A recent announcement by the government has led to multiple debates on dinner tables across the city, some pleased and some outraged. The Department of Consumer Affairs has made the service charge discretionary and not mandatory, i.e. you can choose to pay if you’re satisfied with the service. While it brought a surge of fury amongst the restaurateurs, the customers accepted the news with a smile. Their point of view suggests that the menu prices should include all costs associated and not feel obliged to pay a service over and above, whether or not the service was ace.
For those slightly confused with the tax breakdown, here’s a quick 101. Post the food & beverage charges, these are the charges and taxes levied to your bill:
From the Consumer Affairs Ministry
Consumer Affairs Minister Ram Vilas Paswan says, “Our Department’s view is that imposing service charge is an unfair trade practice and consumers need not pay”. There is no definition of ‘service charge’ in law but taking service charge without discretion of consumers is an unfair trade practice” he shared with The Economic Times.
The Economic Times also quotes Consumer Affairs Secretary Hem Pande “We have been receiving several complaints from consumers that they have to pay service charges even when they are not satisfied, so the government has issued an advisory that hotels or restaurants must give a choice to consumers whether they want to pay that money or not”.
Contrary to popular belief, service charge isn’t solely reserved for the service staff, it isn’t ‘a tip for the waiters’ but rather, based on a point system and rank distribution, it is distributed amongst all staff members – from valet to manager. But as Vir Sanghvi pointed out in 2015, “One problem with service charge is that unscrupulous restaurants don’t always pass all of the money onto their staff – and some don’t pass it on at all”, indicating that this can’t be taken as standard process in India.
The Restaurateurs’ Opinion
Meena Bhatia from Le Meridien shares in an interview with Hindustan Times “We will review the decision. We have been levying a service charge and our guests preferred that because it stopped the practice of some staff member standing around for tips.” National Restaurant Association of India (NRAI) President Riyaaz Amlani mentions: “The act stops us from indulging in any unfair method or deceptive practice. We clearly mention the service charge we levy on our menus. We are not indulging in any unfair trade practice.” Chef and restaurateur Manu Chandra, who runs Monkey Bar outlets across India, said the move would result in a refactoring of prices as service charges were a way to remunerate staff. “Rentals, competition and salaries are rising. The restaurants will have to take a couple of days to work on alternate ways to meet these costs,” Chandra said to The Economic Times.
The Consumers Say It All
The customer is always right (are they?), but the customer’s opinion is not necessarily unanimous. The Times Of India City quotes a customer in Connaught Place saying “I don’t mind paying the service charge. I have come here to celebrate my birthday, if the service is good, I will pay the charge”. In Anoothi Vishal’s latest piece, a city-dweller states “I can be perfectly fine without restaurants but they won’t exist without me… so take down this arrogance.”
Dipak Dash from The Times Of India Business shares “The Local Circles survey has shown that majority of the consumers want service charge to be made optional and 68% consumers have opted for restaurant bills to include a “yes or no” checkbox for service charge.”
Vir Sanghvi’s recent must-read article on the matter, he makes a cutting observation, “Tips and service charges are a hangover of an earlier era when we liked giving baksheesh or were thrilled when waiters sucked up to us in the hope of getting tips. But the new generation doesn’t like all that. They prefer an Uberized world where you pay one all-inclusive charge and don’t worry about how obsequious the service is. In the technology-savvy 21st Century nobody will have any time for medieval and ethically dodgy concepts like tips or service charges”.
Featured Image Courtesy: Knowyourmobile.com
