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Food industry sceptical of dropping service charge


A popular fad in the West currently, a city restaurant has done away with the surcharge. Others say that the service staff wages will take a beating.

The decision by a Mumbai fine-dining restaurant to scrap service charge has been met with disapproval by some well-known chefs and food entrepreneurs.

As of April 24, The Table has eliminated service charge from their billing system. Guests can tip based solely on their dining experience. Owner Gauri Devidayal tells ETPanache, “We feel that this amendment is more equitable for guests, who are now free to decide what they would like to tip. I hope that guests will re-spond positively to this change, and possibly the larger restaurant indus-try too.”

This restructuring, however, has a flip side. The menu prices at The Table will increase to compensate the staff for what was previously covered by the service charge.

Impacts staff

Some known names in the food industry are not enthused by the idea of abolishing the service charge, claiming it would hurt the earnings of the staff.

Riyaaz Amlani, CEO, Impresario Entertainment & Hospitality, and president ofthe National Restaurant Association of India, says, “The service charge makes a big difference to those behind the scenes. Everyone from the waiter to the guy cleaning the bathrooms benefits from SC. When you take it away, you’re actually taking out a big part of their livelihood. While this may be a fad abroad and trendy at the moment, I don’t think it is the way to go. There is also a percentage kept aside for personal emergencies of the staff that they can utilise in a crisis.”

Margins too slim

Manu Chandra, Chef & Partner, The Fatty Bao, Monkey Bar & Toast & Tonic, says that his estab-lishments in the mid-level segment have toyed with the idea, but decided against it. He says, “The impact (of stopping SC) on the right hand column can be substantial. Also, the higher the price, the higher the VAT, so the payout for the customer may just go up. Contrary to popular belief, the margins in restaurants are quite slim, especially if you’re playing by the rule book. The majority pay-out goes to HR, and expecta-tions of salary have almost tripled in the last decade. Menu prices haven’t. SC substantiates the pay-outs in lieu of a tip, which traditionally staff have relied on.”

Chef Kelvin Cheung of One Street Over says, “I don’t really get how eradicating service charge but increasing menu price actually benefits the customer or my staff. It’s a bold move. But I am not sure I would follow it myself. A sizeable portion of the staff’s livelihood comes from the service charge. I don’t want to mess with that”.

Source: Economic Times
(Photo: www.freemalaysiatoday.com)

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