Service charge ban will affect staff: Owners

Rachana Ramesh | NT
Bengaluru

The Centre on Monday prohibited hotels and restaurants from levying a service charge “automatically or by default” on food bills. But the decision appears to have not gone down well with many restaurants in the city that used to levy a service charge.

Pecos, Bengaluru’s famous retro rock music pub, had been levying a service charge of 10% automatically on the bills. “However, the customers would also be informed that it is a voluntary choice for them to make. If they wished to not pay, we would cancel the charge without a hassle,” said Srinivas Gowda, manager of the oldest branch located on Church Street.

“The decision to ban service charges completely is going to cause a strain on the already distressed hospitality sector,” he said, adding that it has only been a few weeks since the restaurant has been able to fully recover from the consequences of the pandemic.

Pecos houses four outlets in prominent areas of the city and provides employment to more than 100 people. The staff are also provided accommodation and three meals a day with a salary ranging from Rs 10-13 thousand. “It’s not like everybody wants to grab a beer every day. On a good month, after the collection of service charge is divided, each staff member will earn an extra income of Rs 4-6 thousand,” Srinivas said.

While there are locals employed, most of the staff are migrants from across the country. “The income that comes through the service charge is usually sent back home for the sustenance of their families. A few have school-going children while others have ailing parents. The ban will reduce their monthly income by 40-50%, which will reduce the quality of life the family depending on them are currently enjoying,” he said.

The Indian Coffee House in the same vicinity follows a no-service charge system. “If the customer is happy with the service, they can tip the waiter,” said Nagaraj, the manager. This system of on-the-table tipping leaves out the staff that work behind the doors. Communiti, a pub on Residency road would also levy a service charge.

“It (service charge) is not only divided among the housekeeping and washers but even among the valet staff,” said the manager. The service charge not only helps relieve the financial burden on the staff that get paid a minimal amount but acts as an incentive for them to provide better service.

“When the customer agrees to pay the charge, the waiter is validated about his service and will thrive to give his best,” he said. “We are also of the opinion that this additional burden on our customers is not required, though the major part of this charge goes to our staff. To protect consumer interest on behalf of our hotel owners, we welcome this decision and also advise all our members to do the needful,” said P C Rao, President of Bruhat Bengaluru Hoteliers Association.

The government has urged customers to file complaints in instances of violation. The move has come after the Consumer Affairs Department noted that the service charge fixed by restaurants is often arbitrarily high and customers are misled about the legality of the charges.