Service charge

DoCA Calls FHRAI for Meeting on Restaurant and Restaurant Collection of Service Fees

The FHRAI clarified that the service charge, like any other fee collected by an establishment, is part of the restaurant’s invitation to potential customers.

To allay concerns and questions regarding restaurants and eateries charging service fees, the Indian hospitality association, Federation of Hotel and Restaurant Associations of India (FHRAI), clarified that A service charge, like any other charge collected by an establishment, is part of the invitation offered by the restaurant to potential customers. It is up to the customers to decide whether they wish to frequent the said restaurant or not. To discuss and seek clarification on the matter, the Department of Consumer Affairs (DoCA) convened the FHRAI for a meeting on June 2.

“The service charge, like any other charge, is an offer of the restaurant or establishment to potential customers. It is up to the customers to decide whether they wish to frequent the said restaurant or not. The service charge is considered a beneficial payment as it is intended for the benefit of the establishment’s staff. Thus, some establishments make the conscious choice to adopt an advantageous policy towards its members of staff by assuring them a minimum tip which is a percentage of the rest of the charges. There is nothing illegal or against the law for restaurants to collect service charges,” said Gurbaxish Singh Kohli, Vice President of FHRAI.

FHRAI said the service charge, colloquially referred to as a “tip,” is the amount paid to staff at the restaurant or other similar establishment by its guest. In some cases, a restaurant may choose to include the service charge amount in the invoice and the percentage may vary from 5-15% of the invoiced value. It is a common and accepted practice in India as well as several other countries, the Association said.

“It is entirely at the discretion of the restaurant whether or not to charge a service charge. If a customer objects to payment of service charges, they may be removed from the invoice. This is common practice even among other service providers who charge certain “convenience fees” for providing services to customers. Services such as booking train and air tickets through websites or portals, food ordered through a website or mobile apps, or cinema tickets booked through online portals all charge convenience fees on customers. But, it is sad to see constant requests from the hospitality industry on one topic or the other,” said Pradeep Shetty, Jt. Hon. Sec., FHRAI.

The information regarding the amount of the service charge is mentioned by the restaurants on their menu cards, so that the customers are well aware of these charges before availing the services.

“We have also informed our members that in the event that they choose to collect a service charge on behalf of their staff by including it in the invoice presented to the customer, they must clearly indicate this on their menu itself so that the customer is well informed. of the same. Convenience fees charged by other service providers do not come with prior notification unlike service fees which are listed as chargeable in the menu card. Also, unlike the convenience fee charged by other service providers, the percentage charged in the service fee is also mentioned on the menu card. On top of that, if the customer does not wish to pay the service fee, we are happy to remove it from their invoice. Or, if the customer mentions before the invoice that he does not want to pay a service fee, the service fee is not charged. This refund or waiver option is not available on convenience fees charged by other service providers. Only the hotel sector is targeted, despite the provision of complete information to the customer on the menu card as well as the possibility of a total and complete exemption from service charges. Also, levying service charges is a global practice and even in India it has been practiced for more than half a century. The accusation is neither hidden nor disguised. It is emphatically and boldly mentioned in the menu. A customer visits a food outlet knowing full well that he will be charged a service fee,” concludes Kohli.