Tuesday, December 29, 2009

The 'service charge' debate

The 'service charge' from many restaurants which we now know is illegal has become the current big talking point around town.

There are two particular comments that I've heard over and over again.

The first is that the restaurants will simply raise their prices. In fact that was the first comment, from Rami, left on my original post on the service charges.

It misses the point in my opinion.

I don't object to paying for my food, I object to the cost being hidden, disguised, misrepresented.

I said in the post: "Generally speaking it's simply a way of charging more for the food than the price shown on the menu and that's dishonest."

Grumpy Goat in response to Rami's comment : "Personally I prefer for the price you see to be the same as the price you pay - and sticking a tiny footer at the bottom of the menu explaining that there's a 15% on-cost is disingenuous at best."

That's exactly the point. The price is shown on the menu as, let's say, Dh50 but in fact the 'service charge' means you pay anything between Dh55 and Dh65.

If that's what you're going to charge for the dish then be honest and say so.

I fully subscribe to the second comment being made; why has this illegal activity been allowed to continue for so long?

The Supreme Committee for Consumer Protection said that under Consumer Protection law 24, 2006, restaurants are not allowed to add any service charge to a bill.

Law 24 of 2006.

We're a couple of days away from 2010.

There's another aspect of this which I don't understand. I quote today's Gulf News report:

A senior official at the Dubai Economic Development Department told Gulf News: "According to the consumer protection law restaurants are not allowed to add service charge to a bill. Once we receive the bylaw we will immediately inform the restaurants to stop this illegal practice which they carried out for more than three years. The bylaw will be issued in a couple of weeks."

A law was passed which can't be enacted until a by-law is issued - which it hasn't been for more than three years.

Any legal experts reading this who can explain that to me?

Another decision I don't understand is this: However, he said restaurants will be given a grace period to adjust their accounting and bill system before implementing the rule.

The length of the grace period wasn't specified.

If it's illegal it's illegal. Adjusting the till can't take more than a few minutes can it?

It sounds like another attempt at ignoring something in the hope that it'll go away. This won't though.

The Gulf News stories start here.


El Shahlab said...

Personally, if I like the food in a restaurant, or, if the experience at a restaurant was enjoyable and the service was excellent, I would tip them around 10 to 20% - given of course there was no service charge. If there was a service charge, I pay the exact bill amount.

I always consider the service charge a polite way for asking for tips.

In countries like the US- the states that I visited for example- there is no service charge; however, you are expected to pay at least 15% tip. And if you don't, its considered offensive.

A friend of mine who used to live in Washington DC left a restaurant without leaving a tip. He was bold enough to show his face there the next day, guess what? He was kicked out.

Moral of the story: You have the right of not tipping if service charge is included in the bill. This is what you can do for now until the law is officially passed.

Rami said...

Heh, look at me getting a shout-out on your blog.

Sorry I never revisited the comment I made on the last post. I really should have, to make my point a bit clearer.

Like El Shahlab, when I eat out, I have a tendency to tip between 10 and 20%, depending on how good the service was (which I think is the whole point of the tipping system). If there is a service charge on the bill, then I tip nothing (perhaps a few coins). The unspoken assumption is that the service charge goes either to the server, or is split amongst the staff in some other way. I know this doesn't happen in most cases, but bear with me.

After the service charge becomes officially illegal, then naturally, restaurant owners (the ones that currently pocket the service charge, at least) will raise their prices. That is natural, as no one likes to suddenly take a paycut.

Now here is where I make a completely wild assertion. I feel that the raised prices (even if they match what was there before.. it's a question of perception) could lead people to then tip less on the overall bill. My issue with all this isn't that I might be paying more for my food (I won't be, I just won't see a service charge), it's that the service staff might just be getting a little more screwed.

Even if I'm wrong, I wonder about places with a service charge that do pass the money back to the staff. There's no 'must tip' culture here like there is in the US. I wonder if their income will suffer.

I actually do feel that the measure taken by the Consumer Protection body is a bit unfocused. Rather than making the service charge illegal, they should ensure that any restaurant that slaps on that 15% passes that money, every fils, right back to the staff (and not as bloody 'training costs'). The only 'Consumer Protection' part needed? Make sure that restaurants display notices about the service charge in easy-to-notice places.

Anonymous said...

I read that the minister chairing the comitty said that the municipulity charge is allowed but not the service charge, so if it goes to the local governments then it is fine to take but if it goes to the owner then it is a big issue.
I add my voice to all who say that the prices quoted should always be all inclusive and then it is up to owners to do the internal accounting sagregation.
Many restaurants I go to follow the all in one pricing method where you pay only what you read in the menue.

Anonymous said...

Over the past 6 years or so I've gotten into the habit of asking in Dubai restaurants if the service charge goes to the staff. If I discover it doesn't I ask to see the manager and tell him that I will never patronize his restaurant again and will ensure that none of my acquaintances do either.

Point is, he is robbing his staff twice: once, when the money his customers all assume reaches his staff does not, and twice when said customers don't leave a well-deserved gratuity because they assume that custom has been covered.

I once dined in an establishment in Khartoum which artlessly added at the bottom of the menu the note that "15% will be added to your bile".


Cat Russell said...

I agree with the other comments in as much as when there is no service charge added I will tip FOR GOOD SERVICE between 10 and 20 percent, when the service charge is already added I leave nothing extra.

No doubt there will be some reaction from owners and a possible increas in prices if this practise is stopped (or when the law/by-law is finally enforced) but then you always have a choice to eat somewhere else. Vote with your feet.

The bottom line is that as a waitress (and I worked as one for many years in my youth) you should deliver good service if you expect a gratuity. It is supposed to be discretionary, and a reward for doing a good job. The only time a service charge was added was for a large table or event, and this was always stated up front.

In my experience service is still quite poor in Dubai, in general. Ultimately I think this will be a positive change for two reasons, the waiting staff will actually get their tips (esp if they are paid in cash) and the service will improve.

The only other alternative is to bring in a minimum wage for waiting staff (by law) and do away with tipping altogether.

Right now as consumers we should push back on the restaurants and start refusing to pay this until it has been clarified, and instead tip the waiters directly, in cash.

Seoul Man said...

It's a real issue and one that bothers me sometimes when I travel sometimes - in particular to the USA> Even with service charge included, many waitresses still get upset if you do not additionally tip. It's unreasonable.

Seoul Man