tighten purse strings

Why restaurants are right to levy a service charge: Tipping conventions are often discriminatory

The government statement on service charge being voluntary in India has opened up a debate about the tipping culture in the country.

In March 1984, a waitress working at a New York pizzeria was given, instead of a tip, the offer to split a lottery ticket by a policeman from a nearby precinct. She agreed, and the two picked three numbers each. The policeman ended up winning $6 million and shared the spoils with her.

This real-life incident went on to form the premise of It Could Happen to You, a 1994 film starring Nicholas Cage and Bridget Fonda.

Likewise, in popular American sitcom Friends, Jon Favreau as multi-millionaire Pete Becker gave a $20,000 dollar tip to Monica (Courtney Cox), who worked as a waitress at a diner.

It is hard to think of similar story lines in an Indian movie or television show. It’s harder still to conceive of a person earning a decent income through tips in the country, where tipping rates have traditionally been low – often a few tens or twenties, a fraction of the change tendered.

This is where the recent order by the government’s Department of Consumer Affairs assumes significance. In a statement on January 2, the department clarified that “service charge” levied by restaurants on the bill is optional and that the consumer is at liberty to pay it while dining out. Since it was deemed voluntary, “service charge” it followed, is just a tip by another name.

The order has been met with mixed responses, with diners welcoming it and restaurants strongly objecting to it.

Around the world

Social sensibilities about tipping are quite fuzzy and depend on the prevailing socio-economic-cultural milieu. A case in point is that the Condé Nast Traveler has an entire webpage dedicated to tipping around the world.

Tipping generously (around 15% of the bill) is customary in the US, where it is not uncommon to see people waiting tables to pay their way to a college degree. Perhaps, generous tipping is seen as acknowledgement of dignity of labour and a way of helping out someone in their time of need. Similar customs exist in several Western European countries.

On the other hand, in Japan and Singapore, tips can invite reactions ranging from confusion to umbrage and can even be perceived as a bribe (more on this later). Tipping is not the norm in Australia either.

The case of the US

Even in the tipping utopia that is the US, there are a lot of factors (often discriminatory ones) that influence tipping behaviour.

The research of Proffesor Michael Lynn, from the School of Hotel Administration at Cornell offers fascinating insight into this. A former bartender, busboy, and waiter, Lynn has a PhD in Social Psychology, and studies tipping behaviour. His research findings were featured on the Freakonomics blog, run by Stephen Dubner and Steven Levitt (who authored the book with the same name).

The blogpost, which includes the transcript of a radio podcast Should Tipping be Banned?, talks about the several grey areas regarding gratuity – for instance, how one must tip the the doorman or baggage handler, but not a receptionist or a flight attendant. Particularly revealing were the opinions of people tending tables. A lot of waiters said they could tell whether or not someone would be a good tipper based largely on outward appearance, like the shoes they wore and whether or not they smoked. In many cases, a smile, a friendly countenance and touch often got the waiter or waitress a bigger tip.

Lynn said that in his years of research, he had found that that the appearance of waitresses mattered more than that of than waiters; people tended to tip members of the opposite sex better; education and income levels of the customers were linked to their tipping behaviour; and factors like hair colour, size of a woman’s breasts, body type and posture played a role as well. Predictably, race, skin colour and ethnicity also affected earnings.

His study also showed that racial stereotypes cut both ways: not only did black customers leave smaller tips but also preferred to giving flat tips (a fixed amount, as opposed to a fixed percentage). They also tipped black servers much lesser than white servers for equivalent levels of service.

Perception problem

Besides, Black Americans also suffer from the perception that they are poor tippers. Anecdotal evidence suggests that Indians aboard are also held by some in the service industry to be ungenerous tippers.

Another grey area that has been examined in research is the thin line between the socially accepted “tip” and the frowned upon “bribe”. A study by Harvard Business School’s Professor Magnus Torfason, which used tipping data from 32 countries and matched it to their corruption perception index scores, found a positive link between the two.

The inter-cultural differences and roles played by socio-economic status and attitudes puts the Indian preference for a flat tip in new light. By obfuscation or sleight of hand (or both), the Indian hospitality industry managed to break the culture of poor tipping by propping up a deterrent of social awkwardness. Simply put, they found the tipping point for better tipping practice.

Vyasa Shastry is a materials engineer and a consultant, who aspires to be a polymath in the future. In his spare time, he writes about science, technology, sport and society.

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As India turns 70, London School of Economics asks some provocative questions

Is India ready to become a global superpower?

Meaningful changes have always been driven by the right, but inconvenient questions. As India completes 70 years of its sovereign journey, we could do two things – celebrate, pay our token tributes and move on, or take the time to reflect and assess if our course needs correction. The ‘India @ 70: LSE India Summit’, the annual flagship summit of the LSE (London School of Economics) South Asia Centre, is posing some fundamental but complex questions that define our future direction as a nation. Through an honest debate – built on new research, applied knowledge and ground realities – with an eclectic mix of thought leaders and industry stalwarts, this summit hopes to create a thought-provoking discourse.

From how relevant (or irrelevant) is our constitutional framework, to how we can beat the global one-upmanship games, from how sincere are business houses in their social responsibility endeavours to why water is so crucial to our very existence as a strong nation, these are some crucial questions that the event will throw up and face head-on, even as it commemorates the 70th anniversary of India’s independence.

Is it time to re-look at constitution and citizenship in India?

The Constitution of India is fundamental to the country’s identity as a democratic power. But notwithstanding its historical authority, is it perhaps time to examine its relevance? The Constitution was drafted at a time when independent India was still a young entity. So granting overwhelming powers to the government may have helped during the early years. But in the current times, they may prove to be more discriminatory than egalitarian. Our constitution borrowed laws from other countries and continues to retain them, while the origin countries have updated them since then. So, do we need a complete overhaul of the constitution? An expert panel led by Dr Mukulika Banerjee of LSE, including political and economic commentator S Gurumurthy, Madhav Khosla of Columbia University, Niraja Gopal Jayal of JNU, Chintan Chandrachud the author of the book Balanced Constitutionalism and sociologist, legal researcher and Director of Council for Social Development Kalpana Kannabiran will seek answers to this.

Is CSR simply forced philanthropy?

While India pioneered the mandatory minimum CSR spend, has it succeeded in driving impact? Corporate social responsibility has many dynamics at play. Are CSR initiatives mere tokenism for compliance? Despite government guidelines and directives, are CSR activities well-thought out initiatives, which are monitored and measured for impact? The CSR stipulations have also spawned the proliferation of ambiguous NGOs. The session, ‘Does forced philanthropy work – CSR in India?” will raise these questions of intent, ethics and integrity. It will be moderated by Professor Harry Barkema and have industry veterans such as Mukund Rajan (Chairman, Tata Council for Community Initiatives), Onkar S Kanwar (Chairman and CEO, Apollo Tyres), Anu Aga (former Chairman, Thermax) and Rahul Bajaj (Chairman, Bajaj Group) on the panel.

Can India punch above its weight to be considered on par with other super-powers?

At 70, can India mobilize its strengths and galvanize into the role of a serious power player on the global stage? The question is related to the whole new perception of India as a dominant power in South Asia rather than as a Third World country, enabled by our foreign policies, defense strategies and a buoyant economy. The country’s status abroad is key in its emergence as a heavyweight but the foreign service officers’ cadre no longer draws top talent. Is India equipped right for its aspirations? The ‘India Abroad: From Third World to Regional Power’ panel will explore India’s foreign policy with Ashley Tellis, Meera Shankar (Former Foreign Secretary), Kanwal Sibal (Former Foreign Secretary), Jayant Prasad and Rakesh Sood.

Are we under-estimating how critical water is in India’s race ahead?

At no other time has water as a natural resource assumed such a big significance. Studies estimate that by 2025 the country will become ‘water–stressed’. While water has been the bone of contention between states and controlling access to water, a source for political power, has water security received the due attention in economic policies and development plans? Relevant to the central issue of water security is also the issue of ‘virtual water’. Virtual water corresponds to the water content (used) in goods and services, bulk of which is in food grains. Through food grain exports, India is a large virtual net exporter of water. In 2014-15, just through export of rice, India exported 10 trillion litres of virtual water. With India’s water security looking grim, are we making the right economic choices? Acclaimed author and academic from the Institute of Economic Growth, Delhi, Amita Bavisar will moderate the session ‘Does India need virtual water?’

Delve into this rich confluence of ideas and more at the ‘India @ 70: LSE India Summit’, presented by Apollo Tyres in association with the British Council and organized by Teamworks Arts during March 29-31, 2017 at the India Habitat Centre, New Delhi. To catch ‘India @ 70’ live online, register here.

At the venue, you could also visit the Partition Museum. Dedicated to the memory of one of the most conflict-ridden chapters in our country’s history, the museum will exhibit a unique archive of rare photographs, letters, press reports and audio recordings from The Partition Museum, Amritsar.

This article was produced by the Scroll marketing team on behalf of Teamwork Arts and not by the Scroll editorial team.