Remember those happy days when standalone restaurant bills didn’t include that one line? The one that is not legally mandated, the only amount that diners can rightfully refuse to pay, the one that annoys us most if our food arrives cold or late or sloppily plated? Mumbai restaurants like to call it “service charge”. We used to call it a tip.
Restaurants here started adding it to their bills in late 2010-early 2011, but it was considered unusual, even in fine dining establishments. In the last year though, only a few of the restaurants I have visited haven’t included a service charge on the bill. Among the 65-odd establishments I have reviewed in the last nine months, less than five didn’t feature it. The industry seems to have adopted a standard rate of ten per cent, though a handful of places charge a slightly lower five or eight per cent. It became more acceptable after the Finance Bill of 2011 mentioned it under “Scope of New Services”, and now it’s widespread, even though no one is legally bound to pay it.
Though, whether pre-service charge days were happier or not is a matter of perspective. Every restaurateur I spoke with said that the addition made sense, mostly because we are terrible tippers, even when we receive adequate service. “Say, a bunch of five people drew up a bill of Rs4,870, they would put Rs5,000 into the folder and leave,” says Pankil Shah, director of Neighbourhood Hospitality, which owns Woodside Inn, Woodside and The Pantry, where they charge 8 per cent as service. “On average, the total tip collection would be four to five per cent of the total billing.” All of them pointed out that a fourth of the diners wouldn’t tip at all, and most of the rest would pick up their change and drop a Rs50 or Rs100 note instead.
There are many arguments for and against gratuity being included in the bill, but while we could debate about it before, now, whether we like it or not, service charge is an industry practice that’s here to stay. (One caveat: in no case should a restaurant charge service for a takeout or delivery meal.) Of course, this means that our dining-out behaviour has adapted to it as well.
When it was first implemented, the reactions ran from confusion to indifference to rage. “Initially people didn’t realise that service charge had been included, and tipped as before,” says Deepti Dadlani, marketing head at deGustibus Hospitality (the company behind Indigo, Indigo Deli, Neel at Tote on the Turf). “Also, people were confused about the difference between service charge and service tax, so we even had a laminated card explaining taxes and charges. A few times we returned even the service tax amount if they were not convinced.” (Service tax, as with all taxes, is charged by the government, and not paying it is not an option). After a while, diners started questioning restaurants about the service charge on their bill. “People would ask us, why am I being forced to pay this charge?,” says Chetan Sethi, the chef and owner at Zaffran, which started charging ten per cent a couple of years ago. “No diner ever says it’s a good thing.”
There are various ways in which restaurants deal with diners who have a problem with service charge, and each establishment has to deal with the situation once every few months. Pradip Rozario, the owner and chef of Kurry Klub, says that he voluntarily knocks off service charge from the bill when he feels that a table has not been served well, and turns it into a lesson about teamwork for the staff. But that’s rare. If there has been no reason to complain during the meal, then most managers explain that it is company policy. If there has been a problem (rude or slow service, hygiene issues or poorly prepared food, for example) then restaurants try to make up for the lapse with other forms of what is called “service recovery” instead – by offering free desserts, or comping the whole meal, or promising the next meal on the house . “Only if the customer specifically asks to waive the service charge [because he or she is deeply disappointed], do we consider removing it from the bill,” says Dadlani. One customer threatened to take Sethi to court. “If they get very aggressive, I try to remind them that restaurants also have a sign that says ‘Rights to Admission Reserved’”. He has yet to turn a diner away though.
In recent months, since we have become familiar with that additional line on the bill, more than half the tables (among the restaurants I spoke with) leave nothing extra in the check folder, and the ones that do, only round it off for convenience. Understandably, while the number of people voluntarily tipping has heavily fallen, the amounts received by the staff as service charge have near doubled. And the distribution of the funds is more uniform, with all of it going into a kitty which is then shared among all staff members according to their job description, position and performance. Shah, for instance, has a point system, where staff members lose or gain points for their performance in the last month and are paid their service charge share accordingly.
In at least one way, service charge has become a double-edged sword for restaurateurs. In an industry with hard and long working hours as well as high rates of poaching and attrition, a measure that was supposed to attract employees has also made things more complicated. “Manpower has become quite an issue,” says Shah. “Also, at interviews now, [candidates] will turn around and ask, ‘How much is your service charge collection each month?’”
Roshni Bajaj Sanghvi is a Mumbai-based food journalist, a contributing editor at Vogue magazine, a graduate of the French Culinary Institute in New York City, and the restaurant reviewer for the Hindustan Times newspaper in Mumbai.