Food & Drink: Gastropod

TWO DOZEN people gathered for lunch in the private room of London's Soho Soho restaurant last week. They enjoyed three courses (salmon, lamb and apple tart) and a lively discussion. Oddly, only one of them could be seen to leave a tip at the end of the meal. Considering that the entire lunch had been spent discussing restaurant service charges, this seemed a bit mean.

The Gastropod used to be on the receiving end of the system, and can therefore reveal what happens to the 10 per cent you leave on the saucer. Traditionally, all tips are pooled in a kitty called the tronque - Napoleonic slang for 'loot'. The takings are then distributed among the entire staff - kitchen and front of house - according to a points system: for example, the haughty maitre d' could have up to five points, the humble plongeur only one. The tronque is shared out accordingly. The idea is that everybody who contributes to the success of the restaurant receives some reward. The memory of the Gastropod is a bit hazy on the shares taken by high scorers like the chef, but is very clear when it comes to the nightly anxiety about whether one point would cover the cab fare home.

The question that vexed the restaurateurs at lunch, however, was not how the money is distributed but how it is collected. Neville Abraham, of the Chez Gerard group (which has seven London restaurants, including Cafe Fish, Bertorelli's and Chutney Mary), thinks that the service charge should be seen as a form of sales commission. At his restaurants, the policy is to levy a charge of 12.5 per cent on all bills which is distributed among the staff and appears as a duly-taxed item on their monthly pay slips. Cash tips left on tables go straight into the waiters' pockets and, he reckons, are none of his business.

This arrangement did not appeal to Peter Boizot, the founder of the Pizza Express chain: he produced a pie chart to demonstrate how incorporating the service charge into the bill would increase the cost to the customer, add to the restaurant's bureaucracy, and diminish the waiter's earnings.

On the other hand, the Chez Gerard group's policy must be popular with the taxman, because it ensures that both VAT and income tax are levied on the tips. Only a restaurateur who can persuade Customs and Excise that the entire service charge goes to the staff, and that the customer has an option whether or not to pay, can avoid paying VAT on it. (This explains why so many bills now have an explicitly 'optional' or 'discretionary' service charge.) If the charge is included in the bill, so is a bit more VAT.

It is hard to disagree with Mr Boizot that when tipping remains a private matter between the customer and the staff, it helps to build a bond between them. Take a tip from the Gastropod, learnt in the days when he wore rubber gloves to work: the most accomplished waiters prefer to work in places where tipping is discretionary, so that's where you get the best service.