Tipping. It’s an issue that’s gripped the industry for as long as we all remember. For a lot of restaurateurs, the stigma associated with tips and where they go is something they can live with. For others that may want to change the traditional tronc system, there’s the fear things will only get worse for the profitability of their business. Throw in a growing demand for transparency from the modern diner and industry-wide difficulties in recruiting skilled staff, and pleasing everyone seems impossible.
But what if I told you things weren’t destined to get worse? What if I told you abandoning the typical tipping model could be a route to securing higher customer numbers, establishing a better rapport with those guests, and recruiting staff who care as much about your business as they do their salaries?
In January last year, East Sussex hotel and restaurant The Gallivant raised the hourly wage of all its staff to £9 an hour – four years before the 2020 National Living Wage standard – and abandoned service charges and tips altogether. The decision was applauded by both guests and staff – the latter quite literally, as at the staff meeting called to announce the new pay structure, staff from front and back of house clapped.
Sixteen months later, you have to wonder whether the decision has yielded any favourable results. Harry Cragoe, who’s owned The Gallivant since 2010, admits the move to scrap tipping and raise wages was a ‘leap into the unknown’, but it turns out things aren’t working out too badly for the hotel and restaurant at the moment.
‘Our occupancy has never been higher – markedly higher than this time last year,’ says Harry. ‘Without a degradation in our accounting rate of return. In fact, it’s the opposite compared to last year.’
What’s most apparent about the move is the effect it’s had on staff long term. Perhaps it should come as any surprise – surely in any profession, if you advertise higher wages, you’ll attract a higher quality of employee. That said, there are still those in hospitality who’ve yet to cotton onto the idea.
‘When we first implemented it a few staff left as they realised they weren’t going to get a free ride on their share of the tronc,’ says Harry. ‘Today we’re certainly finding it easier to recruit. The general tone of the person wanting to work for us has significantly improved – happier, more positive people that are genuinely interested in delivering a great experience for our guests. Staff that give a damn.’
As Harry says, happier staff will inevitably bring a better experience to the customer. The ethical aspect of improvements to the workplace also manufactures a degree of empathy from guest to staff. Still, it’s difficult to quantify how much of an impact, if any, that has on the fortunes of the business. ‘Among guests it’s very received,’ says Harry. ‘But we’re not getting customers making a song and dance about it. Just an undercurrent of “well done”. And there’s certainly no negativity associated with the fact we’ve increased prices accordingly.’
As for those in the industry, Harry says the majority show an extent of negativity towards the new wage structure. ‘For most, the reaction is very short term, i.e. “it must be hurting your bottom line”’, Harry says. But, from a financial point of view, it’s true things haven’t been all that rosy for the hotel. ‘I always thought the strategy had a long tail. I was hoping positive things would start to take effect 18 to 24 months down the line,’ Harry says. ‘Has it? Not in terms of our costs, but in terms of happy customers which feeds directly to occupancy, the answer has to be yes. Obviously improvements to our product have had an impact, as has the weird economy we’re currently in, but I suspect our happier team and better service is also having an impact.’
Since The Gallivant’s move is so rarely seen among businesses, let alone those in the hospitality sector, Harry says it’s been a bit of a learning experience for him and the team. ‘Two years ago I didn’t spend too much time talking to my GM about how we could improve the exchange with our employees that are having an impact on our customers’ experience. Now I’m constantly talking to her about it. This has pushed us as a business to focus on improving the lot for our team, to make working for us more rewarding, more fun, and more validating.’
The Gallivant’s move took a lot of cojones, and some would say it’s paid off. The thing is, if you – like Harry – are concerned about the happiness of your employees (and therefore the happiness of your guests), the question of how much money you make isn’t at the top of the list. Plus, it seems that, even though his business isn’t necessarily better off in terms of profits, the owner’s head is in as good a place as his staff. ‘Overall, the experience has been enormously positive,’ says Harry. ‘I’m really excited about this, and the future as a whole.’
Photos courtesy of The Gallivant