Tipping point

Foodies in the city have welcomed the Department of Consumer Affairs’ circular stating that customers can pay service charge at restaurants only if they are happy with the service. 

An increasing number of people are spending a sizable portion of their earnings on dining out, which has become a way of urban life. Many diners, who are aware of the billing system, feel that in many places, service charge is foisted on them, even when they haven’t been happy with the service.

Divya Srinivasan, a 28-year-old technical writer and food blogger, said that she spends 20 per cent of her earnings on eating out and exploring different cuisines. “I spend a lot of money on dining out with my family and meticulously include this in the monthly household budget. When I go to a restaurant, I have a budget in mind. But I have to allocate an extra amount for the various taxes, including service charge. Until now, everyone has been paying service charge, irrespective of whether the service has been good or not. Hotels and restaurants are a part of the hospitality industry and service should be a prerequisite. Charging extra for this doesn’t make sense,” she said. 

Diners feel that due to a lack of awareness on the billing system, they have been forced to pay the service charge, even if they were unhappy with the service. Prateeksha Kumar, a resident of Velachery, who dines out often, said that there have been many times when she was dissatisfied with the service. “You wish you had an option to not pay a service charge that restaurants levy just to make your point. Now that the government has made it voluntary, I am absolutely for it. If I, as a customer, feel the service is good, I pay for it. Or else, I don’t. It sounds fair enough,” said the marketing executive. 

Some, despite knowing that service charge has always been voluntary, have never exercised this option. Dr Wasim Mohideen, Director of Preventive and Wellness Medicine at Basil Wellness who is also a popular food blogger, said he felt that the service charge was too high at many restaurants. “But I take it for granted that it is a part of the meal cost. It doesn’t matter if it was bad food or poor service – I write it off as a bad meal. It is a double-edged sword. As long as the restaurants mention on the menu that they are charging that a particular amount, it is implied that you are agreeable to paying it,” he added.

For diners like Ajit Induchudan, an investment banker and foodie, the move brings back tipping the employees rather than letting the restaurant do the honours. “Knowing that not all restaurants adopt a clean sheet on transferring the amount collected through the service charge to the employees, this ruling comes as a good move. I am more than happy to directly tip the server, when I am happy with the service, than leave it to the restaurants,” he said. 

The new ruling has also created awareness on various taxes and charges that go into the billing component. Food forums on social media sites abound with questions on service charges and if the consumers are required to pay it. 

Gopinath Rajendran, a food blogger and one of the admins of the Facebook group, Where Chennai Eats (WCE), said that many diners don’t know the nuances of the billing system. “A common complaint we’ve had is that the list of taxes one would find in a bill itself is quite confusing for laymen to understand. On the other hand, a uniform service charge benefits everyone who’re working behind the scenes in a restaurant. Now that service charges are made discretionary, only time will tell how practical it will get,” he concluded. 

Incentive to work in sector might go: Hoteliers 

Hotels and restaurants say that while this move will increase the level of competition among the establishments, it will also lead to a loss of skilled manpower.

Nikhil Moturi, a city-based restaurateur, said he had to do away with the service charge nearly two years ago, after a fracas with a customer. “This particular customer refused to pay service charge, even while acknowledging that there was no problem with the service or food. When I decided to do away with the service charge, I lost quite a few employees. This is because Chennai has a poor tipping habit, unlike Europe where diners tip 10 per cent of the amount,” he said.

Srinivasan R, Secretary of Tamil Nadu Hotels Association, said the idea of a service charge was to ensure equal distribution to all staff responsible for the experience, not just the waiters. “There are several factors that go into service, beyond just the serving. The idea of a service charge is to ensure that this sum is 

distributed to all the staff,” he said. 

A member of another hotel association, speaking on condition of anonymity, said the service charge should either be done away with or be uniformly enforced. “People come to the restaurant for the food, primarily. Many restaurants were levying service charge while also pocketing tips, in which case the customer has been paying double. Either this service charge should be scrapped completely or it must be implemented uniformly,” said the source. 

If service charge is voluntary, it will only raise the level of competition in the hospitality sector. Rakesh Sethi, General Manager of The Raintree on St. Mary’s Road, said, “As a service provider, this will help ensure that our guests are happy. Any credible establishment will ensure their service goes higher to retain customers. There will be a lot more competition, as we are fighting for the same pie. As far as the billing is concerned, we will continue with the current system, until we get a mandate from the Hotel Association of India.”

The policy on tips distribution differs from place to place. Many star hotels include the money from the service charge in the salary package. For eg.,  if the salary package is of Rs 30,000, Rs 3,000 comes from the service charges. However, tips work differently. In most of the star hotels, the tips are collected from different restaurants functioning from the same property and 20 to 30 per cent of the amount goes to the kitchen staff. The rest is shared among the wait staff. There are 20 to 30 staff in a service team and on a daily basis they get anything between Rs 3,000 – 5,000 as tips. By month end, each staff get Rs 3,000 to 5,000. At standalone restaurants, the serving staff average Rs 250 – 300 per day.