All Out

A strike at TGI Fridays. Now that’s interesting…

TGI Fridays faced protests outside restaurants in London and Milton Keynes as waiting staff joined in the UK’s first strike over tipping.

So what’s the problem?

In February, the casual dining chain, which has 83 outlets, began redistributing 40% of service charge payments paid on credit and debit cards to back-of-house employees, including kitchen staff, in lieu of a wage increase.

Ouch! Tips are supposed to be in addition to the waiters’ salaries – a reward from the customer for good service. That the chain is then using this in lieu of wages seems a bit harsh. There has to be a reason for it, surely?

Workers say the change is linked to increases in the legal minimum wage, which has forced the restaurant to put up waiters’ pay. Those increases, they say, have gradually eroded the differential with kitchen staff who have historically earned a bigger salary but not had a share of tips.

Ah… So there’s the problem right there. The minimum wage, like other interferences in the market by heavy handed regulation inevitably creates perverse incentives. I doubt that the Guardianista will see it that way, but there it is, for all to see.

The waitress said the change in tips policy meant a minimum cut in pay of 10% to 15% for waiting staff who had already seen a fall in tips as more people pay by contactless or skip tipping. She calculated that she had lost about £250 since the end of February and had gone overdrawn for the first time since she leaving university.

We don’t know what degree she got, but presumably not one worth paying her for. So, she has gone to uni and is now in a minimum wage job, which means that her skills aren’t worth too much and that is the problem with the minimum wage – it inflates the value of work that isn’t actually worth as much as the wage itself. Hence those perverse incentives.

The waitress added that the cut in tips was only the latest in a series of measures that had trimmed waiters’ benefits. “Every time the minimum wage has gone up they have taken something back. We used to get paid extra on bank holidays, now we don’t. Shift leaders used to extra pay, that’s gone.”

Yes, because very rise eats into the company’s margins, reducing profitability and hence their ability to employ people – so you have a choice; take the pain or lose your job. If you have the skills, you can seek better opportunities elsewhere. If you don’t, well, you have to take it on the chin. That’s why you are still in a minimum wage job despite having a degree. It’s why, when I took a minimum wage job, I put up with it just long enough to use my skills to get something better. It was a transient period – and someone who is educated should be looking at it in the same light.

Dave Turnbull, the regional officer for Unite, which has been supporting the workers, said: “We need the company to wake up and talk to us. The only way for this to be resolved is to sit down and talk about a way forward.”

Mmmm. How about doing away with the minimum wage that prices people out of jobs? I realise that Mr Turnbull might find that controversial, but a lesson in it is staring him in the face.

The TGI’s dispute comes amid tough times for casual dining chains struggling with rising costs, more competition and a squeeze on customer spending. Jamie Oliver’s Italian chain, Prezzo and Byron have all closed multiple outlets and asked their landlords for rent cuts.

There’s your alternative.