Air-conditioned restaurants are sneakily adding service charges to your bill, survey shows

According to the findings of a LocalCircles survey, which aimed to gauge people's experiences with service charges at air-conditioned restaurants over the past three months, it was revealed that 43 per cent of respondents had the charges automatically added to their bills and paid them without contest. In contrast, a mere 9 per cent of individuals asserted their rights and managed to have the service charges removed.

The survey, conducted among 11,066 participants, posed the question, "What was your most common experience with service charges when you visited an air-conditioned restaurant in the last three months?" The majority (43 per cent) responded that "the restaurant charged and we paid," while only 9 per cent stated that they exercised their right to dispute the charges and successfully "got them to remove" the service charges.

Interestingly, the survey also brought to light that not all air-conditioned restaurants were automatically levying service charges, as reported by 30 per cent of the respondents. Another 18 per cent mentioned that they were unaware of the issue as they either "did not pay attention or someone else paid" the bill on their behalf.

During community discussions, several individuals revealed that despite experiencing poor service on occasion, they still paid the service charge due to being in a family, social, or formal setting and wanting to avoid any potential conflicts with the restaurant staff.

The survey report included a comparative analysis between surveys conducted in September 2022 and July 2023, indicating that despite the restaurant industry being back in full swing, consumers were still facing forceful imposition of service charges instead of it being voluntary or optional as per the guidelines.

In a significant development, on April 12, 2023, the Delhi High Court issued an interim order, urging industry organizations to consider replacing the term "service charge" with an alternative such as "staff welfare charges" to dispel consumers' misconception that it is a government tax. The high court also put a hold on the guidelines issued by the Central Consumer Protection Authority (CCPA) on July 4, 2022, which banned hotels and restaurants from automatically levying service charges on bills. The court clarified that customers should not be misled into believing that the service charge has been approved by the court.

This interim order came into effect after the CCPA appealed to the Division Bench of the Delhi High Court to overturn its order on July 20, 2022, which suspended the central government's recommendations to stop restaurants and hotels from forcefully adding service charges to customers' food bills.

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