New code of practice will restore hospitality industry's reputation

The British Hospitality Association is urging all restaurants to adopt a new Code of Service Charge Practice, which is being developed in conjunction with the Department for Business, Innovation and Skills.

At a meeting of major restaurant groups at the accountancy firm BDO Stoy Hayward in London, BHA's chief executive, Bob Cotton, said that the current controversy over the service charge had damaged the industry's reputation.

"If we can ensure that every restaurant accepts and adopts the code, the industry will have done much to reinstate its reputation," he said.

"We must put behind us all the critical comments the restaurant industry has had to endure in the last year and make crystal clear that the BHA and the Restaurant Association supports total transparency in this area."

He said that members of the BHA's National Restaurants Group - which represented the vast majority of chain-owned branded restaurants in the country - had accepted the code.

"Some groups have already been providing this information for customers for a number of years. I confidently expect it will be widely adopted by the whole industry. Members of The Restaurant Association are also being urged to adopt the Code."

Cotton said that the code, when introduced in October, will urge restaurants to display on their website or in some other easily accessible form, an explanation of how the proceeds of the service charge are distributed to staff in accordance with the restaurant's arrangements.

It should be made clear whether the proceeds are shared between the restaurant and the staff, and whether the distribution is controlled by the restaurant or by a representative of the employees.

If a percentage of the service charge is held back by the restaurant to cover administration or other costs, that percentage is explained and is made clear.

Cotton added that 30,000 other restaurants in the country would be encouraged to adopt the code.

"Consumer pressure will no doubt play its part in this as customers ask for similar information of independent restaurants to that provided by the major groups. But we hope that all restaurants will voluntarily accept the code before consumer pressure might begin to force the government to consider a statutory approach."

The BHA, he said, fully supported consumer transparency.

"Customers must be able to understand exactly what happens to the proceeds of the service charge. Only with this transparency can the industry's practices be seen to be above reproach."

The code of practice will be published by the government before the introduction of new legislation on October 1, which will ban restaurants from using the proceeds of the service charge to make up the national minimum wage. Until now, this practice has been perfectly legal.

Words: Clare Riley

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