70% consumers unhappy with Delhi HC stay on rule restricting service charge at eateries — survey

LocalCircles survey finds that 20% consumers plan to 'fight and not pay the additional charges', while 37% say they will avoid restaurants levying service charge.

Representational image | Richard Vines | Bloomberg

New Delhi: Around 70 per cent consumers are unhappy with the Delhi High Court’s order putting a stay on the Centre’s guidelines that prohibit eateries from levying a service charge, results of a nationwide survey conducted by LocalCircles, a community social media platform, Tuesday revealed.

Earlier this month, the Central Consumer Protection Authority (CCPA) had issued guidelines restraining eateries from mandatorily levying a service charge.

These 70 per cent consumers have also said that they will either refuse to pay service charge or avoid restaurants/cafes levying it. The survey received over 21,000 responses from consumers located in 291 districts of India. Around 66 per cent respondents were men, while 34 per cent were women.

The survey also found that 20 per cent consumers planned to “fight and not pay the additional charges.” Another 37 per cent wanted to avoid restaurants levying service charge and 13 per cent planned to avoid eating out altogether. The remaining 28 per cent of Indian consumers were willing to pay service charge if it is not made part of the bill, while 2 per cent remained undecided.

One of the reasons consumers gave for not wanting to pay service charge was that they already tip the staff of most air-conditioned restaurants/diners “based on the service quality provided”.

‘Forced to pay service charges by AC restaurants’

The survey also noted how consumers have argued since 2017 that their “biggest issue” was having to pay an additional fee even when their experience had not been good.

Of the total consumers surveyed, 71 per cent also said that in the last five years, there have been occasions when they were forced to pay service charges by air-conditioned restaurants even when the service had been below their expectations. Among these, 23 per cent said it had happened to them once or twice, while 18 per cent said it took place three to five times with them. Around 24 per cent respondents revealed that it had happened as many as 6-10 times, and 6 per cent experienced it more than 10 times.

The decision by the Delhi High Court was taken on 21 July on a petition by the National Restaurant Association of India (NRAI) and the Federation of Hotels and Restaurant Associations of India, challenging the CCPA’s 4 July guidelines. To prevent “unfair trade practices and violation of consumer rights,” the guidelines stipulated that restaurants/hotels shall not add service charges automatically or by default to the food bill.

While staying the guidelines, the high court also asked eateries to prominently display the service charge component in food bills and not charge a service fee on takeaway or delivery of food. The matter has been listed for further hearing on 25 November.