London restaurant chain Ping Pong bans staff tips on card and introduces ‘brand fee’
A London restaurant chain has banned customers from paying a tip by card and introduced a 15 per cent “brand” fee instead, just three months before a new laws makes it compulsory to give staff tips.
Ping Pong, which operates five dim sum outlets in the capital, said the new optional charge would go towards “franchise fees and other brand-related expenditure”.
According to a report in The Times, the fee would replace a 12.5 per cent service charge, 90 per cent of which went to staff.
To compensate, staff at the franchise will be offered a pay rise which the company said would match the earning they would have received from the service charge distribution.
Ping Pong said it was trialling the charge ahead of new legislation changes.
The Employment Allocation of Tips Act comes into force at the start of July and will make it illegal for employers to hold back service charges from their staff.
Government officials said the move would put £200m more into workers pockets, but restaurants fear it could add to costs amid a period of high inflation.
Art Sagiryan, Ping Pong’s chief executive, told The Times, government had “completely ignored the huge costs that are related to operating the new system”.
He said: “Everyone in the industry is waiting to see who does what. There will be people introducing cover charges, there will be people introducing higher bills or menu prices, and we in the interim are trying to decide where we will go.”
It comes amid a challenging period for the hospitality, which has been one of the slowest sectors to recover from the pandemic.
Inflation and supply issues have led to higher costs for owners, while the cost of living squeeze has meant customers have less disposable income.
City A.M has contacted Dim Sum for comment.