Whose tips are they anyway?

The Government has published ‘Service Charges, Tips, Gratuities and Cover Charges: A Consultation’ which seeks views on how the law should be changed to prevent employers using tips or service charges to bring employees’ pay up to the level of the national minimum wage.

I have no doubt that they will receive plenty of views on this as it is a highly emotive subject as you will know if you have any involvement in the operation of a restaurant.  Through staff surveys Business Blueprints discovered 90% of a typical front of house team believe that the tips are entirely theirs as a personal affirmation of their excellent work from their customers.

The most important perspective on this I believe is that of the customer and their intention when they left the additional sum of money over and above the bill for their meal.  At Business Blueprints on a number of occasions we have gained insight through research with regular restaurant users in both focus groups and quantitative studies as to the reasons why they leave a tip and who they intend to receive it.   30% of customers do not leave a tip because the food and/or the service was not good enough.  85% who leave a tip intend for the money to be left equally for the team that created a great experience including attentive service, a caring atmosphere and delicious food.    All the aspects that Business Blueprints seeks to measure in a mystery visit to reflect the likelihood of a person returning to and recommending a restaurant.

And then there is the employers’ or restauranteurs’ perspective – they build a typical high street restaurant at today’s rates for anywhere between £400k and £1,000,000, pay the rent or mortgage, they hand pick the staff, train them, buy all the food, create a ambience that guests appreciate and want to come back to, provide the equipment to cook the food on, provide the recipes and the motivation to do all the above consistently!

What other business or industry is there an external influence on how any income generated by the business is distributed amongst the people who work there – other than ensuring that the statutory and good employee regulations are maintained?

The “restaurant” that creates a memorable experience that can be relished, recommended and repeated will always be rewarded with a good tip!  Surely it is therefore up to the “restaurant” to decide the best way to distribute the “restaurant ” income in order to encourage and reward the team just like any other business – If they decide to in an unjust manner then the business will suffer just like any other.

96% of People do not Complain!

In yesterday’s Daily Telegraph Waitrose advertised “If you don’t enjoy one of our products, we’ll replace it and give you a refund.  Reckless? No, just confident.”  This for some cynical businesses might seem a step too far  – Inviting customers to just make up lies and complain to get something for nothing when “there is clearly nothing wrong.”

Or is it that Waitrose are completely aware of the fact that 96% of people who have a reason to complain simply do not bother – what they do is tell at least 12 others about their experience and perhaps never go back.  Making it acceptable and actively encouraging customers to give negative feedback or in truth gain real insight from your customers through really helpful comments on how to get it right next time is absolutely essential for the short, medium and long term health of any business.

The price of a full refund on a Roast Beef Joint priced at £8.99 at Waitrose is nothing in comparison with the annual value of an average shopper in Waitrose.  Indeed in a restaurant Business Blueprints worked with; Spur Steak & Grill their average spend is £12, with an average annual visit frequency of 20 thus each customer is worth £240 – are you going to begrudge a refund of £12 for a meal that does not meet guest expectations or lose £240 or more over the life of your business- I think not!

It is fundamental to: 1. Do not be afraid to ask for feedback - a customer who has something negative to say is as afraid as you are – make it easy for them; 2. Actively seek out complaints - remember behind every one you find there is a potential 24 others who either agree or have a niggle or full blown complaint that you do not know about; 3. Reward the brave customer that tells you about their issue; 9 out of 10 of customers who complain and get a good response from you will be back and will be your most loyal and valuable customers.

During a recession customers become loyal to the brands that provide value for money and consistently good service and abandon those brands that let them down – Make sure you are the former not the latter!

Heading for a bad Xmas?

The conventional wisdom seems to be we’re heading for the worst Xmas in years.  Well I seem to remember that was the story in 2007, and 2006 and maybe 2005 too.  Let’s face it bad news sells, but how bad will it be?  It is interesting that research we conducted amongst shoppers back in the spring recorded quite consistently the highest levels of spend on non-food goods we’ve seen.  Now that was before all this talk of the credit crunch.  So what about now?  Well what I’ve been hearing and seeing in our recent research is that whilst shoppers have felt the pinch on grocery and it is clear they are behaving differently to a year ago.  But in terms of non-foods it seems that people want a good Xmas so don’t be surprised if we see another late Xmas surge.