Restaurateurs reach tipping point over ministry's service charge advisory

‘The service charge is given to the employees as a part of their salary. Now, employees have been calling to negotiate their salaries to balance the loss that they will face personally. In which case, we won’t be able to retain some of them.’ 

A day after the central government said that customers have the option of not paying the ‘service charge’ part of hotel bills, major eatery owners said the move could impact the morale of staff. They said if a customer is not satisfied with service at a hotel or restaurant, he or she can demand a lower service charge. However, waiving the entire service charge off is unfair and also difficult to implement, they added. 

Rahul Singh, CEO and founder of The Beer Café, said service charge is a common practice globally. According to him, this is an emolument for all staff members, who work through odd hours, holidays and weekends to provide a perfect dine-in experience for the customer. 

“If the guest is not satisfied with a particular item, we anyway replace it or not charge for it,” Singh noted. 

Joy Singh, co-partner of Raasta in Delhi and Mumbai, said service charge is for the management that looks after a guest from the entry door to the table as a token of appreciation and makes a part of their salary. 

In a statement issued on Monday, the department of consumer affairs said that it had received a number of complaints from consumers that hotels and restaurants were levying service charge between five and 20 per cent in lieu of tips, and that a consumer is forced to pay it irrespective of the kind of service received. 

To this, Sahil Gupta, co-owner of TabulaBeach, The Hungry Monkey, Arriba -- Mexican Grill & Tequilleria, said all over the world, restaurant staff make a living based on tips and service charge and not salaries alone. 

Gupta said his chain would be happy to remove the service charge from any bill if the customer requests so. “However, we would like to remind everyone that every employee of a restaurant -- from housekeeping to the manager with everyone in between -- deserves some extra appreciation from customers for all the work they put in.” 

Abhimanyu Boken, director of After Stories, said while he is not against the move, he’s puzzled how such decisions happen overnight without informing the industry in advance.

“The service charge is given to the employees as a part of their salary. Now, employees have been calling to negotiate their salaries to balance the loss that they will face personally. In which case, we won’t be able to retain some of them.” 

Hemendra Rai, consultant, After Stories, said with this move, the government has taken dignity away from the hospitality industry employees as the whole principle behind service charge was to remove the ‘ji huzoor’ system of the past. 

Anurag Katriar, executive director and CEO at deGustibus Hospitality, said discontinuation of service charge at this stage would adversely impact millions of workers. “Therefore, we plan to continue levying the service charge as before,” he added. 

According to Samira Chopra, director of Cybiz BrightStar Restaurants, payment of any charge over five per cent should be solely at the discretion of the customer. 

The Federation of Hotel and Restaurant Associations Of India has asked the ministry of consumer affairs to withdraw its “press note” that states: “paying of service charges are voluntary by the guest and should a customer be dissatisfied with the dining experience he/she can have it waived off”.

In a letter to the ministry, FHRAI secretary general Amitabh Devendra said: “We are making this representation to clarify that service charge is very much lawful, and there is nothing illegal about it. We neither approve or disapprove of the practice of including a service charge as part of the bill. Each establishment is free to evolve its policy in this regard.”

With inputs from Arnab Dutta

Photograph: david.petts4/Creative Commons.