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Should you tip after service charge?

Should you tip after service charge?

If you’re not quite sure whether the service charge eliminates the need to tip, how the money is split and when an additional tip is called for, read this to clear up all doubts.

All major restaurants now add a service charge to your bill. This began a few years ago at some major restaurants, after five-stars introduced it, but has now become standard practice. The charge may be as low as 5-6%, but is more often 10-12%, marginally lower than the 12.5% rate that prevails in many parts of the world. Its introduction has, however, created awkward moments for us all on being presented with the bill. It’s a new system, so the etiquette is yet to be established.

Let’s list the various doubts the service charge system raises. Does it eliminate the tip completely? Is it rude to leave behind an empty bill holder? How is the money divided between staff? When is an additional tip called for? If it is, how much should I leave behind? To answer these questions, we talked to a few people in the industry to learn their policy, as well as a few restaurant-goers to find out what they do. Here’s what we found.

Topping it up
At restaurants that don’t have a service charge, we decide the tip for the service we receive. If your order required any additional effort from the wait or kitchen staff or if you were treated to exceptional service, you would put in a bit extra. Restaurants with a service charge, whether it is 6% or 12%, are effectively telling you what it costs for their staff to serve you, but this is a basic charge. It doesn’t, however, include a tip for exceptional service, dealing with demanding guests, for accepting special requests or serving messy children.

Delhi-based marketing executive Rohan Nair, for example, says he tends to add around 5% even if there is a service charge. He says, ‘I certainly leave less money in restaurants that have a service charge, but I’d say I add around 5% to the bill, always in cash, because I feel that the cash will find its way to the right people.’

We also talked to a few people in the industry to find out how they feel customers should respond to good service. All three of them, in charge of around 10 restaurant brands between them, said that additional tips are welcome if the customer receives outstanding service.

Deepti Dadlani, in charge of the Indigo brand in Mumbai, says, ‘Indigo levies a flat 10% service charge across all its branches. Customers used to tip over the service charge but this has greatly reduced. Most people don’t tip above 10% anymore. But I do feel that for exceptional service, people should tip more, around 15%.’

This figure – of 15% – was repeated by another restaurant, too. Eric Cardozo, General Manager, TGIF, Mumbai, said, ‘TGIF outlets levy a 12% service charge. However, I think that customers should pay more than this if they are pleased with service. I think 15% is fair.’

SID Hospitality’s Mitesh Rangras, who handles Lemon Grass and Aoi, among other Mumbai eateries, says it’s completely up to the customer, but nothing more is expected. According to him, ‘We take 6% across the board at all our restaurants. We don’t expect the customer to pay anything more. It’s totally up to them whether they want to or not – but as I said, it’s not expected.’

Who earns it?
A big concern is that either a portion of, or the entire, service charge goes straight to the management. This is often the case in the UK, at least, so it’s quite possible it happens here, too. Ajit Sharma, part of a PR agency in Mumbai, says, ‘I’m always wondering if the person who served me will receive the tip or if it will go straight to the restaurant owner. So what I do is I usually ask the waiter firmly how the service charge is divided. I’ve done this a handful of times, only at restaurants I know I’ll revisit, and hear the money is divided between the staff.’

All the restaurants we talked to confirmed that the service charge is divided by the wait and kitchen staff in one way or the other. SID Hospitality, for example, splits the amount down the middle between the two teams and then pays individual members, while at Indigo outlets, the total service charge for the month is divided among the manager, wait and kitchen staff.

So now let’s get back to our questions.

Q: Does it eliminate the tip completely?
A: It only covers the basic cost, so you could top it up a bit.

Q: Is it rude to leave behind an empty bill holder?
A: If you feel you’ve asked for only basic service, it’s fine to leave it empty.

Q: When is an additional tip called for?
A: If you’ve received exceptional service or been a demanding guest.

Q: How is the money divided?
A: Usually between the wait and kitchen staff. If you’re suspicious, try asking the person serving you how the service charge is split.

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