A trendy London restaurant has abolished tipping – but will charge customers a 15 per cent ‘management fee’ instead.
Ping Pong, a dim sum franchise with five restaurants in London, said the discretionary charge will help ‘maintain the brand experience’ at chain restaurants.
It comes ahead of a new law coming into force in July that will make it illegal for hospitality businesses to hold back service charges from their employees.
Ping Pong said the new ‘brand charge’ will go towards ‘franchise fees and other brand-related expenditure’.
A note at the bottom of its menu reads: ‘This fee covers the costs associated with managing and supporting the restaurants, as well as maintaining the brand experience to our company standards.’
London restaurant Ping Pong has abolished tipping and will charge customers a 15 per cent ‘management fee’ instead
The dim sum franchise says this fee will go towards the upkeep of their five restaurants and will go towards staff wages
The group said it had made the change in response to the new tipping law in order to make it ‘fairer’ for staff – and is considering making the fee mandatory from June.
The restaurant said the charge allowed it to raise wages to at least £12.44 per hour, meaning employees will have a stable income that will ‘match earnings they would have received with service charge distribution’.
But Marc Gander, of the Consumer Action Group, described it as ‘outrageous’ and said that all discretionary charges are a sort of ‘moral blackmail’.
He added: ‘I think restaurant customers should refuse to pay this charge and not feel guilty about it. And as for Ping Pong, they are simply playing ping-pong with the government’s legitimate attempt to rationalise this ‘optional’ tipping thing which has been getting out of control for far too long.’
Professor Joshua Bamfield, director of the Centre for Retail Research, said: ‘The ‘brand charge’ notion actually makes a very powerful case for the new law: that employees ought to get 100 per cent of the service charge rather than lopping off part of it to pay for the business’ franchise costs.’
The Employment (Allocation of Tips) Act comes into force on 1 July. Officials say it will put an estimated £200million more into workers’ pockets.
Some Ping Pong customers have taken to review website TripAdvisor to complain about the charge being introduced.
One said: ‘I’m pretty stunned, I’ve never even considered this could be a thing – paying for a company to maintain their own company standards? They’re a business, not a charity.’
Ping Pong said a final decision on whether to include a mandatory brand charge, increase product prices, or a combination of both, will be made ahead of the launch of its June menu.
A spokesman said: ‘Ping Pong wanted to create a fairer and more reliable system for their staff. As such, staff wages have been increased with the entry level salary being £12.44 per hour for all staff.
‘The benefit to our employees will be stability of wages throughout the year, reducing the impact of seasonality.’