Restaurants claim 'service charge' by default: 43% pay, only 9% oppose forced levy

A Local Circles survey has revealed that out of 11,066 persons surveyed, 43 percent stated that they paid service charges at the air-conditioned restaurants

Around 43 percent of people pay service change of 10 percent or above for dining at air-conditioned restaurants, while 9 percent "got it removed" and asserted their rights, shows a survey.

The Local Circles survey covered 11,066 people and received over 11,000 responses from citizens across 303 districts of India.

It also appears that not all air-conditioned restaurants are levying the service charge, according to 30 percent respondents, but over 52 percent were billed services charges.

In community discussions conducted by Local Circles, a Community Social Media platform, most people highlighted that they had to cough up the money despite often experiencing poor services because they were either in a family, or in a social or formal setting and a tiff was the last thing they would want.

At least 18 percent stated that they had no knowledge of the issue as they “did not pay attention or someone else paid” the bill.

Restaurants have been slapping a service charge of anything above 10 percent across the country, although there's no mandated levy.

A comparative study of the surveys conducted in September 2022 and again in July 2023 when the restaurant industry is back in full swing shows that consumers are still being levied the service charge rather forcibly, instead of making it a voluntary or optional contribution as per the guidelines, the study noted.

On April 12 this year, the Delhi High Court in an interim order had asked both the industry organisations to consider changing the ‘service charge’ terminology to an alternative term like 'staff welfare charges' to remove consumers’ misconception that it is a government tax. The high court in its interim order had also stayed the guidelines of the Central Consumer Protection Authority (CCPA) on July 4, 2022, prohibiting hotels and restaurants from levying service charge on bills "automatically or by default" while clarifying that the customers should also not be misled to believe that the service charge has been approved by the court.

Most restaurant associations maintain the position that service charge helps employees and even the consumers as the gratuity becomes transparent, the study says. However, most consumers have been opposing the idea that restaurants are levying service charges forcefully or by default in the bills, particularly where the service experience has not been good and it should, instead, be a suggestive charge with an option for the consumer to provide consent, fill or check the box.