Amex’s 10% dining discount returns in January – here’s how it works behind the scenes

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• NFH says:

  22 Dec22 December 11:41

  Many restaurants, particularly in London, will claw back more than the 10% by disingenuously adding a 12.5% so-called “service charge” on top of the prices in the menu. Despite being purportedly optional, these additional percentages are not genuinely optional because the consumer does not opt into them. It’s all to facilitate a VAT dodge and a misleading indication of total price in the menu.

  • NFH says:

    22 Dec22 December 12:15

    As for legislation, Section 230(2)(b) of the Digital Markets, Competition and Consumers Act 2024 requires an invitation to purchase, such as a restaurant menu, to indicate “the total price of the product” and is expected to commence in April 2025. Therefore restaurant menus will have to show the total price of each product. It remains to be seen whether “the total price of the product” will be interpreted as the total price that the consumer will be asked to pay or the total price that the consumer is contractually bound to pay.

    • TGLoyalty says:

      22 Dec22 December 13:22

      Not sure this will change service charges which by law (since Oct 1st) must be wholly given the employees.

      The service charges are usually pretty clear on menus.

      Though the service charge law change has just added “cover charges” per person to bills in London.

      • NFH says:

        22 Dec22 December 13:37

        The legislation that you’re referring to is to protect workers. The legislation that I’m referring to is to protect consumers. As a consumer, I’m not very interested in how restaurants remunerate their workers, but I do expect a price in a menu to be the total price that I will be asked to pay. This nonsense doesn’t happen in any other European country except perhaps for Italy.

      • TGLoyalty says:

        22 Dec22 December 14:29

        I can see that but I’m not sure the link you posted is intended to change the way service charges are shown on menus.

        I was talking about how the change impacts the establishment and their pricing policies ie new fees or increasing prices. I actually expected the service charges to reduce on 1st October as now the restaurant is getting nil and prices to go up but I’m still seeing the same 10-15% maybe it’s too early to tell what will change.

      • NFH says:

        22 Dec22 December 14:47

        TGLoyalty – the legislation that I quoted is not targeted specifically at restaurant prices. It’s intended to prohibit any misleading indication of price where a business fails to dislose the total price of a product.

      • TGLoyalty says:

        22 Dec22 December 15:26

        Yes the point of it is so that the price is shown or clearly calculated. So to end the practice of unclear pricing that can’t be easily calculated with no tax or many extra charges upon charges plus % postage etc. if you think this will mean every price needs to be shown fully inclusive I think you’re mistaken.

        It’s a simple every price plus x% everyone with a phone can work that out. Hence I don’t believe anything will change. But let’s pick that up in April as I have no more to add now.

      • NFH says:

        22 Dec22 December 16:23

        No, the option to indicate how the total price is calculated can be used only “if, owing to the nature of the product, the whole or any part of the total price cannot reasonably be calculated in advance“. This would apply to a delivery charge that potentially covers multiple items in a single delivery for example. It would not apply to a percentage, because the total price including the percentage can always be calculated in advance.

        Misleadingly low prices distort competition, because consumers focus on headline prices rather than taking the time to calculate total prices. It’s the same principle as when Ryanair was charging £6/€6 for card payments on top of its headline fares in order to mislead consumers about the total fare. Such misleading indications of price are being progressively outlawed by many jurisdictions, and rightly so. The new legislation is intended to be a catch-all to outlaw this malpractice in the UK entirely.

  • Lumma says:

    22 Dec22 December 14:22

    Adding “optional” service charges is a way to provide extra pay to staff at a lower cost than just increasing prices. They’re not subject to VAT and when staff are paid from that money, they don’t need to pay National Insurance or student loan repayments. A 12.5% service charge would need to be an increase of around 17-20% on the menu prices without it.

    On holiday in Colombia last month they added 10% to bills pretty much everywhere but you have to tell the server that you’re happy to pay it. Perhaps that could be the solution

    • TGLoyalty says:

      22 Dec22 December 14:30

      This is also true. It is better for the employees for sure especially now they get / share all of it.

    • NFH says:

      22 Dec22 December 14:53

      The legislation that I quoted would not prevent the remuneration of restaurant staff in the manner you describe. For example, where a restaurant charges a total of £18 for a dish, the bill could continue to show a £16 charge plus a £2 (12.5%) additional amount, but the menu would have to disclose the full £18 price upfront, perhaps with a footnote saying that the prices include an optional 12.5% component.

      • Lumma says:

        22 Dec22 December 17:12

        There’s nothing misleading about the way it’s done now. If you don’t want to pay the 12.5% just tell the staff. They might ask if there’s a reason but it will be removed.

        What it has done, especially with the new regulations has increased pay packets for hospitality workers, whereas the old way of working for tips often meant a handful of waiters were pocketing big tips and the rest of the team not getting anything.

        There was also the issue that certain demographics of customer getting better or worse service because they were deemed to be more or less likely to be big tippers.

        • NFH says:

          22 Dec22 December 17:50

          It is misleading because the price in the menu is less than the total price that the restaurant will ask the diner to pay. Restaurants in no other European country, except perhaps for Italy, operate this nonsense. Nor does any other industry in the UK operate this nonsense. The norm is that the price you see is the price you are asked to pay. Anything else is disingenuously misleading.

        • Cicero says:

          23 Dec23 December 03:49

          No, let the customer decide whether to pay the charge, don’t put the onus on him to remove it. There’s no reason why anyone other than the waiter should receive the service charge, only the waiter is providing the service. The other staff members should be remunerated accordingly. And why shouldn’t certain demographics get better service if they are prepared to pay for it?

      • Cicero says:

        23 Dec23 December 03:46

        That doesn’t make any sense. It would be much more confusing than the current situation.

• MKB says:

  22 Dec22 December 11:57

  Now we know that using an Amex at participating restaurants costs then 15%, perhaps we can negotiate to pay them cash for a 12.5% discount? Win-win.

  • Kowalski says:

    22 Dec22 December 13:31

    Yeah I presumed it’s 5% of the 10% fees total

    • LittleNick says:

      22 Dec22 December 19:52

      Presumably that’s excl. the regular credit card/amex fee charged to merchants & retailers at 2-3%? So a £100 restaurant bill would amount to the restaurant getting about £80-£83?

• Kowalski says:

  22 Dec22 December 13:41

  That can’t be true though surely? I know it doesn’t seem like it, but not everyone has a smart phone. It’s bad enough a lot of restaurants don’t accept cash anymore, but to no longer accept physical cards either, that’s just bonkers!

• Colin MacKinnon says:

  22 Dec22 December 14:03

  Profit is sanity, turnover is vanity!

  Now we know hits only chain restaurants that take part in- the good local ones in Edinburgh wouldn’t mind losing 10.5% of their turnover, but that could be 50% or more if their profit on weekends!

• Shane Buckley says:

  22 Dec22 December 16:49

  I think Colin is right, I think it is 5% of the cash back, not 5% of the gross amount so 10.5% total

  • TGLoyalty says:

    22 Dec22 December 18:03

    No wonder only a few have signed up. That’s pretty awful.

  • SBIre says:

    22 Dec22 December 23:08

    I had looked at the Krowd website and the sample dashboard implied a much lower fee. (Just over 10.3% I total) Looking at the Amex page I agree you are right. I struggle to see what Krowd do that Amex could not do for a tiny fraction of that fee and without the risk of adding Krowd as an intermediary.

• davidn says:

  22 Dec22 December 20:02

  Various websites put average UK restaurant profit margins at 0 (!) to 15%… which, without too much thought on the matter — it’s a tiring time of the year! — makes me inclined to think that participants are charging high prices, or scrimping on ingredients/standards/wages/something… ?

  • Rob says:

    22 Dec22 December 20:09

    Given that you presumably spend a lot of time in aircraft or hotels, you should understand the economics of attracting additional custom to businesses with high fixed costs and low marginal costs.

  • TGLoyalty says:

    22 Dec22 December 20:09

    Alot of the places are chains. Burgers, coffee, Krispy Kreme.

    The profit margin also includes marketing budgets and of course they’re hoping to attract more high spending customers who may splash out on high margin items from menus.

  • Lumma says:

    23 Dec23 December 01:29

    I think you’re confusing gross and net profit. Gross profit is usually somewhere between 65-80% on most menu items.

    Uber/Deliveroo charges are usually 30% and restaurants are happy to work with them for the extra business it generates. I think most restaurants would happily pay 15% for genuine extra business but I wonder how much is extra business under this model versus people saving the offer and getting the cash back as a nice surprise

• Tom says:

  23 Dec23 December 13:37

  Is there any word that the Amex tier point spend rewards might come back?

  • Rob says:

    23 Dec23 December 13:40

    Our best bet is that if/when BA moves to awarding tier points based on spend, Amex will bring them back in order to make low levels of status still theoretically achievable for leisure travellers (since Silver would be around £10k of pre-tax spend and Gold £25k otherwise, based on my rough and ready calculations).

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