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Old 1st January 2011, 21:47   #1
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Default Can a customer be charged for Service (at a restaurant)?

Hey Guys,

"Wish you all a very happy and a prosperous 2011"

As part of new years, we family visited a well known restaurant "LITTLE ITALY" this noon.

Everything went well, food was good and the ambience was average.

Finally, the check arrived. The surprise in the check was that they were charging a service charge @5% on the bill amount. Mind you ! it was not service tax, but something called " SERVICE CHARGE".

When the same was enquired, they said it was "MANAGEMENT DECISION" to do so and in other words called " TIPS"

My point is whether this is " LEGAL" AND " CORRECT".

Last edited by nandans2005 : 1st January 2011 at 21:49.
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Old 1st January 2011, 21:51   #2
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Default Re: Can a customer be charged for Service ???

Anywhere that a restaurant collects service charge, one is not expected to tip the waiter additionally. A lot of restaurants in India do this, and I presume it's legal unless someone points out otherwise.
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Old 1st January 2011, 22:14   #3
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Default Re: Can a customer be charged for Service ???

+1 to what SS said.

It's becoming rather common at the fancier places. I doubt if there's any legislation that makes it illegal.
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Old 1st January 2011, 22:32   #4
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Default Re: Can a customer be charged for Service ???

Quote:
Originally Posted by nandans2005 View Post
Finally, the check arrived. The surprise in the check was that they were charging a service charge @5% on the bill amount. Mind you ! it was not service tax, but something called " SERVICE CHARGE".
I don't know about legality of it, but i think including it in the bill is just pure extortion!

I mean most of us do give decent tips, and waiters do get a salary too, don't they? Also, restaurants do include their profit percentage in the prices, right? Where does a SERVICE CHARGE fit in? Failed to understand!

Read these...

http://ashisha.com/consumer/2010/12/...-food-charges/

Dear Economist: What can I do about service charges at restaurants? | undercover economist | "The Undercover Economist", about economics in everyday life, and "Dear Economist", in which readers' questions are answered, tongue-in-cheek, with the
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Old 1st January 2011, 22:39   #5
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Default Re: Can a customer be charged for Service ???

I recently went to Nando's( Welcome to Nando's. The official worldwide home of Nando's famous Peri-Peri chicken.) for lunch.
The service was not upto the mark,i had to ask for water thrice,before anyone listened to our request.
and i paid 10% service tax apart from the 12.5% usual VAT.
i wonder for what did i pay the 10%
and off course,we left without paying any tip.
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Old 1st January 2011, 23:43   #6
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Default Re: Can a customer be charged for Service ???

if a restaurant collects service charge, one is not expected to pay a tip.
sorry to say, many indians consider anything over 10 Rs to be an extremely generous tip.
waiters' salaries are low, with the tips expected to compensate. service charges, methinks are a good alternative,provided that they actually go the waiters.
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Old 1st January 2011, 23:56   #7
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Default Re: Can a customer be charged for Service ???

I know someone who runs a restaurant and decided to introduce service charge. They did that because people leave very little tips (Rs 10, 20) on bills of Rs 1000/- and above.

One is usually not expected to tip on top of service charge.
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Old 2nd January 2011, 00:18   #8
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Default Re: Can a customer be charged for Service ???

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Originally Posted by hondadude View Post
I know someone who runs a restaurant and decided to introduce service charge. They did that because people leave very little tips (Rs 10, 20) on bills of Rs 1000/- and above.
One is usually not expected to tip on top of service charge.
Yes, one is not expected to tip separately once a "service charge" is levied. Perhaps the restaurant should also specify that tips should not be left separately to avoid embarrassment for the paying customer.
Eating out seems to be going further up the scale, though it doesnt look like people are doing any cost cutting in that regard, no offence meant to anyone in particular
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Old 2nd January 2011, 00:56   #9
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Default Re: Can a customer be charged for Service ???

Service Charge is to ensure waiters get atleast some tip. Generally it is in the single digits (5% or so) and you can infact tip more if you are happy with the service. I generally leave a tip of 10%, however if there is a service charge, i leave a tip based on my satisfaction levels as well as what the service charge already was.

If you are into reading, then read a book called 'waiter rant' - its a pretty funny book on the life of waiters and yes does go into details of how they get paid minimum wage and are expected to make up in tips, service charges, etc.
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Old 2nd January 2011, 06:28   #10
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Default Re: Can a customer be charged for Service ???

By and large we Indians are seriously El Cheapos when it comes to leaving tips for service. Generosity is very low on the list of "things to do and live by".

People casually run up a bill of Rs 3-4000 in a top restaurant including drinks, but when it comes to leaving a Rs 400 tip, they crib and cry. Cannot understand this mentality. the accepted norm is usually atleast 10% if one is happy with the service one has received.

In a small Dosa kind of restaurant a bill for breakfast for 4 people can be around 400 or so - here the cheapness about tipping comes to the fore - people will leave some 5 bucks, 10 bucks etc on a bill of that kind - my take is please leave at least Rs 40-50. Consider the value-less ness of Rs 5 and Rs 10 in today's world.

Many restaurants add this service charge of 10% to the bill amount and they mention it clearly too. In such cases one doesnt need to tip - however, personally, I like to ensure that the waiter who served me properly and with a smile, gets something for his trouble.

Even when it comes to handicapped of physically challenged beggars etc - give at least Rs 10/-.

How much can it really affect us if we give a little more than the silly Rs 2 coin or whatever?

Quote:
Originally Posted by hondadude View Post
I know someone who runs a restaurant and decided to introduce service charge. They did that because people leave very little tips (Rs 10, 20) on bills of Rs 1000/- and above.

One is usually not expected to tip on top of service charge.
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Old 2nd January 2011, 09:35   #11
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Quote:
Originally Posted by shankar.balan View Post
By and large we Indians are seriously El Cheapos when it comes to leaving tips for service.
this is a world renowned fact the waiters abroad are pleasantly surprised when an indian leaves a real tip vs just round off or worse leave nothing.
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Old 2nd January 2011, 10:41   #12
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Default Re: Can a customer be charged for Service ???

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Originally Posted by hondadude View Post
I know someone who runs a restaurant and decided to introduce service charge.
Ask him why instead, he doesn't increase the rates on the menu by 5%, pay the waiters extra using that & not have any separate charge.

It's a scam to raise prices without raising prices.

Quote:
Originally Posted by shankar.balan View Post
People casually run up a bill of Rs 3-4000 in a top restaurant including drinks, but when it comes to leaving a Rs 400 tip, they crib and cry. Cannot understand this mentality. the accepted norm is usually atleast 10% if one is happy with the service one has received.
Why should I tip 10%? I don't get tipped 10% at work.
Do you tip the guy who delivers the milk everyday 10%.
Do you tip the guy who delivers newspaper everyday 10%.
Do you tip the guy who washes your car 10%.
When you do a remodeling of your house costing 5,00,000, do you tip 10% on top of it?
When you bought your car, did you tip 10%?

Last edited by carboy : 2nd January 2011 at 10:47.
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Old 2nd January 2011, 11:34   #13
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Default Re: Can a customer be charged for Service ???

"Can a customer be charged for Service ???"

Most of the top restaurants in Bangalore have started including the tip in the bill. You are not compelled to tip after having paid this charge, but from what I heard, a waiter at a posh place at UB City who wasnt tipped (after the service charge was levied) walked up to the customer on his way out and thanked him profusely and offered to pick the tab the next time they came.
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Old 2nd January 2011, 11:37   #14
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Quote:
Originally Posted by carboy View Post
Ask him why instead, he doesn't increase the rates on the menu by 5%, pay the waiters extra using that & not have any separate charge.

It's a scam to raise prices without raising prices.


Why should I tip 10%? I don't get tipped 10% at work.
Do you tip the guy who delivers the milk everyday 10%.
Do you tip the guy who delivers newspaper everyday 10%.
Do you tip the guy who washes your car 10%.
When you do a remodeling of your house costing 5,00,000, do you tip 10% on top of it?
When you bought your car, did you tip 10%?
because the way the hospitality industry works is different from all these examples. i don't know if this is true for India, but globally waiters are normally paid 'minimum wage' and they are expected to delight customers and make their income using TIPS. This way you have a 'choice' if things are not up to the mark.
read the books by author ex-waiter Steve Dublanica to understand more or look at this famous blog Waiter Rant

As a side note, a lot of companies have something called as C-SAT score (customer satisfaction) and a tiny fraction of your salary may infact be based on that This is true for atleast 3 large MNCs that I have worked for!
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Old 2nd January 2011, 11:44   #15
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Default Re: Can a customer be charged for Service ???

Shankar,

Is it a little too much to expect that others may not share the same generosity that you have? or to label people? Our culture is different from the west, and yes, leaving tips should be dependent on the service and not a flat service charge. There's top notch mall joints which are completely shoddy (zambar's service comes to mind) but they leave no scope for tips by levying a 10% service charge.

For what it matters, I seriously think by giving alms to beggars we are just creating & furthering a social evil. Everytime we toss a coin out of our AC cars, we are encouraging free loaders (who will father 4-10 more of them because they know that a woman with a toddler gets more alms than a physically fit beggar) and indirectly encouraging those who maim kids/people to make them physically challenged beggars.

Here I'd agree with carboy to much rather tip my car cleaner when he does a really good job than waste money like that.

Last edited by phamilyman : 2nd January 2011 at 11:46.
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