Indian restaurants and service charge

More and more Indian restaurants charge a “service charge” on their bills these days. It’s usually somewhere in the 5-10% range, unless you’re in Delhi, where 10% is almost standard. Being in the F&B business and having run a restaurant of my own, I thought I’d write this post to clear up some common questions about it. I get asked these often enough that having a post to clarify is worthwhile.

Is service charge mandatory as per any government regulations?
No, not at all. It is completely at the restaurant’s discretion. Not all restaurants charge it.

Do I have to pay the service charge? 
If the service charge is disclosed in the menu, you have agreed to pay it by virtue of placing an order. That’s a legal contract.

Why is there a service charge at all? I don’t understand the point of it.
Because the industry works on a principle of low salaries and extra money through tips. Indians are notoriously lousy tippers (yes, I know, not all of you.) The service charge gives a more reliable income source for wait staff while aligning their incentives to restaurant sales (given that the charge is a percentage of sales).

In an ideal world, wait staff would be paid a more reasonable wage and there would be no need for the service charge. Unfortunately, that has the effect of upsetting the profit equation in the business by increasing the percentage of sales that goes towards salaries. For instance, 15% of turnover is considered about average for salaries. If that became 30%, restaurants would need to increase base prices of dishes, which would have pretty much the same effect as that service charge levy anyway, except that some customers would think the food is more expensive and not visit, which would actually make things worse.

But I got lousy service, man! WTF?
None of this excuses bad service, of course. If you get bad service at a restaurant and get a service charge on the bill, you have options:

1) Talk to the manager, register your complaint, tell him/her you won’t come back because of the crappy service. Possibly bitch about it on a food forum or on social media. Any half-competent manager will realise the bad PR potential and waive it.

2) Do not return to the restaurant. This isn’t too far-fetched; you would probably not go back to a restaurant with crappy service even if they didn’t levy a service charge, right?

OK, tell me the truth. Does this money actually go to the service staff at all?
That depends on the restaurant. Most will pay out a large percentage of the service charge to wait staff, somewhere around 60-80%, usually setting some money aside for breakages etc. Sometimes, the kitchen staff too get a portion of it.

Do I have to leave a tip if there’s a service charge on the bill?
Don’t leave a tip if there’s a service charge on the bill unless you think the service has been that outstanding.

Hope this clarifies things from a restaurateur perspective.

My Ford India road trip to Hyderabad

Greetings, citizens.

This blog post is to tell you about a road trip I’m undertaking from 10-15 August, 2012, sponsored by Ford India. Since I’ll probably be posting more than a few tweets about it, I thought it would be a good idea to write a post to give a few more details and to lay down my ethical disclosures.

So a social media agency that works with Ford India, WATConsult, approached me a month ago and said I was a “top influencer online on food” (if you ignore my numerous wisecracks, of course) and that Ford India had created a campaign to send influencers on many topics on a 5-day road trip in a Ford Classic Titanium car with one tank of fuel to “pursue their passion” along with a film-maker who would shoot this trip and post a video of it after we were done. Of course, being the skeptical kind, my inner voice immediately asked “What’s the catch, yo?” Fortunately, there was no “you have to post tweets about the car” type requirement in the terms and conditions, or I would have refused straight away.

The location I chose to explore was Hyderabad, and Aditya Sawant (the film-maker) and I are team “Highway Belly” who will drive to Hyderabad via Kurnool to explore the food scene during Ramzan time, and try to check out as many interesting places to eat as we can. Along the way, we’ll shoot videos and take pictures and post them. I’ll also try to organise a Hyderabad food tweetup so we can have some fun. I’ll be tweeting about it using the hashtags #1tankfull and #highwaybelly so you can either track or filter those tweets out. :D )

If you have any suggestions on what to eat and where to go, please do post them as comments here, or tweet them to me @madmanweb or mail to mail@madhumenon.com

Right, so now that the information part is done, here come the ethical disclosures:

1) This road trip is sponsored by Ford India, who have paid for our hotel bookings along the way and given us a meagre daily allowance of Rs. 1000 per day for F&B, with Rs. 7500 incidentals and emergency money. That’s all the money I’m getting, so I’m not getting rich on this. There might be a couple of t-shirts thrown in too, but I think that’s it.

2) Ford is also providing me with an iPad to chronicle the trip, which I will get to keep at the end of the trip, so yes, that’s effectively a freebie.

3) I will not be posting any tweets endorsing the Ford Classic car in which we are travelling unless I actually believe what I’m writing. Believe me, I get approached a fair bit by clueless social media agencies to attend events for various brands asking me to tweet about it in return for “lots of exposure” and “meeting celebrities”. I just refuse all of them. My integrity is the most important thing to me and takes years to build, and it’s not up for sale. I have refused to do restaurant reviews for publications where I knew the owner, for instance. If people start doubting whether my writing is paid for, my opinion’s value drops to nothing.

4) I will not spam your Twitter timeline with tweets about the trip. Like you, I too hate it when somebody takes over my timeline, so expect only about 5-6 tweets per day on average. I’ll ask suggestions from people on where to eat and where to go, but you won’t see any “OMG DIS IS OSSUM BRO!” tweets.

And lastly, here is a teaser video that Adi has made for our trip: