Restaurant fends off 3% automatic tipping controversy
Island Radio is fending off backlash against a 3 per cent tipping policy.
The Redfern restaurant which is in a new $50 million dining precinct in the inner Sydney suburb has defended the policy and said guests can still opt out.
One angry local asked, "Do I need a reason? You should pay your staff enough. Why must we go through this painful rigmarole?”
"The optional 3 per cent surcharge at Island Radio, communicated at multiple stages during the booking process (on our website, in the booking widget, in the confirmation email), written on the menus and again verbally when the bill is presented, is designed to reward our team for their dedication and hard work," an Island Radio spokesperson told Yahoo Finance.
"It also serves to incentivise exceptional service and support increased tenure within our industry - at a time when experience is hard to find, and living costs are increasing."
Island Radio, part of the crew behind Tilda, Hinchliff House, and Bondi's Promenade, is letting diners skip the surcharge, no questions asked.
"Gratuities are managed through a third-party program, which we believe is the fairest approach, and every dollar goes directly to the team working during that shift, including the kitchen," they said.
"We fully respect that not all guests may wish to pay the surcharge, which is why it remains entirely optional.
"We are confident in our stance, and you will find that many hospitality businesses have moved in this direction."
Japanese-inspired rooftop bar Joji has also adopted an opt-out service fee of 5 or 10 percent, depending on the number of guests. A recent diner expressed surprise that the fee wasn't simply integrated into the overall cost.
"I asked the manager if it will be added to every bill why not just increase the price of everything by 10 per cent?" they said.
"I've already voluntarily walked into this establishment to pay outlandish prices for your food and drinks, another dollar or two won't make a difference —but seeing that clause is a real eye-roller."
According to Australian Restaurant & Cafe Association CEO Wes Lambert, Australians are rejecting the practice.
Lambert told yahoo Finance, "While there is a cost of doing business crisis for Australian restaurants and cafes, it is a very limited and isolated occurrence that a restaurant or cafe in Australia would have an automatic gratuity for small groups.”
Australians have labelled the practice sneaky.
One critic said, "Seriously, if you can’t operate a profitable business in tough times, suck eggs. Close up shop and open a stall at a market on a Saturday. There are other restaurants that would gladly take my money and not be deceiving like this."
Island Radio has refuted claims that its restaurant was attempting to "deceive" diners through its automatic gratuity policy. The company has dismissed comments suggesting the gratuity was "hidden" or that staff were not receiving fair wages as "completely untrue and ill-informed."
This controversy comes as Australia's hospitality industry faces a challenging period. CreditorWatch predicts a significant increase in business failures, with one in 11 hospitality venues expected to close within the next year.
CreditorWatch CEO Patrick Coghlan anticipates further difficulties for the industry, stating that improvement hinges on increased consumer spending, which is not expected until the second half of 2025 due to recent interest rate hikes.
While consumer spending has slightly increased in recent months, thanks to tax cuts, the hospitality sector remains under significant pressure.
Jonathan Jackson, 9th December 204
