:28):
but everyone asked formarlborough, new zealand,
sauvignon blanc.
Sauvignon blanc, sauvignonblanc.
Okay.
He found a bulk supplier whocould give him a bottle of four
dollars, okay, and he wasselling it for 50 nice now
that's a huge markup and he saidhe had other wines that were
better value, nicer, uh, lowermarkup, but people just wanted
(17:49):
the new zealand, and it was justand and fifty dollars.
What the hell?
They were just doing it and hewas making a fortune.
Now let's think about that as asingle premise, that you're
making 300 on your wine.
Okay, and actually so for me togive you 15 on that.
30 quid, that's another fourpound, 50 on top, you've just
(18:10):
made 215 percent yeah, it says315 percent for a single bottle
of wine yeah, that's ludicrouswhy are we tipping the wine?
I don't get that.
Speaker 1 (18:20):
I just don't get I I don't, I don't know we where
we've had these arguments before.
I remember during the pandemic,when restaurants were closing,
everyone looked at the largeowners of shopping centers who
were renting to Strada andJamie's Italian and all that
kind of mid-range market, yeah,yeah, and how they were shutting
(18:40):
down like nobody's business.
Well, they were relying onquite healthy numbers of people
adding it into their shoppingexperience mid-market, mid-range
, but british land and all thepeople who own these kind of
buildings were still chargingpretty healthy rental sums and
the whole thing just tickedalong it.
(19:01):
It worked, so the markups weregood.
So I don't fully back andbelieve when they all say
they're going to go bust withthis.
I think I think there's.
I think there's a pyramidinvolved.
Reality Training was created in2001 by Bob and Jeremy, both
(19:24):
actors who met at drama school.
In 2001, by Bob and Jeremy,both actors who met at drama
school, reality deliverstraining that is effective,
memorable and entertaining, witha touch of theatricality to
bring it to life.
We now have a company oftrainers, actors and coaches who
you can work with to createchange programs across your
business.
Please contact us viarealitytrainingcom.
Please contact us viarealitytrainingcom.
Speaker 2 (19:51):
Let's imagine that you have got one of these big
restaurants in a nice position,maybe in an airport, and let's
imagine it turns over a milliona year and some of them will
turn over way more than that.
Yeah, okay.
So a million a year, you've gotyour 12.5% on top.
That's £120,000 in servicecharges on that million turnover
.
Okay, that's essentially freemoney.
(20:11):
Okay, so you've got all thecosts you've just been talking
about, all your rates, all yourstaffing costs, etc, etc.
But you've got 120 a year cashinjection simply from
transactions.
That's just free moneyessentially.
And people already paid themarkup on the booze They've
already made.
You've made some money on thefood, it's you know.
(20:31):
In that sense it's a hugeamount of money.
And then you go into a chainwho are turning over 10 million.
Then 1.2 million a year is inservice charge money, 1.2
million just in credit cardtransactions.
Speaker 1 (20:44):
Okay, it's mad money 1.2 million just in credit card
transactions.
Okay, it's mad.
So, interestingly enough, thechains that have multiple
investors wanting their moneyback don't own their own
buildings.
This seems possibly more vitalto a family-owned mortgage-free
yeah.
(21:05):
So there might be someindependents that come through
this quite nicely and some ofthe chains that had well, I
don't know, it's going to bevery interesting.
I think one thing that's goingto bound to happen is they've
already got the percentage onthe booze that can't move too
much, but they're all going tomark the food up.
The food's going to rocket, thefood's going to have to go up,
(21:33):
but then, in which case, lesspeople will go, then you create
you're in the same pressure onthe sector.
Yeah, it's poor historically.
When I worked at cafe bohemthere, was no minimum wage law.
I kept all of the tips, sothat's one thing he did do is we
kept every red cent of it, butit was all cash.
Speaker 2 (21:41):
It was a cash economy oh, I agree, and I was the same
.
When I worked at the swan intunbridge wells, I used to do
saturday nights in the hotel bar.
It was very faulty towers, youknow, and I was, you know,
bowtied up and, uh, you know,all the usual bum flufferies and
I was often handed cash tipsfrom people who I was serving.
(22:02):
All I was doing was servingthem drinks.
It wasn't a cocktail bar, itwas no, you know, it was no skin
off my nose, I was was beingpaid anyway, but there was a
feeling that they wanted toreward my joie de vivre with a
few quid, and I was delighted toaccept it, of course.
But again, I think we've reallygot to make a distinction
between personal reward.
(22:22):
Here's a lovely guy get you a,a drink.
Back to your original point now, of course, when I worked in
pubs and you worked in pubs, ifsomebody bought you a drink and
they were buying around, youcould have it yeah, okay, so
I'll have a half with you.
Don't mind if I do yeah, that'sor you know now, these days
nobody drinks behind the bar,which I think is absurd yeah and
so you, you take the money, doyou.
Speaker 1 (22:43):
How does that get?
You're not meant to?
Speaker 2 (22:44):
you're not meant to.
Speaker 1 (22:45):
You're meant to run the money you're meant to run
the money through the till.
Let the owner make the profitmargin on the beer and you pour
the beer it's extraordinary,isn't it?
Speaker 2 (22:53):
have it at the end of your shift.
My grandfather, joe morel, thelate great joe morel.
He worked in a series of pubsaround clark and well, and
whenever he was bought a drinkhe would take the money and put
it in a little pot.
Speaker 1 (23:07):
It was a tip.
Speaker 2 (23:07):
That's great okay now again, that's a personal thing
and I think many of ourlisteners will think well, okay,
if I go to a barber's, if I geta taxi and the guy's efficient
and quick and a good laugh andwhatever personal reward, yep,
I'll physically reward thisperson in some way with some
money.
But I think this idea of nowthe way the service charge has
(23:30):
come in, I think what it's doneis actually it's now biting back
at the people who brought it into use it as a revenue stream,
because they're now thinkinghang on a minute, oh no, I've
got to give all of this to thestaff.
So maybe if they worked on it ina slightly other way, they
might have had a halfway houseor called it tips, for your
(23:51):
server actually called it thaton the on the thing that might
have made a massive difference.
Service charge sounds likereally what on top of everything
?
You want me to pay this on topand I will never forget.
I won't.
We won't say where this is.
We went for a Christmas partyonce to a very, very top
restaurant and it should havebeen wonderful and the service
(24:12):
was average to poor.
There was a huge service chargeand this was a couple of weeks
before Christmas and they wantedus out before 9.30 so they
could give the table to somebodyelse.
Now do you really think I'mgoing to give that brand a tip
and be happy about paying theirservice charge when actually the
(24:33):
service is appalling andthey're hurrying us along?
That's outrageous.
That's absolutely outrageous.
And what happens is this youjust don't go back.
Speaker 1 (24:43):
Well, that's right, you just vote with your feet.
I mean, there's some we're acountry that has this sort of
odd relationship with that.
The us are much further downthe road of sort of obliged
brazil, chile, around 10.
The netherlands publish it all,so it's all in print saying
exactly what's going to happen.
So you know, japan, none ofthis, there's none of this.
(25:04):
It's all part of the game.
There's no culture.
It the price is the price.
That's where it is.
Iran if you really have beencharmed, you leave a gift for
the person who served you, youdon't?
It's nothing about money.
What a little, a little trinket.
I don't know whatever key ringsyou notice they didn't have one
.
I think the wider debate thatappeals to me is if you are
(25:28):
wanting to earn money by beingbrilliant in customer service.
Restaurants have been afantastic ground for you to go
into, because you know you getfood.
You, you can be a low incomebut work your way up, and then
then you're you get food.
You, you can be a low incomebut work your way up, and then
then you're in hospitality andthen you're managing people and
so on, so on.
If they don't get this right,this will be another sort of
point of journey into work beingcut off or reduced.
Speaker 2 (26:01):
Yes, I is an interesting one because and then
you structure your menu sothere's no tips and no service
charge, it's just decide on thepricing.
I was just thinking back toyears ago.
There were two restaurants Iliked, one in london, one in
bristol that were Italian andevery server in that place was
(26:23):
way over 50.
Okay, and male they were allmale and the service was just
off the charts friendly, funny,quick, efficient, knew all about
the dishes, personality andcharm, you know, just fantastic.
Now, in that kind of scenario,of course they would have
(26:45):
benefited from tips and servicecharges, I'm sure.
But I wonder whether when that'syour full time job, you're a
pro.
You've been doing it for 20 or30 years.
Of course you're on a salary.
You're already on a salary,you're on a salary per year.
The standard of your service isnot going to deviate.
You're always going to bebrilliant and people are going
to go to that restaurant becauseof you.
(27:06):
Absolutely Not much emphasis isput on that.
That you know if you've got areally good server.
People come back every week.
Let's go and see that lovelyguy you know, which is actually
brilliantly lampooned in theleague of gentlemen when this
couple who are unhappy.
Go to see an italian restaurantwith luigi because he lifts
their spirits they're sodepressed until he comes in
(27:28):
luigi, luigi, and then it turnsout his name isn't luigi, but
wonderful, you know, that's thepoint that if you've got a
really, really good level ofservice, then you are the custom
is going to be, then the customis going to be such, your
regular custom is going to besuch.
And come back to Indianrestaurants.
We go back to the same Indianrestaurants when the service is
amazing all the time, becausethat's the reason, that's how
(27:52):
they absolutely lock in theirrevenues and they lock in their
longevity, because they'reabsolutely brilliant.
And I think we have a realdisconnect between those two
things with this service charge,with this new law that actually
, if your service is poor, nowthis law has come in, everybody
is going to be way much moreconscious and I hope that the
(28:15):
places that are brilliant andhave great people, people flock
to them because that's going tomake everyone work harder.
Speaker 1 (28:23):
You talked about the top restaurants that have
employed waiters permanently.
Maybe the kind of casualrelationship with staff will
change and they'll say look, wewant to make a commitment to you
.
If you make a commitment to us,maybe you'll have more places
deciding that actually justbeing brilliant.
Having the volume of customersis now going to be more
(28:43):
important than the tip.
There's going to be such a sortof spotlight held over this
tipping principle.
Right, let's do, let's do.
Three is the magic number.
Speaker 2 (28:51):
Three is the magic so nice, easy one.
Speaker 1 (29:01):
What's the best customer service you've ever had
when it comes to bars,restaurants, hospitality?
Speaker 2 (29:08):
I think I've mentioned this before, but it
was in new york.
It was in the grammer seatavern, which is not a low-cost
restaurant.
We went in.
All of the servers are women ofa certain age, all wearing
beautiful outfits and theirknowledge of each individual
(29:29):
cocktail, each individual dish.
The best way to go through themenu is just amazing and you
have an amazing meal.
And then the bill comes at theend.
This is not a tippingrestaurant.
Our service is included.
We hope you had a wonderfultime.
They do not want to tip.
Now, that was shocking becauseit was in America, but it was
(29:51):
also a great example ofexemplary service that wasn't
hustling for tips.
They were just that goodbecause they chose to be.
And my question to you is whatis the best customer service
you've had?
Speaker 1 (30:04):
I think I possibly am in California and it's two
summers ago and I wish I couldremember the place.
It was a California town, atraditional US restaurant.
We looked, we didn't understandthe menu in any way and the
prices were very high to us asUK foreign travelers.
And this woman in her 60s cameover and just said oh, it looks
(30:28):
complex.
Start small, work your waythrough it.
Don't don't order as you go.
Our chefs are quick, don'tworry about spending a fortune
on these mouths because youdon't know the portion sizes.
You, you just start small andwe'll work.
And it was like took all thepressure off and we tasted
different things and then somekids were more hungry than
others and we added dishes as wewent, which was a really nice
(30:50):
way.
Rather than what's your starter, what's your main, what's your
put, lock it in.
It was just come and go as youplease that that was.
That's the most recent goodexperience, and I will try and
find out what the place wascalled yeah so worst service for
you.
Speaker 2 (31:03):
Well, my question to you is similar.
Is it?
Can you remember a time whenyou didn't tip because the
service was so bad?
So that's a slightly differentquestion.
I've had lots of bad service,but I'm just thinking about a
time where it was soparticularly poor that we you or
I, or whatever we didn't feel atip was was warranted, didn't
think it was was worth I knowone with tash when we were on
(31:26):
holiday in torquay.
Speaker 1 (31:28):
I ordered the lemon chicken and there was no lemon
in it.
It was just a dry piece ofchicken.
I said there's no lemon, isthere some lemon?
It's a lemon chicken dish.
And he went.
Other people have had it andthey haven't complained.
Speaker 2 (31:39):
So we didn't give him a tip no, have you ever, on
that, removed a service chargebefore paying the bill?
Speaker 1 (31:47):
possibly not just being too bloody english and
what you just said earlier justcrossing it off the list and not
going there again I'm surethat's the more default habit
for a bit disgruntled off we go.
We're not going back thereagain.
Speaker 2 (32:01):
I can't remember a time where I I don't think I've
ever done that, but I'm justtrying to think of a time that
there have been times when I'vebeen away on business where the
service has been average orbelow average and I haven't
tipped because I just think noyou know, please give me, me
(32:23):
something to to reward you ifthere's nothing to reward, yeah,
vacant.
Speaker 1 (32:25):
Looking around doing the Michael winner thing, waving
the napkin yeah, yeah, exactly.
Speaker 2 (32:32):
It's funny.
My son, charlie, has justrecently started a job serving
at a wedding venue, and I'm notsure what the tipping scenario
is there, but he says what'squite interesting is that people
, when they see you behind thebar or they see you serving
something, they naturally feelslightly sorry for you, and I
(32:52):
don't know whether this is partof the deal.
People go, oh, look, this poorguy's having to work behind
there.
Speaker 1 (33:00):
He must be poor, he must be struggling a bit and
actually I think there is a bitof that there was.
There's a hotel in buckinghamthat's now part of the
buckingham university.
I don't know if you know this.
You remember that thing calledbuckingham beals on the
roundabout.
It then became a best western.
Do you know the one I mean?
Out on the roundabout that's?
Speaker 2 (33:18):
now part of Buckingham University campus.
Speaker 1 (33:19):
But there was a guy who worked behind that bar there
who, when you looked into hiseyes, you felt you shouldn't
have ended up doing this.
And so you feel slightly and hehad sort of no busyness and
he'd take ages to pour a pintbecause he had ages and it was a
bit depressing and you thoughtwhere's he scuttling back to?
There is something about that.
(33:40):
You shouldn't have to be doingthis.
Speaker 2 (33:42):
No, my third question we've actually talked about is
I was going to ask you whetheryou remembered when we had to
play an assumed tip, and thatwas, of course, in America.
When we first went there, wewere told what the tip was that
we were going to be paying.
That was so bizarre.
Yeah, can you remember anothertime when you've had to pay
(34:03):
someone?
Speaker 1 (34:03):
said, oh, and with the tip?
Yeah, that's again aCalifornian trip with Tash and
the kids in a pizza place.
We paid the bill and we didn'ttip because we were just rushing
.
And we were called back in witha manager having a conversation
with us saying Chelsea's beenyour server.
You really need to give her 20.
That's how it works here and asbrits you may not understand
this.
I'm going to take you throughit and I need you to cough up
(34:25):
and give her some money.
She ran out for us and broughtus back into the restaurant to
tip yeah, I've never heard about.
Yeah, that was extraordinary andshe was folding napkins,
scowling in a sort of ante roomand we sort of looked at her and
she sort of looked back at usand was sort of doing that face
like oh, and the manager wassaying, look, look at Chelsea,
(34:45):
she's over there.
You haven't tipped her.
And I went.
What she said let me explain toyou, because you Brits just
don't get this.
And Tash and I go what?
How much was the bill?
She wanted us to put downanother 40 quid.
And we were talking and we wentwe're not doing that when it's
chelsea's been off and hardlyattentive and these have been
pizzas that have already, youknow, a pete.
That pizza was 29 and then wellthat's what it is here in this
(35:09):
part of burbank or wherever wewere, and I remember us just
leaving ten dollars or somethingand walking out and her going
unbelievable and chelsea comingback in as we look back through
the windows, chelsea and themanager talking, and I just
thought your service has beendesperately average.
Why should I tip you?
Speaker 2 (35:26):
god, I mean there's a whole drama, right there, you
can imagine Chelsea's face,can't you?
Yeah, absolutely.
I mean, I made sure to facelike a smack backside.
Speaker 1 (35:34):
Yeah, absolutely so my last question to you is
you're running a four siterestaurant group.
You're the owner of it.
You and your fellow directorhave just got this news.
You're not very big, but you'requite ambitious.
You may be in your forties andthis little restaurant business
of yours, what are you going todo?
What are you going to talk toyour staff?
What's your plan to deal?
Speaker 2 (35:55):
with this.
It's a really good question.
I I think maybe maybe were-institute something which you
you don't see in manyrestaurants these days you get
managers and things like that.
I think if you had a permanenthead waiter or permanent head
assistant head waiter whosalaried people who were there
(36:18):
most of the time, then you wouldhave an exemplar to use that
awful word a fantastic servicethat would in each place, would
carry a higher salary cost butwould absolutely show the
standard.
Then you could have howevermany waiting staff you need to
run the evening, who will be onan hourly rate, but I think you
(36:42):
you absolutely make sure thatthe head waiter and the
assistant okay are running theservice level so that you, as a
restaurant, keep gettingcustomers, because now you're
losing your tips yes, yeah,correct, and actually it shows
that you've got to.
Speaker 1 (36:56):
Then I up.
I'm with you on that.
I think I would do nothing withmy prices.
I would prove that we're goodand that we're happy to go along
with the law because it's a lawand that everyone's going to
keep their tips.
We're not going to get it, andbecause we're so good, I would
then be able to inflate myprices in due course.
Speaker 2 (37:15):
And actually the other thing I was thinking.
There are certain restaurants.
Nothing happens before 7, 7.30.
And then at 9.30, the chef'sgone, I think you and.
I have, you know, traveled andgot to places and turned up at
restaurants.
We've missed the chef and it's,you know, chicken salad or
something.
And I think maybe there'ssomething about extending the
(37:42):
hours slightly that you're open,because that's, you know, means
you get a bit more passingtrade.
But regardless of solutions, Ithink this new law over the next
two or three years is going toshake out a lot of poor service
restaurants and pubs and I don'tthink there's anything that's
going to change that.
Speaker 1 (37:57):
It's a very interesting thing.
So, instead of us giving youtips, today it's been more about
tips.
Speaker 2 (38:04):
One other thing I was going to mention just very
quickly.
If you ring a contact centerand the person you speak to is
amazing, wouldn't it be lovelyif you could just say, yeah, I'm
going to give you an extrafiver?
That's very funny, really.
Yeah, we don't do that that,but the guy's incredible.
I, I could buy something for 50quid.
I, I could easily spend that ona, on a meal somewhere.
(38:26):
Why can't I?
Why can't I tip the guy fiveron the phone.
Interesting, isn't it?
That's funny.
There we are.
Think about that.
Thanks for tuning in.
Cheers, bobby.
Thanks guys, bye.
Thanks guys, bye.
Popular Podcasts
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!