April 29 2026 - 10:00am
There’s a certain satisfaction in watching a fabulously rich and famous man undone by the very forces he rails against. At the launch of his Netflix documentary earlier this year, Gordon Ramsay said restaurant critics had “destroyed restaurants over 25 years” and that he now “fucking need[s]” influencers to get people through the door. Unmoved, Jay Rayner wrote in the Financial Times that one of Ramsay’s new ventures amounted to “£776 of meh”. Critics, unlike influencers, have a stubborn habit of reporting what they actually find.
So with the news that Ramsay’s twee restaurant, Lucky Cat, is charging customers a 20% service charge, up from the generally accepted 12.5%, you wonder what the man is smoking. Some have suggested that Ramsay may have raised this to incentivize a higher standard of service, but the exact reason so far is unclear.
Business costs indeed rose at the start of April, with national insurance contributions, minimum wage, and other employment costs all going up. It is also true that the restaurant industry is trapped in what seems to be an endlessly reported permacrisis. But Ramsay could hardly have designed a better way to annoy everyone with the creeping stupidity of the service charge system.
Everyone understands what a tip is. A person or team performs a service particularly well and, despite already being paid, is spontaneously deemed deserving of a voluntary and personal gift from the customer. Regular earnings are taxed in the usual way. A genuine tip bypasses the employer, is not guaranteed, and does not form part of the supply. That is why it is exempt from VAT and National Insurance.
This is not the system we have now. Staff are costly and often unreliable, yet they remain one of the few levers operators can actually pull. That creates a basic dilemma: how do you cut costs while still giving people a reason to stay? The industry’s answer has been the added service charge. Framed as “voluntary”, it benefits from favorable tax treatment, keeps headline prices artificially low, and —until recently — did not reliably bypass the employer. In many cases, restaurateurs controlled how it was distributed right up to when the Tipping Act came into effect in 2024. Even then, loopholes remained: tips could still flow to directors or head office staff with no direct role in the service being rewarded. I know this because I’ve received tips in both capacities.
The “voluntary” element has now become a begrudgingly accepted fact of life. Nobody seriously challenges the service charge anymore for fear of looking like an arse to their friends. And the spontaneous element disappeared long ago, with a specific rate being demanded. HMRC agrees with both of these pretenses.
This is where the problem with Ramsay’s charge becomes clear. His move has been labeled “Americanized” because of its scale: in the US, a 20% tip is widely treated as the baseline, with higher amounts increasingly expected for strong service. You can argue separately about the federal minimum wage and whether that model is good for employment. But at least the arrangement is transparent. Customers know they are expected to add something to the bill. The British version is worse because of its sneakiness, its weasel-worded “discretionary” language and its creeping complexity.
The real scandal is not that restaurants want more money. Of course they do: costs go up. But if they want to charge more because of staff costs, they should do what every other business does and charge more. Then it is none of my business how they spend their money. What I object to is how disingenuous it is.
So here is the answer for customers: stop paying it. Not sometimes, every time. Force restaurants to tell people the real price before they buy. End the ambush at the end of the meal, the tax wheeze dressed up in “be kind” language to force compliance. The service charge racket survives because the British aren’t American enough to fight in public. For once, we should be.
Join the discussion
Join like minded readers that support our journalism by becoming a paid subscriber
To join the discussion in the comments, become a paid subscriber.
Join like minded readers that support our journalism, read unlimited articles and enjoy other subscriber-only benefits.
Subscribe