Coffee chain Caffè Nero has ended its policy of free lunches for staff in a bid to offset the impact of the national living wage, which came into effect this month.
The company sent a letter to staff warning that the change in wages (all staff over 25 years old must now be paid at least £7.20 an hour) would have a "significant financial impact on the business" and that it was therefore looking to trim other costs.
Caffè Nero told BuzzFeed News it was spending "four times" what it was required to on wage increases and had made the decision to extend the wage rise to under-25s, something it was not legally required to do.
Therefore, it said in the letter to staff, it had to make "operational savings".
This is a part of the letter announcing the changes:
Staff will instead now be entitled to a 65% discount on food and 75% discount on drinks during shifts.
One staff member, who didn't want to be named, told BuzzFeed News the move was "ridiculous".
"We work for them, we make the money for them, and we're always understaffed," the employee said. "On top of everything, they don't give you food any more."
She also accused Caffè Nero of demoting her because the chain said it could not now afford to have more than one manager in that store – something the coffee chain strongly denied and said was "not company policy" but instead "an individual potentially disgruntled employee".
Caffè Nero said it was "committed to the investment and development of all its employees" and that the "big majority will be receiving a pay increase depending on their role or situation."
A spokeswoman said the national living wage was a "huge potential cost" to the business but said it was also a "great opportunity" to review pay.
She said the company had decided to increase pay across the business, with many benefiting from a pay rise, in a move that would put it on a good footing for future national wage increases, for example in 2020, when it is expected to increase again.
"Caffè Nero is committed to the investment and development of all its employees," she said.
"Pay and benefits is a hugely emotional subject, and so an in-depth internal feedback programme was run by the business over a six-month period, which sought the opinion of baristas, shift leaders, assistant managers and store managers.
"From 11 April, all current employees, regardless of their age, will be moved to at least the new national living wage if currently below it. Alongside this investment, all current employees will continue to receive paid breaks, and a substantial discount on food and drink bought when on shift.
"Employees currently paid over the national living wage have all had a full pay review, and the big majority will be receiving a pay increase depending on their role or situation. Much of this is above and beyond the minimal wage requirements and emphasises our commitment to our hard working, and dedicated baristas."
Caffè Nero said it was committed to career development paying a "fair wage".