Côte defends position in service charge row

21 August 2015 by
Côte defends position in service charge row

Côte Restaurants has hit back at accusations that it "pockets" the service charge it asks of customers at the expense of front of house staff, saying it does not recognise the 12.5% in its revenue.

http://www.standard.co.uk/news/uk/restaurant-chain-c-te-takes-entire-service-charge-instead-of-giving-it-to-staff-a2918366.html" target="_blank" rel="noreferrer">London Evening Standard- that it takes all 12.5% service charges from staff, and does not even allow front-of-house staff to keep tips left in change.

In a statement to The Caterer today, a Côte spokesperson defended the 72-site company against the claims, saying that it did indeed take the service charge, but re-distributed it fairly among all staff within the restaurant in question, and did not factor the 12.5% service charge into its overall annual revenue.

The spokesperson said: "We can confirm that, contrary to recent press reports, Côte distributes the service charge income to the restaurant level employees at which the service charge was collected. The individual restaurant manager allocates the service charge across all restaurant level employees, as we believe it is important to recognise those preparing the food or cleaning the kitchen in addition to the front of house staff."

This backs up the group's previous response, in which it said that collecting the service charge allowed it to pay staff a higher rate than the minimum wage, namely £7.50-£8.00 an hour, rather than the minimum of £6.50 for staff over 21.

On the subject of payment of staff, the spokesperson added: "This service charge element of compensation is always paid in addition to a base amount which is at least equal to the national minimum wage. It is paid through the payroll, net of taxes and National Insurance. As such, the company does not recognise the service charge as revenues in its accounts."

The group also flatly denied the claim - reported in the Evening Standard as coming from an anonymous Côte employee - that staff were not at liberty to take tips left in cash.

It said: "Company policy is that where customers leave a cash tip, it is at the waiters' discretion to keep it for themselves or to include it in a general pot with other members of staff. Any deviation from this policy will be investigated and disciplinary action taken where appropriate."

Côte did not comment directly on the allegation that all staff were instructed to tell customers that all cash tips go directly to front-of-house staff; a policy which, if it were proven true, has been called tantamount to asking staff to "lie", by Iain Wright MP, chairman of the Business Select Committee when speaking to the Evening Standard earlier today.

Founded in 2007 by Andy Bassadone and Chris Benians, with funding from Richard Caring, Côte was sold in September 2013 for £100m to private equity firm CBPE, and then sold to another equity firm, BC Partners, for a reported £250m in July this year.

It reported a 30% rise in turnover in its financial year to July 2013, and has experienced a recent period of strong growth, opening over 30 locations in the past two years.

The UK currently does not have a standard rule or law for tipping, with different restaurants implementing different rules - compulsory, optional, or no service charge. Customers are then always at liberty to leave extra cash if they wish.

Companies also collect money in different ways, from allowing each front of house staff member to collect individual tips, to putting all service charges into a tronc system, and redistributing it among all staff later.

In an article in The Caterer in October 2014, Peter Davies, employment tax director at accountancy, tax and corporate finance firm WMT, where he specialises in advising hospitality businesses, said: "There are always going to be some businesses that will push the envelope, but certainly the overwhelming majority of businesses that I'm aware of don't 'cream off' tips or service charges; they seek to cover their costs and nothing more."

Côte accused of ‘misleading' customers by taking service charge >>

Tipping: compulsory or discretionary service charge? >>

Sale of Côte Restaurants confirmed >>

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