A new law being introduced this year will make it illegal for businesses to withhold tips from workers. This is welcome news for over two million employees. who will keep a total of £200 million a year in tips, according to government estimates.
But this is a very different issue to the recent call in some quarters of our local business community, to go a step further and make a service charge a mandatory payment on our bill.
As a consumer, one of the great choices we all currently have when we eat out, is the ability to decide whether or not we consider a service worth paying for. We have the option to leave a service charge or not.
Most of us have come across the term ‘the customer is always right’. Coined by Retailer Harry Gordon of Selfridges in 1909, it has been used as an important business marketing tool, to remind us of the importance of customer satisfaction.
How many of us, for example, will go back to a restaurant where the service is poor? If we also now forced to pay for that poor service, social media channels will be on fire.
Equally, in small business we usually work with a small consumer pool, either due to geographical boundaries or a capacity to produce products in any great volume.
Many of our customers are local and so our reputation for quality of product and quality of service are two of our most valuable assets. Without these our chances of attracting new customers through word of mouth, or retaining existing customers through repeat business, is hugely limited.
This keeps us on our toes and makes sure we invest in training our staff and engaging with opportunities to improve what we do.
Programmes like the Welcome Host initiatives to support small businesses improve their service offering, are built on our need to continually better the service we offer. Are these needed if there is a mandatory service charge?
If what we do is not up to our customers expectations then that is a very important message we need to hear. There are other countries that are already working a mandatory service charge system and having visited one recently, we have call for concern for our future.
A future where it’s okay for someone to take a food order with their back to you and charge 20% on the bill for the privilege. A future where this is not the exception but where low service standards have become the norm.
Maybe that’s it and we are just being prepared as consumers to accept a poorer level of service. A bit like when Covid taught us all quickly that ‘cash was no longer king’ but paying by card was mandatory.
Could this not be a slippery slope to a poorer service experience for the customer and a lack of feedback to the business that their service needs improved?
We don’t live in a tourism hotspot where businesses might be able to get away with poor service and still generate high sales volume.
We live in a place that relies on repeat business, and if you’re not up to scratch your sales will suffer. Consumers will always vote with their feet, and if you automatically charge them for a service they consider mediocre or poor, then they will walk even faster (and maybe even run). Then when they’re finished the race, they’ll tell their friends and family never to darken your door.
- Michelle Lestas is a turnaround small business specialist, keynote speaker, published author of “In Business with Yourself” and chair of the Association of Business Mentors (Ireland).