Home Food The Tipping Point: The foodservice industry’s take

The Tipping Point: The foodservice industry’s take

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The recent move by a Mumbai-based fine-dine restaurant, The Table, to eliminate the service charge has left the foodservice industry in a tight spot.

Food industry stands divided on eliminating service charge
Service charge in bill often leads to double tipping because customers do not notice that they have already paid a service charge before leaving cash for their waiter

The Table has stood firm and has removed tips and service charge from its billing system, leaving them totally up to the discretion of the consumer.

The conundrum: Many restaurants add a up to 15 per cent service charge to their bills, which often leads to double tipping since customers don’t notice they already paid a service charge before leaving cash for their waiter. And that’s not all. Many-a-restaurant have been accused of keeping all or part of the service money rather than passing them on to staff.

In fact,a study was conducted that yielded that one in five restaurants did not pass tips to their staff, despite the fact that a vast majority of customers said they wanted waiting staff to receive those tips. The research also revealed that more than three-quarters of the customers wanted to see the restaurant’s tipping policy clearly displayed.

The fact that The Table has done away with service charge is a welcome move, however there is a flip side to the coin. The Table has increased food prices, passing on the burden of that 15 per cent to customers.

Despite this, many food entrepreneurs are impressed and say they might adopt the same in the future.

Owner, , says, “Removing service charge will definitely benefit customers. Ideally, they should not be burdened to pay for the service.  Also, the VAT has increased, so, removing service charge will eventually lead to lower food prices. I am in favour of this move and I would love to make the change in the near future.”

speaks in support of removing the service charge: “It is a mature step taken by The Table. All across the world, there is no concept of service charge and I am happy to see that the Indian food industry has started following these global ethics.”

Chef Brar says restaurants will enter a transition phase where they will bear the burden for some time. However, this will smooth over soon.

“Customers should understand that the staff should be compensated for the quality of services they have provided. It will also help restaurants access information on how satisfied a customer was,” he adds.

However, there are others who refuse to support the move, believing it is a loss for their staff.

Owner,  Umang Tewrai condemns the step saying, “Service charge is a tip for the workers and I believe that it should not be dropped. With service charge in place, the workers get a fixed amount of the total bill which is not a burden on the customer. If it becomes mandatory to get rid of the service charge in the bill, then definitely, it is the customer who is going to suffer as no restaurateur will pay the expenses from their own pocket. Prices will be increased and the burden of the tip will be passed on to customers.”

Owner, , agrees, adding, “Dropping the service charge will definitely have an impact on wait staff’s salary. And if any restaurant decides to remove the service charge they will have to increase the prices on the menu in the same proportion.”

Managing Director, , concludes, “A variable component in the staff’s monthly compensation, the service charge, is distributed among both, front-end and back-end workers. If we remove the service charge, a tip made by customers would only be pocketed by waiters. The service charge increases a staffer’s salary by almost 30 to 40 per cent. This motivates the staff to achieve sales targets, which results in efficient service.”