Why Does Service Charge Feel Hollow? 

I’ve been following the story about The Well and Boot in Waterloo adding a 4% service charge to every drink ordered at the bar… and I can’t shake the feeling that we’re missing the point entirely about what service charges should actually be for.

Don’t get me wrong; I completely understand why they’ve done it. When you’re paying £7.75 for a pint of Guinness and still struggling to make ends meet, you’ve got to explore every avenue to keep your doors open and your staff properly paid.

But this feels almost dirty to me. Hollow. Like we’re exploiting customers to solve a wage problem.

Why operators are doing this

Let’s be honest about the financial pressures driving decisions like this:

Zone 1 wage costs are brutal To attract and retain decent staff in central London, you need to pay competitive wages that reflect the cost of living.

Margins are paper-thin Even at nearly eight quid a pint, many operators are struggling to make the numbers work.

Tax advantages make it attractive When service charges are distributed through a properly managed tronc scheme, staff only pay income tax on those amounts; they’re exempt from National Insurance contributions. The business also saves on employer’s National Insurance (currently 15%). For a business distributing £20,000 in monthly tips, that’s £2,760 saved each month.

It’s easier than raising prices Adding a 4% service charge feels less confrontational than putting prices up directly.

I get it. These are real pressures with real consequences for real people.

But here’s what feels wrong

Picture this: you walk up to the bar, order a pint, tap your card, and carry it back to your table yourself. Then you discover you’ve been charged extra for… what exactly?

One customer summed it up perfectly: “Where’s the service in that?”

This is where the whole thing falls apart for me. We’re calling it a “service charge” when what’s actually happening is basic, transactional service. You order, they pour, you pay, you carry. That’s not service worth paying extra for; that’s just the baseline expectation.

Service is transactional; it’s the basics you expect when you walk through the door. Tech will pour that pint for you in the not too distant future.

Hospitality is the human connection, the warmth, the going above and beyond that genuinely adds to your experience.

The problem with service charges being everywhere now is that we’re no longer rewarding staff for going the extra mile. We’re just supplementing wages for doing the minimum.

The real purpose of tips

To be clear, I really believe in tipping, your teams need them, but they should never be taken for granted. I think that’s the issue here; service charges have completely lost their original meaning.

T.I.P.S originally stood for “To Insure Professional Service.” It was meant to reward excellence, not subsidise basic wages.

When service charges become automatic, we lose that connection between exceptional hospitality and reward. Why would staff push themselves to create memorable experiences when they’re getting the same tip regardless?

And from the customer’s perspective? Why are they paying extra for average service?

This is exactly why so many guests are uncomfortable with service charges now. They can sense when it’s not earned, when it’s just a way to extract more money rather than recognise genuine hospitality.

The authenticity gap

The Well and Boot is also cashless, which means unless you’re particularly observant, you’re probably paying this 4% without even realising it. That feels disingenuous to me.

If you genuinely believe your team deserves extra recognition, be transparent about it. But don’t hide charges in the small print or assume customers won’t notice.

Customers aren’t stupid. They can tell when they’re being penny-pinched to solve your labour cost problems.

A better way forward

I’m not saying operators shouldn’t find ways to properly reward their teams. But let’s be honest about what we’re doing.

If you need to increase wages to attract good staff in Zone 1, increase your prices honestly. Build the true cost of excellent hospitality into your pricing structure.

If you want to implement service charges, make them meaningful. Reserve them for situations where genuine hospitality is being delivered; table service, recommendations, checking in with guests, creating experiences that go beyond the transactional.

And if you do implement them, make them transparent. Clear signage, staff training, and honest communication about what customers are paying for.

Most importantly, train your team to deliver hospitality worth paying for. If you’re charging extra, make sure there’s genuine value being added to the guest experience.

The bigger picture

What worries me is that we’re normalising this disconnect between what we charge for and what we deliver.

Service charges should be about recognising exceptional hospitality, not solving wage problems. When we use them as a stealth tax to cover our cost base, we’re fundamentally changing what hospitality means.

Customers will pay more for great experiences; they’re less forgiving when they feel like they’re being penny-pinched for basic service that should be included in the price.

The challenge for all of us in hospitality is finding sustainable ways to properly reward our teams for creating genuine hospitality… without making our guests feel exploited in the process.

What’s your take? How are you balancing fair wages with authentic guest experiences at your club?

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