2 months ago
- London has seen a rapid adoption of automatic 'optional' service charges in pubs, bars, and cafes, a practice previously limited to sit-down restaurants and resisted as American-style tipping.
- Three main factors drive this trend: increased employer taxes (like higher national insurance), a 2024 law ensuring tips go to staff with tax advantages, and new technology making tipping prompts feasible.
- Service charges allow venues to pay staff more while reducing tax burdens (e.g., avoiding VAT and national insurance), keeping menu prices lower and addressing wage increases post-Brexit and minimum wage hikes.
- Staff benefit from higher take-home pay via service charges compared to wage hikes, but customers often feel frustrated by the added costs, comparing it to American tipping culture.
- The trend reflects broader strain in London's hospitality industry, with operators lobbying for VAT cuts and competing against tax-avoiding businesses, while some customers resist on principle.
- Dawn Butler has raised donations potentially for a mayoral campaign, despite denying formal plans, as Sadiq Khan's decision on a fourth term looms.
- Andy Burnham's pledge to cut London transport fares appears to be a copy-paste error from a regional campaign piece, causing confusion.
- A tax loophole for 'children's meals' remains unexploited by restaurants, despite efforts to find luxury kid-menu options.