Avinash Gupta eats out at least four times a week — “both lunch and dinner.” This past Saturday, he dined on pepperoni pizza at Americano, at Kala Ghoda; Sunday evening’s dinner at Izumi, in Bandra, featured hamachi; and last evening, he had plans to head to Nuema, co-founded by film maker Karan Johar.
The former banker says he is perplexed by the furore generated by the guidelines issued by the Central Consumer Protection Authority (CCPA) that on Monday barred hotels and restaurants from levying a service charge without the express consent of a diner.
Gupta said he finds the new guidelines extremely unfair, and deny all manner of staffers at a restaurant adequate compensation. “When you go the US, where service charges, range between 15% and 25%, you pay up, so why is it that you only have a problem with it here? The whole system gets compensated when you have service charge,” said Gupta.
The latest government guidelines mark yet another flare-up in a nearly five-year-old battle between restaurateurs and consumer rights groups, but, unlike in 2017, the practice of levying service charge has now been defined as an unfair trade practice by the CCPA, which was set up as a regulatory body in 2020 under the Consumer Protection Act, 2019.
Restaurateurs across the city are, unsurprisingly, as vociferously opposed to the idea as they were back in 2017.
“Barring restaurants from levying a service charge will not mean that it will simply go away — it will get absorbed into the food menu. When that happens, it will result in many people leaving additional tips of their own accord, and that means higher spends for consumers. Having the service charge on the bill is more transparent,” said Gauri Devidayal, founder of The Table, in Colaba. The Table had, in fact, rolled back the service charge in 2019 and increased prices of its dishes, only to reintroduce it again within six-odd months. Devidayal, who is also the honorary joint secretary of the National Restaurant Association of India, claims that the overall feedback from guests pointed to a preference for service charge. “It took care of the tipping for them,” she said.
Service charge also forms part of the salary package for restaurant employees, said Vanika Choudhary who runs the farm-to-fork Sequel chain, in Bandra, BKC, and Kala Ghoda, and the newly opened Noon at BKC.
“During the lockdowns, when dining in was not allowed, the team expected the service charge to be paid because that is how salaries are structured. We took a hit but we paid it,” said Choudhary. “Also, at no point are we forcing customers to pay it. It is written very clearly on the menu that prices are exclusive of service,” said Choudhary.
Senior communications professional Srinivas Krishnan termed both the tipping norms in the US as well as the service charge levied on customers in India as two sides of the same coin. “Tipping should be totally voluntary. If I’m tipping, I’d like it to be in cash. Cash has an immediacy for the wait staff that cannot be achieved by a service charge. As importantly, the government should have better things to do than arbitrate on a matter that should ideally be left to restaurant owners and customers,” he said.
Food writer Kunal Vijayakar, who echoes Krishnan’s views, says that he is a big tipper. “Good service should always be rewarded. There are times when I’ve tipped as much as 40% of the bill amount, but here’s the thing — whether I want to tip a person and how much should depend on how I felt about his or her service on a particular day. It’s an emotional decision.”
Rahul Bajaj, director of the Le Sutra Hospitality Group, which runs, among others, Out of the Blue, in Bandra, said foresees bleak days for the restaurant industry that is yet to recover from the crushing blow inflicted by the pandemic. “Restaurants will now be forced to increase prices and that will lead to a less people dining out… it’s all connected,” he said.
Service charge is a creature that has crept in surreptitiously since around 2012, says Shirish Deshpande, chairman of consumer organisation Mumbai Grahak Panchayat, which was part of the meeting last month with the consumer affairs ministry.
“In an online survey we conducted in 2017, 93% of consumers wanted the government to do away with the service charge,” said Deshpande. “The government’s 2017 guidelines were vague, but this time, we have a new Consumer Protection Act, and these new guidelines have the force of law.”