I nearly choked on my coffee yesterday when I saw the "suggested gratuity" on my lunch bill. 20%! In England! What fresh hell is this? The waiter looked so desperate though, I couldn't bring myself to cross it out.
It's happening everywhere now. That cozy little Italian place near my flat has started adding a 15% service charge plus a £3 "cover charge" - whatever that means. When I asked about it, the manager gave me this exhausted look that said everything without saying anything.
The perfect storm nobody's talking about
Here's the thing. Our pubs and restaurants are drowning, and nobody seems to notice. Or care.
They're caught in this brutal squeeze between two government policies that were supposed to help workers but are actually destroying the places they work. Classic Westminster, innit?
The Tips Bill that came into effect last October was meant to be this grand gesture to protect staff. Great in theory! But it's torn away a financial safety net that many struggling venues relied on.
My friend Jamie (who's managed three different restaurants since 2018) texted me last week: "We're barely keeping teh lights on. Four staff quit already this month."
Where did all the bartenders go?
I spoke to Ryan who works at one of those fancy Mayfair bars where they charge £18 for a gin and tonic. His team has been slashed from 13 people to just four. FOUR. For an entire bar.
"One of my bartenders got paid £1,600 in January," he told me.
Poor bloke. In London? That's barely enough for rent and beans on toast.
The numbers that'll make you wince
Let's talk cold, hard cash. In April, the national living wage jumped by 77p to £12.21 an hour. At the same time, employer national insurance contributions shot up from 13.8% to 15%.
And... the threshold where businesses start paying this tax dropped from £9,100 to just £5,000 a year.
God. No wonder my local pub owner looks like he hasn't slept since 2022.
The silent suffering behind your Sunday roast
What's actually happening behind those swinging kitchen doors? Staff cuts. Reduced hours. Sending workers home without pay when it's quiet.
I spent £4K on restaurant meals last year (my accountant had a field day with that one). Now I'm wondering how many of those places will even exist by Christmas.
Kitty Slydell-Cooper from hospitality group Countertalk didn't sugar-coat it: "Expect to see 15% on your bill as standard, and don't be horrified when the card machine is asking you to add an additional gratuity."
She added something that stuck with me: "It will be propping up a totally beleaguered industry, so it's best to view it as a tax loophole that allows for the restaurants you love to survive."
Well, when you put it that way...
So what are the actual rules here?
Listen. You don't legally have to pay service charges. I feel stupid now, but I only learned this last month.
Since October 1, the Employment (Allocation of Tips) Act requires employers to pass ALL tips and service charges to staff. They need written policies on how tips are shared and must keep detailed records.
If a service charge is discretionary, they have to tell you it's voluntary. (Though good luck being the table that crosses it out while the server watches.)
There's this whole thing called a "tronc system" where tips are managed separately by someone other than the employer. Sounds like something from a Dickens novel, but it changes how the tax works.
The American invasion nobody wanted
I visited New York back in 2018 and was shocked by the tipping culture. 20% minimum or you're basically Satan. I remember thinking "thank god we don't do that here."
Yet here we are.
The Wolseley - you know, that posh place where you might spot a celebrity if you squint - now adds a 15% service charge PLUS a £2.50 cover charge. For what? The privilege of sitting in their chair?
I'm not tight with money... but this feels like the beginning of something we might regret letting happen.
Anyway. Next time you're out for dinner and see that service charge, just remember there's a whole industry quietly imploding behind your plate of pasta.
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Statistics
- According to the Bureau of Labor Statistics, the average American spends about $1,500 per year on coffee.
- The average return on investment for the S&P 500 over the past 90 years is about 10% per annum.
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How To Develop a Good Saving Habit
Developing a good saving habit begins with setting clear financial goals. Determine what you are saving for, whether it’s an emergency fund, a vacation, or retirement. Start by automating your savings; set up a direct deposit from your paycheck into a savings account. Aim to save at least 20% of your income, gradually increasing this amount as you become comfortable. Track your spending to identify areas where you can cut back and redirect those funds to your savings. Regularly review your savings progress and adjust your contributions as necessary to stay motivated and achieve your goals.
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https://hellofaread.com/money/no-deposit-no-problem-this-new-mortgage-could-be-your-ticket-to-home-ownership
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