Restaurant service

The issue of restaurant service charges concerns an important principle of consumer rights

Some may wonder whether restaurant billing practices should deserve central government attention. Perhaps, more than the extent of harm to consumers, it is the principle that is important – companies shouldn’t be able to get away with questionable practices by being smart. Restaurant arguments that service charges are (a) not illegal; and (b) compensation assistance personnel are, respectively, irrelevant in context and an assertion without evidence. Service charges don’t break a law because there isn’t yet a law dealing with it – what they break is the well-understood principle of transparency. Restaurants are usually not upfront about these charges, they almost never let consumers know that according to Indian government guidelines of 2017, paying these charges is voluntary, and in the invoices, the charges are shown at proximity to taxes, which gives him an appearance of legitimacy that he cannot actually claim. . Restaurants also conveniently ignore consumer court verdicts against service charges. In January this year, the Kolkata Consumer Dispute Redress Commission ordered a restaurant to return the service charge it forcibly collected from a customer, along with a compensation amount. The fact that a 2018 survey by LocalCircles showed that only 12% of customers asked restaurants to remove service charges from their bills shows how low consumer awareness is.

As for the lofty argument that service fees help restaurants offer better salaries to their staff, it is instructive to note that in all these years the issue has been debated, restaurant owners have never sought to support this assertion with evidence. As Piyush Goyal pointed out, restaurants are free to raise their prices to cover their salary costs. There’s no doubt that restaurants are a tough business, with a high failure rate. It is also true that the pandemic has hit the sector hard. But the argument that restaurants need to collect service fees to ensure business stability is fallacious – bad practices cannot be sanctified by citing difficulties in the operating environment.


This article appeared as an editorial opinion in the print edition of the Times of India.