The UK pub industry is facing a new challenge as a controversial trend of implementing US-style tipping gains traction, coinciding with a period of widespread pub closures.
A nationwide debate has been sparked by the Well and Boot pub in Waterloo, London, which has introduced an optional four per cent service charge on every drink.
The move, which adds roughly 30p to the price of a pint, has been criticised by financial experts who fear it will become a new norm, shifting the burden of rising costs from employers to consumers.
Mounting closures and rising costs
This tipping trend is emerging as the pub sector grapples with significant financial pressures.
Data from the first half of the year shows an average of eight pubs a week permanently closed their doors.
Since early 2020, over 2,200 establishments have disappeared, with many being converted into residential properties or offices.
The British Beer and Pub Association (BBPA) has estimated that 378 pubs will close this year across England, Wales and Scotland, amounting to more than 5,600 job losses.
Pubs contribute 2.8 per cent of the total business rates bill but account for just 0.5 per cent of total business turnover, leading to an overpayment of around £500m.
The closures are linked to a sharp increase in operational costs. In April, the national living wage rose by 6.7 per cent, while employers faced higher National Insurance contributions and a reduction in business rates discounts.
According to the British Beer and Pub Association, these factors have created a “vicious cycle” that threatens the stability of the industry.
The tipping point for revenue
For some pubs, the service charge is seen as a way to boost revenue and support staff without a direct price increase.
However, several financial experts have argued that the practice undermines the traditional UK model of discretionary tipping based on service quality.
Graham Wells, founder and financial Coach at Gro Wiser Financial Coaching, said: “The whole point of discretionary tipping is to show appreciation for fab service, but this blanket charge, driven by big corporates, is removing consumer discretion. They might say it’s ‘optional’ but that’s just playing on normal, human behaviour.”
“It could backfire to an extent as it’ll likely put some people off, but I fear it’ll gradually become the norm unless the government changes tax rules to disincentivise this behaviour. And I can’t see that happening any time soon,” he added.
Independent financial adviser Samuel Mather-Holgate agreed, explaining that pouring pints shouldn’t need a tip.
“We also don’t want to be tipping where it’s not deserved. Pouring a pint doesn’t deserve a tip like an excellent waiter does. This is a sure fire way of putting off punters and pushing your regular drinkers down the road.”
While tipping may provide short-term financial relief, it could alienate customers and ultimately fail to address the underlying issues of rising costs and profitability.