Service charge debate: Eatery owners hail latest order
On Wednesday, the Delhi High Court put on hold the guidelines by Central Consumer Protection Authority (CCPA) that barred restaurants from adding a service charge to food bills
On Wednesday, the Delhi High Court put on hold the guidelines by Central Consumer Protection Authority (CCPA) that barred restaurants from adding a service charge to food bills. Justice Yashwant Varma observed, “If you don’t want to pay, don’t enter that restaurant. It is a question of choice.” The issue would need further consideration, the hearing concluded. In the meantime, all eateries have been asked to prominently display the levy of service charge.
“It affects the livelihood of the staff. Nearly 30-40% of their expenses are met from service charge,” says Akshay Anand, co-founder, Cosy Box. Also applauding the move is Zorawar Kalra, founder of Massive Restaurants: “This is a huge relief for the lakhs of employees working in this sector.”
Describing the CCPA guidelines as “arbitrary”, Swadeep Popli, founder, The Chatter House, says, “It created a lot of confusion for consumers and business owners. It is the right of any business to set a price for its services and for people to make a decision based on the same declared upfront!”
Relief for restaurant bodies
Kabir Suri, president, National Restaurant Association of India, says, “NRAI is relieved, because it (CCPA guidelines) would have had an adverse impact on the human capital employed in the trade. As a responsible body, NRAI will soon send out advisories to all its members about the conditions spelled out by the Delhi High Court and urge them to comply in totality.”
“Federation of Hotel & Restaurant Associations of India (FHRAI) and its members shall make all endeavour to ensure that consumers and patrons are well informed about the levy of service charge. We are glad that our employees shall continue to avail agreed benefits under service charge,” says Gurbaxish Singh Kohli, Vice President, Federation of Hotel & Restaurant Associations of India.
The diner’s call
“We do levy a service charge, but we remove it if the customer demands so. I think, herein lies the middle ground that is satisfactory for both parties,” says Naveen Sachdeva, founder, Deja Brew. Echoing similar sentiments, Shikha Begwani, owner, Ophelia, says, “In the hospitality field, we wish to provide the best experience through excellent services. If a customer doesn’t want to pay the service charge, we will respect their choice.”
How it works
Sharad Madan, co-founder of Khubani, says, “Service charge never goes to the pocket of the restaurateurs. It’s a small perk that is evenly divided among the entire staff.” Adding to this, Naresh Madan, co-founder, Imperfecto, says that the charge acts as an “extra income and incentive, which motivates the staff to give their best at the job”. Mohammed Anas Qureshi, brand head at Ivoryy - The Cocktail Garden and Aviary Cocktail Nest, believes that it is not illegal as long as owners are transparent. “When you individually tip a service staff, it goes to a particular person, but service charge is distributed equally,” he says.
More than an additional income
Many also believe that service charge works as a token of appreciation. Vikrant Batra, founder of Cafe Delhi Heights, says, “It is not just an extra income source, but also a token of appreciation that induces them (staff) to give their best.” For Amit Bagga, co-founder of Daryaganj, the Delhi Court order brings a sigh of relief, as the staff had earlier been concerned about managing their expenses with service charge being removed.