/ Money

Should the ‘optional’ service charge be barred?

Wallet on bar with drinks

Restaurant service charges are a bone of contention for our community, but what about extra charges at the bar? Have you ever checked your bar receipt to see whether an ‘optional’ service charge has been added?

About a month ago I visited a London hotel with some friends and proceeded to order a couple of cocktails at the bar. The bartender diligently made the drinks and gave me my change along with a receipt that I tucked into my purse.

It wasn’t until a few days later when I was clearing out my purse that I noticed I’d been charged an ‘optional’ 12.5% service charge. Surprised at this, I phoned the bar and spoke to the manager. I told him that my receipt said the charge was ‘optional’, yet it had been taken without my permission. He told me it was customary to add a service charge to all drinks and food served and that it said so on the drinks menu.

I said we must be using a different dictionary definition of the word ‘optional’.

To make a long story short – he refunded me my £1.74. However, the entire experience left me wondering whether others have been caught out in the same way.

‘The barman opened the bottle and charged for service’

Most people will pop their drinks change straight into their pocket or purse without checking the receipt, yet some bars could be making a small fortune from ‘optional’ service charges.

We decided to take this question to Which? members. Although around a third told us that they always check bar receipts, three in 10 said they rarely or never do. Interestingly, women are significantly more likely to check their receipts than men, and the older you get, the more likely you are to do so. We heard some interesting stories as well, such as this one:

‘About seven years ago, I arrived before anyone else for a meal in Leeds, so ordered a drink. The barman opened the bottle, handed it across the bar, and gave me a bill including service charge. I refused to pay this, and gave him the money for the drink only.’

But not everyone is willing to complain:

‘A hotel in London a couple of years ago… we bought a small wine and a single spirit and mixer at the bar. The man serving us added service charge automatically and gave us change based on this being mandatory. We didn’t complain as it was the first time we’d experienced it and thought it was the norm in London.’

So, have you fallen victim to the ‘optional’ bar service charge? Did you complain, or were you happy to pay the added charge?

Comments
Member

Unfortunately, we are now ‘Americanized’ with regards to tipping. As a British, I really find it annoying when a tip is added/expected to every drink you order at the bar. So it seems that if you’re short of money, be wary – no drink as you don’t have enough tipping money !!

Member
royston says:
11 August 2013

I always find it amusing when it comes it discussions about Tipping its my surname!

Member
David says:
3 August 2013

I was never given a tip when I worked & sorted out peoples problems, so I don’t give a tip if I can help it.

Member
Sophie Gilbert says:
3 August 2013

I dislike tipping largely because I’m never sure how much to give, though I tend to stick to 10% in restaurants here and abroad, and small change in bars abroad, unless service is outstandingly good or bad, in which case I adjust the amount accordingly, from a good 20% down to zero.

I also dislike tipping because the principle dates back, as I understand it, from when the minimum wage didn’t exist and waiting staff were notoriously paid very poorly. As this isn’t or shouldn’t be the case legally any longer (and how can we guess as customers if it is or isn’t the case in each restaurant or café we visit?), why do we carry on? For myself it’s because I don’t want to buck the trend as I feel I would be one of the very few who do.

As an aside, I bet some waiting staff in some places are better paid than I am…

However, so far I haven’t knowingly been charged for “optional” service at the bar, but I will look out for that, and I am likely to vote with my feet if I come across it. Unless, big maybe, the bar staff haul their ar*es from behind the bar and serve me at my table?

Member
Paul says:
3 August 2013

Personally, I believe a tip should be earned and “optional” charges dilute the effect of a customer providing someone a tip. Out of principal I almost always ask for optional service charges to be removed to make the point that as the customer it should be my choice whether and how much I tip. I will usually tell staff the reason for this as well.

Professionally, wearing my Trading Standards Officer hat, there are arguments that the practice breaches the misleading pricing provisions of the Consumer Protection from Unfair Trading Regulations 2008. All mandatory charges must be included in the headline price. A charge which is automatically added to your bill is not exactly optional. The second problem with this practice is that consumers often are not aware of the charge until afterwords as the information is usually in tiny print, which I often find hidden at the back of menus. Plus, OFT research shows that people do not fully take into consideration charges outside of the headline price. Our brains can only cope with so much chunks of information when making decisions between a variety of food/drink and various prices.

I draw your attention to the government Pricing practices guide: guidance for traders – https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/31900/10-1312-pricing-practices-guidance-for-traders.pdf – which you will note that most of the service industry ignores:

2.2.14 You should not include suggested optional sums, whether for service or any
other item, in the bill presented to the customer. If your customers in hotels,
restaurants or similar places must pay any non-optional extra charge, for example a
“service charge”:
(a) you should incorporate the charge within fully inclusive prices wherever
practicable; and
(b) you should display the fact clearly on any price list or priced menu, whether
displayed inside or outside (for example by using statements like “all prices include
service”).

Member

Very often a bar will not provide a legible price list (let alone one that’s actually correct), and will not issue a receipt unless you really insist, which will make you unpopular with the staff. It’s reasonable to assume that you’re always being unfairly ripped off when at a bar, but this is the first I’ve heard of an optional service charge at such a place! Buying any kind of product or service just gets ever more frustrating when you have to watch out for immoral practices all the time. Why can’t we just be treated properly without having to kick up a fuss first?

Member

There was a campaign some time ago – “Fair Tips” to ensure that the hospitality industry at least paid the minimum wage up front to waiting staff rather than forcing them to top it up through tips. That ended up with a code of practice rather then legislation but most reputable places signed up.

Maybe it’s now time for Which? and others to run a campaign to abolish service charges completely and go over to the system which has operated perfectly well in France for years, and that is that the price on the menu is the price you pay, no service charge or other ‘extras’. I’m sure this would have huge public support though there would be the inevitable squealing from the trade who will lobby their friends in government to keep the status quote. But it’s a battle worth winning.

Member
Anon the Mouse says:
4 August 2013

This opens a whole nest of questions.

Does the charge get split only between those that have provided you with the service? such as waiter, cook, porter, or is it a general pool that is spread further? If the latter then it’s a business subsidy.

If the staff only receive NMW then the company is in breach of NMW as they are paying 12.5% below the law.

If they are paid NMW + 12.5% (regardless of charges “earnt” that night) then the service charge is NOT being passed on and is in effect a business subsidy going to management

If they are paid wages + their own charges “earnt” for the night then it is actually a true tip.

Member
ruth says:
4 August 2013

My experience is very similar to a few others, whilst in a club in london i ordered drinks for our group as it was very loud i handed my card over without paying much attention. It was only the next day when i looked at the very fancy receipt in its little receipt holding card that i not only noticed how ridiculously expensive the drinks were but also that i had been charged £4.60 service charge. In some parts of the country that is minimum wage for someone starting work for a whole hours work yet i had just been charged that for 2 mins work, and easy work at that. I didn’t complain but i really wish i had. It wasn’t made clear any where that i would be charged this charge and if it had been i would have refused to pay it. It should be the customers choice about tipping based on good service not just the fact that someone has served you which is essentially their job.

Member

I have been wondering what happened to the display of price lists in pubs. Have the regulations requiring price marking been surreptitiously revoked? Or is there widespread non-compliance? – because I haven’t seen a price list for ages. Perhaps Paul might be able to enlighten us. The price shown on the list should be the maximum that can be legally demanded.

Member

As I pointed out just a few days ago in the Convo about tipping, the “optional” service charge is a device to avoid VAT, but it does also mean you are not obliged to pay it, unless the establishment want to get themselves in trouble with HMRC:

>>> In the UK at least, you might assume the practice of adding an “optional” service change to the bill is simply to embarrass, coerce or encourage customers to leave a tip as a matter of routine. In fact, if the restaurant management know what they are doing, it is to ensure that VAT is not payable on the service charge. This became effective from 1982:

http://www.hmrc.gov.uk/manuals/vatscmanual/vatsc56400.htm

So, if the recommended gratuity is supposed to be 15% and you don’t think they deserve more, check it is 15% of the net amount only. If 15% is added to the gross amount (after VAT is added to the bill) you are effectively paying an 18% tip, as no VAT is due on the gratuity element of the bill. And if a smaller or no gratuity is warranted, you can always rely on the Tribunal ruling “… that since the statement ‘service not included’ meant any service charge was voluntary, the customers were not obliged to pay it. <<<

Member

It is ridiculous to add any service charge when you buy drinks at the bar. There is no waiter service and you have to provide the service yourself of taking the drinks back to your table (if you manage to find one).

The pricing system in France is particularly transparent and demonstrates what a rip-off the American practice of bar service charges is. In France, you pay one price for buying/consuming drinks at the bar (which includes no service element); you pay a higher price for buying/consuming drinks at a table; and you pay an even higher price for buying/consuming drinks at an outdoor table.

This rip-off system of American service charges must not be allowed to become established in the UK.

Member
matt says:
5 August 2013

I am more than happy to pay a tip to a member of staff if they have enhanced our experience in any way especially if we are out for lunch or dinner. I will always ask first if the staff get the money. The problem with service charge is that the employees may feel that they are guaranteed a tip so don’t try as hard. On the other hand, a tip for literally opening a bottle is disgusting. I have never knowingly experienced this but will be looking out for it. The difference between us and the states is that waiters/waitresses in the USA get paid significantly less than over here so a tip is necessary for them to survive. In some places in very rich areas like hollywood some staff may even be expected to pay to work there as the potential for tips is so high.

Member
Trevor says:
9 August 2013

It’s time to get transparency on this one: Which should organise nationwide a campaign to get tipping abolished in this country (as it is in France).

there are just too many issues and bad practices surrounding the whole business of tipping and I feel sure this thing of automatically adding an ‘optional’ tip is just the thin end of the wedge and bars and restaurants everywhere will be doing it soon.

the time is right now for this issue to be addressed (some would say it’s long overdue)

As in all businesses, it’s a management responsibility to train, motivate, supervise for quality, etc and pay their staff the market rate and it shouldn’t be for customers to make up a shortfall in wages with tips or to ‘withhold’ tips to encourage a poor performer to leave a place of work (which doesn’t work anyway if tips are pooled and divided up later).

Member
CurlyWurly says:
11 August 2013

I have noticed the ‘optional’ tip added increasingly in restaurants and have asked for it to be removed from the bill. I don’t really agree with paying extra when the service has been as you would expect!
I have as yet to notice this charge on drinks at the bar but will keep a look out in the future. There is no way that I would expect to pay this when the bar staff have served me the drink I have asked for and no more! Perhaps I’ll serve up my own and ask for a discount!
It’s getting ridiculous – perhaps we should keep our recents – this may become another ‘claim back’ in years to come!

Member
Paul says:
12 August 2013

The Price Marking (Food and Drink Services) Order 2003 was revoked by the Consumer Protection from Unfair Trading Regulations 2008. These 2008 Regulations have the advantage of being future proof and very flexible to cover all products and services but lack the prescription of the specific laws that they replaced. So, gone is the list of 30 drinks that needs to be displayed. Now it is replaced by a duty on any bar and restaurant to trade fairly and a criminal offence to mislead any customer by omission. The advice to this sector is to provide a good range of prices for the variety of drinks that are offered in a bar scenario and obviously were menu is provided with food and drink the price is an essential piece of information were any products listed.

Optional service charges do appear to be becoming the norm in food menus in many restaurants but despite this norm restaurants are still required to prominently state this optional service charge. In my opinion consumers would not expect to be charged a service charge for merely obtaining a drink at our bar and therefore there would definitely be a duty on that business to prominently state those service charges so they are visible to anyone standing at any section of the bar. However, it is arguable that that charge should be included in the headline price for a number of reasons, particularly typical consumer behaviour:

1) many consumers feel embarrassed to argue about the removal of a service charge due to a social stigma around the subject eg. arguments from friends that you are being stingy and potential guilt that you are not doing your bit, as one who can perhaps afford it, to help top up the wages of poorly paid staff.
2) The earlier point that I made that consumers do not take enough account of those charges that do not form the headline price

I would personally agree that this is a subject well suited to a Which? Campaign with a push to remove “optional” service charges. If a business wants to make a charge they should simply come out and admit it and make it a compulsory charge. I would also go further by saying that, due to consumer behaviour and, in my opinion, the widespread practice in this sector of hiding these charges in small print or at the back of menus, service charges should be banned altogether. As many have said in previous posts consumers should be empowered to make their own decisions whether they leave a tip and how much they feel is fair.

Member
Caroline says:
7 October 2013

I notice this is common practice in London but not so much elsewhere. What I find really disgusting is that when asking if the tip actually goes to the waiting staff they often say that they only get a fraction of it. Therefore the rest is going to the cafe/restaurant which I can only say that I see as fraud. If this is the case then the extra should be included in the prices on the menu not as the ‘optional’ tip. I have now started to automatically deduct this as the norm. I leave a cash tip if the service is particularly good.

Perhaps if we all started to deduct this ‘optional’ extra there might be a message sent?

Member
Bella says:
21 November 2014

I work in a restaurant and the service charge that we automatically are made to add to the bill is not actually obligatory. The customer is entitled to remove it from their bill! However as waiter/waitresses we get none of this service charge. It is a clever scheme for restaurant owners to get more money and deceiving customers into thinking it is a form of tip! I believe customers should have the choice of whether or not they want to tip! Ask to remove the service charge if in doubt.

Member
Paul says:
13 January 2015

This thread is like a who’s who of ignorant cheap people. The source writer is exactly the kind of person that should stay at home with a bottle of Tesco wine and complain to her ‘friends’ about what insignificant thing has irked her today. I have worked in the service industry for my entire life, from my families restaurants in Ireland, nightclubs in London, restaurants and bars in the USA and canada and now back into restaurants in London. The service charge is ‘optional’ as the restaurants staff are taught to think of it as another item which is being charged for and if not received (adequate service/exceptional service) then it should not be paid, much the same as you shouldn’t pay for a beer which you never received. The difference is that most restaurants and bars operate on very tight margins and have very restrictive wage budgets which they need to adhere to in order to in order to be financially successful. (remember this is a business after all) Now in order to keep wages within the acceptable range most places can only afford to pay minimum wage to it’s staff. Sure places could pay ‘more’ but this would result in higher food and beverage pricing to cover this extra cost, and it’s deemed more honest and transparent to say “hey in order to retain and develop good staff, we need to pay that little bit more, this little bit more is represented on your bill as an optional service charge which goes directly to the staff and not hidden in the costs of the food” – if you felt the service was below par or sub standard then please inform us and we will remove the charge, it will also expose to the team, where they are not delivering and allow the restaurant to improve. As for the person above who claims to work in a restaurant and that their bosses take the service charge. In all the venues I have ever worked this has never happened so maybe they should re assess where they choose to work. Every venue I have worked for uses this service charge in its entirety to (after tax) to go directly to the staff. It is generally split fairly between wait staff, bar, kitchen and porters. (the majority always goes to the floor staff – normally 75% and the rest is split among the guys in the background working just as hard but not in the public eye) It’s a great way to champion professionals in this industry who want to develop a career in hospitality and allows them to earn competitive wages, in an often under appreciated profession, and may I add a great way for the guest to see what it is they are paying for and how much and not have it hidden in the cost of other goods. If you phone a venue to get a refund of £1.74 then you are a pretty sad individual who doesn’t deserve to experience great restaurants. Stick to TGI fridays.

Member
Frances says:
7 February 2015

I went to a new bar/restaurant last night – we sat at the bar and ordereddrinks for which we paid cash. We ordered from a drinks menu so we knew how much the total should have been, however when our change came (without a bill or receipt), we saw that we had been charged an extra £1.25. When we queried it, we were told it was service charge. The drinks menu did not mention a service charge, we did not run a tab but paid cash on delivery of the drinks and we even had to wait to order. how is it proper then to charge a service charge. our waitress then disappeared so we could not even insist on a refund. I think this is extremely sharp practice since the service element was minimal, the charge was not declared anywhere and we paid cash for the round rather than running a tab.

Member
David says:
20 March 2015

Last night (March 19th) I went with three friends to the http://www.thedruryclub.com situated at 167 Drury Lane in Covent Garden, London. It’s a music venue with a bar. When I bought a round of the same drinks we’d previously had, one friend noticed the cost had increased, I therefore asked the barman why there was a difference. For whatever reason, he chose not to answer but instead, printed and handed over a receipt. It showed the total cost for four drinks as £27 of which £3 was service change. The bar operated in the same way as a pub, we queued and waited to be served. I asked for the service change to be taken off and it was. My concern is the everyone at that club/bar unknowingly pais service change on drinks. Is this legal?

Member
Louise says:
6 February 2016

At the end of a day out in London my friend and I ended up in the Grosvenor Hotel cocktail bar for a very quick cocktail before catching the train home.
Cocktails £12 each but bill was £27……
Why??????
Just greed!!!

Member
Ashish Gaba says:
19 October 2016

It’s my first time in bar in UK & I ordered glass of wine & they charged me £10 bar charges & i think it’s complimentary