The restaurant tycoon Richard Caring has admitted his private members club Annabel’s made a “dumb mistake” after staff revolted over the use of more than £70,000 of their pre-Christmas service charge takings to pay managers’ bonuses.

Just one table of diners at the exclusive Mayfair venue, which has hosted celebrities, financiers and aristocrats ranging from Kate Moss and Harry Styles to the late queen, can spend more than £10,000 in an evening, according to workers.

Guests pay an optional 15% service charge, which goes to staff, and a further £3-a-head cover charge, which is kept by the company. The Guardian has seen evidence that Annabel’s, where a latte costs £6, a cheeseburger £26 and a ribeye steak £125, can collect more than £100,000 in service charges in just one week.

One member of staff said that “everyone got mad” when workers realised their share of the bumper service charge takings in the run-up to Christmas had been reduced by as much as £70,000 to hand bonuses to about 50 managers.

Workers say the issue has highlighted the opaque way card tips and service charge payments are shared. Most are on zero-hours contracts and are paid £12.76 an hour, 5p above the legal minimum wage, so rely on these gratuities to pay their bills.

One said: “There’s really no fixed salary at all, it’s low.” Another added: “Tips are a huge bit of pay. We cannot rely on minimum wage.”

The service charge is shared among about 280 hospitality workers through a system called a tronc. There is a tronc for card gratuities, while cash tips are divided separately.

It is understood that more than 60% of frontline staff at Annabel’s are paid the £12.76-an-hour rate, with their pay bumped up by different amounts from the troncs for each hour worked, based on seniority. Businesses do not pay national insurance contributions on service charge and tips, so paying workers in this way reduces the bill to HMRC.

Under a law implemented in October 2024, employers in Britain must share out 100% of service charges and tips collected in a venue to its workers in a “fair and transparent manner” and employees have the right to know “how tips are allocated and distributed”.

After being approached by the Guardian, Caring said the use of the service charge to pay bonuses to managers had been a “dumb mistake” and that it would no longer distribute the tronc in this way.

Annabel’s said it had held a series of meetings with workers in late March and April and “a number of changes have already been implemented in response to feedback”. It shared out an extra £103,000 to reimburse hourly workers at the start of April as “a gesture of goodwill”.

The club said it had held a “full consultation” in 2024 on its old policy, which allowed “surplus tronc in certain periods to fund incentives for floor-based managers”, before it was implemented. It said pay was worth up to £24 an hour once tronc payments were taken into account, adding that it fully complied with the 2024 legislation.

Caring accepted that the club’s tronc system could be more transparent: “I believe in openness … Everybody should know what they are getting.” He said Annabel’s was preparing to offer contracts that guarantee at least 20 hours a week of work, with the aim of introducing them before an effective ban on zero-hours contracts from September.

Caring has recently announced he is selling a majority stake in his hospitality empire – which includes Annabel’s, Harry’s Bar, The Ivy restaurant group and the upmarket eateries Sexy Fish, Scott’s and J Sheekey – to Abu Dhabi’s Sheikh Tahnoon bin Zayed al-Nahyan for a reported £1.4bn.

Caring will reportedly retain a £1bn stake in the group and will stay on as president under a four-year commitment.

The Ivy chain is defending a legal action that had a tribunal hearing this week from a waiter who claims he was refused details about how the upmarket restaurant group calculated his share of tips and service charges.

Despite the “goodwill payment”, some Annabel’s workers remain unhappy with pay and conditions and plan to protest on Friday outside the Mayfair club.

The IWGB union, which says it has dozens of members at Annabel’s, said staff wanted to be paid at least the independently verified living wage for London of £14.80 an hour, and to get a fair share and more transparency on distribution of the service charge. They also want contractually guaranteed hours that reflect current working patterns.

Henry Chango Lopez, the general secretary of the IWGB, said: “The billionaires and A-listers who make up Annabel’s clientele can spend more on a single meal than the club’s [little more than] minimum-wage, zero-hours staff take home in a month.

“For the Annabel’s staff trying to survive in London on just £12.76 an hour, tips aren’t a bonus – they’re the only thing keeping the rent paid.”

Several Annabel’s staff told the Guardian that they received their share of the service charge under a points system. Some knew the number of points they had and others did not, and it was not explained on payslips.

None of the workers spoken to by the Guardian knew how points had been allocated compared with other workers at different levels and exactly who shared diners’ payments.

Annabel’s said all staff had been sent letters explaining their personal points for the service charge but it could not give details of the system for the service charge because of “confidentiality requirements”.