The big debate has begun with Barbeque Nation being penalised for levying service charge and asked to pay Rs 17,000 as compensation
So just a few hours ago, Barbeque Nation in Chandigarh has been penalised by the UT Consumer Disputes Redressal Forum for levying service charge and asked to pay Rs 17,000 towards compensation and litigation costs to the complainant. The news has shocked almost all the stakeholders in the food sector as service charge is something that we have been paying for ages. Most of the food outlets in major metros in India are taking ‘service charge’, an amount allegedly corresponding to the tip that you would typically give to waiters.
Of late, there has been dramatic hue and cry over ‘service charge’. Restaurants owe it to the welfare of their staff while customers call this practice ‘unjust and illegal’. To sample the argument, we happened to check into Monkey Bar, Cannaught Place, recently and were asked to pay Rs 162 on a bill of Rs 1620 as service charge. We simply called the staff and tried to reason. “This is as per the policies of the restaurant. We have clearly mentioned about the service charge in the menu,” he pointed out rightfully. When we prodded him on the concept, he explained, “This is for the infrastructure, good seating, air conditioners, furniture, waiters’ service…” We obliged and paid the amount. Sitting next to us, a young couple quickly intervened. “This is happening everywhere. This is like the tip. I do not if why it is being forced upon us,” said the guy, named Neeraj Mehra.
‘IT IS FOR THE WELFARE OF THE STAFF’
Remember, last month, social media was abuzz with images of food bills where several websites explained how customers are being cheated by the restaurants. So the million dollar question prevails, ‘Is service charge a fraudulent practice’? Varun Puri, owner of Lights Camera Action Air Bar explains us, “Unlike abroad, we do not have the culture of leaving tip at the end of the meal. So service charge acts as booster for the staff to go out of way to make guests comfortable. For restaurateurs, it is a great tool to hire well-qualified staff at the front as well as in the kitchens. We take it for the welfare of our staff. We have worked out a formula of 60:40. Sixty per cent of the amount that comes from the service charge will be given to waiters at the front while 40 per cent is distributed among kitchen staff. We have clearly mentioned about the service charge in the menu card.”
‘CUSTOMERS FEEL CHEATED’
‘I hated it…’ says Abhimanyu Aggrawal who celebrated his birthday last weekend at Gurgaon’s Hard Rock Cafe. The young boy had to pay an amount of Rs 773 as service charge on the gross bill of Rs 7730. After all the taxes, the final score settled at Rs 10,254. “There are many who can afford it but for me, every single penny counts. I think we had already given much to the restaurant by this massive bill. I wish I had not paid this service charge!” he rues.
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‘IT SHOULD BE AN OPTION’
Food critic Osama Jalali calls the entire practice shocking. “I have little idea about this issue. If it is charged as service tip, why can’t it be an option? And if restaurants are charging it on the name of infrastructure, why don’t they value their dishes or menu accordingly? Segregating it on the bill is not a good idea,” he says. Not everyone is defending the ghost of service charge. Manik Vishnoi, food and beverage manager, Bengaluru Marriott Hotel Whitefield, term it ‘forceful way of extracting tips from the guests’, hence not clean and ethical system. “I strongly believe that customers who like our services and facilities at the hotel would leave a tip as per their satisfaction level. In my opinion, this tool is popular in some of the restaurants and hotels as it directly impacts their staff motivation. We at Marriott have an incentive plans in place for upselling and for recognising our associates for their services towards guests,” he says.
IS SERVICE CHARGE LEGAL?
Due to fierce debate in public, the restaurants are now displaying the icon of service charge right at the entrance of their outlets and also on menu cards. But does that make it legal, or mandatory? As far as the legal imposition is considered, it is only service tax and not service charge which customers should pay on their total food bill. “Levying of service charge is as illegal as bribery. No such charge is levied in any other country. Unfortunately, consumers do not raise their voice very often either out of ignorance or inability to take up the matter before the right fora. We should not encourage this practice even though the industry has been levying these charges for quite some time now and terming the same as ‘tradition or age old practice’. More so, there is no uniformity across the wide spectrum of restaurants and hotels. Many a times, these charges are just mentioned in a microscopic format on the menu or somewhere else for the ‘heck of it’. Levying of such charges should be challenged in the court just like other wrong traditions have been,” says Rajya Lakshmi, an advocate dealing with consumer cases, on quora.com.
WAY AHEAD?
There is no quick fix to the issue. The matter needs to be discussed and debated in the public discourse. Varun Puri says government must relax the tax structure so that restaurants could waive off the service charge. “There’s no uniformity in tax structure. “On liquor, Mumbai levies 5 per cent of VAT while the figure goes up to over 20 per cent in Delhi. I think government must come up with centralised tax structure to tackle this issue,” he says.
We bat for more discussion!
