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Submitted by

Bob Morrell on 23.04.2024


B2B Sales, Customer Service, Leadership and Management, Omni-Channel, Presentation Skills, Retail Sales, Selling, Telesales/Call Centre, Travel Sales
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Tipping, Service Charges, Brand Charges… What is Happening with This ‘Grey Area’?

Speech bubble

The act of tipping, while commonplace, remains one of the most intricate social customs we engage in regularly. The interplay of gratitude, financial transactions, and social norms coalesce in the seemingly simple act of leaving a gratuity.

A pivotal change in the UK is the Employment Allocation of Tips Act 2023, promising a revolution in the service industry. This law aims to establish a foundation of fairness and transparency in tip distribution, ensuring that the hard-earned gratuities reach those who serve. But it's not just a legal matter—it's a reflection of our values as a society and our collective stance on fair compensation for service. The discussion extends to businesses, now required to comply with this law or face substantial financial consequences.

We've all experienced the shock of seeing a service charge inflate our bill, but what is the rationale behind this? It turns out that service charges can be a significant revenue source for establishments, sometimes overshadowing the profit margins on food and beverages. What is the rationale behind service charges, their contribution to restaurant revenue, and how they shape our dining experiences?

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One solution is all-inclusive pricing instead of the surprise of added charges. The psychological impact of menu prices and the subsequent decision-making process will prompt us to question the transparency and customer experience. Clearly there are major cultural contrasts between the US and the UK.

Tipping may be an age-old practice, but it's a practice that continues to evolve, affected by legislation, societal values, and economic pressures. Whether you're a diner, a business owner, or simply curious about the subject, we need, as a society, a better grasp of the world of service industry gratuities.

Tune in to our Bob & Jeremy’s Conflab podcast episode, Tipping, Service Charges, Brand Charges… What is Happening with This ‘Grey Area’?. Click HERE to listen.