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Opinion: What Does The Service Charge Change Mean For The Hospitality Business?


In a huge move from the Centre, it was said that the service charge that is mentioned on your bill is not a mandatory payment. If you were unhappy with your service or the experience when dining, you can waive the payment. As it stands, the service charge is added to your bill and handed to you with a totalled amount. Very often customers end up spending lots of money despite being unhappy with the service or the experience they had at the dining establishment and paying that extra service charge doesn’t always sit well with customers.

Personally, I have been flabbergasted by the amount of the service charge added to my bill after a meal that left me unhappy. But it never even occurred to me that it was something I could avoid or change. At a lot of restaurants not only do you pay the service charge, you also end up leaving a tip for a good experience because you want the staff and the management to know that you were very impressed and happy with the service. But there are also those days when you don’t want to pay the extra charge or leave a tip and that is where this discussion comes into play.

This will definitely affect the lives of people in the food industry, especially wait staff, kitchen staff and everyone working at restaurants that depend on the service charge to help pay bills and keep money in the bank account. While it might benefit the customer, it has a downside to it as well and that is clearly something that nobody else seems to be talking about or acknowledging. In an interview with IANS, Riyaaz Amlani, the President of NRAI (National Restaurant Association of India) said, “If this kind of statement is made without application of mind it will be extremely detrimental to the employees. It is not just the owner but all the employees who are associated with a restaurant including the dishwasher, the caretaker, the toilet cleaner, all depend on service charge. How can you take away their livelihood without application.”

The whole concept of ‘service charge’ has never really been much of a surprise and customers have always been aware of it and aware of how much money has gone into what they’re eating. It’s at the discretion of the customer whether or not they want to leave a tip after they’ve finished paying the bill. So keeping the service charge on the menu doesn’t hurt anyone, but it definitely doesn’t benefit the employees if they take the service charge away.

The decision was made after complaints from customers that restaurants were charging a service charge between 5-20% instead of tips, forcing customers to pay “irrespective of the kind of service provided”, the Department of Consumer Affairs said. The Hotel Association of Indian clarified questions about service charge and said that the “service charge is completely discretionary and should a customer be dissatisfied with the dining experience they can have it waived off.”

For the customers, this is a huge deal and it’s a positive thing for them. It’s not so beneficial to the employees or the establishment, which is obviously the problem here.

What do you think about this decision? Leave your thoughts in the comments below.