Restaurants scrap service charge, saying they'll increase wages through higher prices

By James McAllister

- Last updated on GMT

Oklava and Hill & Szrok scrap service charge will increase wages and prices Coronavirus Job Retention Scheme

Related tags tronc Restaurant Coronavirus Job Retention Scheme

Oklava and Hill & Szrok have separately announced they will be no longer add a 12.5% service charge to bills, and will instead be incorporating the cost into menu prices.

Both businesses - each based in London - say they decided to make the change after staff members were left out of pocket during the lockdown as a result of the Government's policy not to include tronc payments under the Coronavirus Job Retention Scheme (JRS). 

While, in theory, the JRS is meant to allow employees to be furloughed and still receive 80% of their wage up £2,500 per month, the decision to exclude tronc payments meant many staff within the hospitality sector have actually been receiving far less. 

In a statement posted to Oklava's Instagram page​, co-founder Selin Kiazim said the situation had brought into sharp focus the fact that hospitality businesses could no longer put craft and passion before their bottom line.

She wrote: "The optional service charge has always gone to our staff, in full. However, this service charge, while optional for our guests, has never been optional for us.

"Without it, we would not be able to pay our skilled staff the wage they deserve and would simply not have survived as a restaurant.

"The furlough scheme introduced by the Government during lockdown brought this issue into sharp focus: for many restaurants, their tronc (the service charge portion of the wages they pay their staff) was not taken into account for the furlough pay. Hospitality employees faced up to a 50% reduction in their take-home wage during lockdown.

"We want to continue looking after our staff as best as we can and sustain the restaurants we love. Therefore, the service charge will become a part or our menu price. What you see on the menu is what you pay - and you (and us too) will be confident this goes towards a healthy restaurant with staff that are paid what they deserve. Hospitality is a career as valid as any other, and we will no longer be making a large portion of our staff’s wages open to discretion."

Kiazim, who operates Oklava's flagship Shoreditch restaurant as well as Oklava Bakery + Wine in Fitzrovia, added that her and business partner Laura Christie had wanted to scrap service charge for many years, but hadn't had the confidence to take the step before now.

"It can be hard to break the mould, but the Coronavirus crisis has broken the mould for us and we would like to embark on this new ‘normal’ of the post-lockdown world with policies we really believe in," she said.

"As an industry we run on very tight margins, often putting our craft, passion and love of hospitality before the bottom line. This can’t be the case any longer."

Butcher-cum-cookshop Hill & Szrok says similar. 

In its own Instagram post​, the business said: "The furloughing of restaurant and front-of-house teams up and down the country has laid bare a system that is at best, unfair, and at worst, total bullshit.

"As things begin to go back to normal, we've realised that normal wasn't working.

"These weird times have given everyone a chance to pause for thought, to re-evaluate. As we begin to open up the restaurant for our private dinners and get back to normal service, we’re scrapping service charge. There won’t be a discretionary 12.5% included on the bill; there won’t be an option to add a tip when we hand you the card machine; there won’t even be a jar by the till. 

"The standard practice at most restaurants (including, until recently, ours) is to pay all staff on a base rate, usually nothing more than minimum wage, and then top this up with tips to get to something that people can actually survive on. This allows businesses to spend as little as possible out of their own pocket, skimming the rest from service charge.

"The furlough scheme has seen restaurant staff receiving less than a one-third of their normal pay - without service charge to beef out paycheques, they’ve been retained on 80% of the national minimum wage, whether you’re the kitchen porter, or you’re the manager.

"Meanwhile, some restaurant owners escaped to the country to lockdown in their second homes, doing vids for the gram on how to nail your sourdough and master your handmade pasta.

"As businesses, we’ve been cashing in on a system that’s meant to be a gesture of gratitude. Tips should be a way for customers to say thanks to staff for looking after them, not to pay them for coming to work.

"So we’re scrapping our old ways. As we absorb the extra cost, prices will be going up, but so will the wages of our team.

"Customers will need to accept the slightly higher prices, staff will have to take a small hit on their taxes and restaurant owners will have to stand up for the people who make their business run."

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