30 percent of consumers do not pay service charge in restaurants: Survey

For many years, restaurants and hotels have been adding a service charge to our bills. Even as the government has made it clear that service charge is not mandatory, the practice still continues.

Published: 19th September 2017 08:05 AM  |   Last Updated: 19th September 2017 05:15 PM   |  A+A-

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Express News Service

NEW DELHI: For many years, restaurants and hotels have been adding a service charge to our bills. People may pay the bill without understanding what it means. Even as the government has made it clear that service charge is not mandatory, the practice still continues.The Department of Consumer Affairs issued an advisory a few months back defining mandatory service charge at restaurants as an unfair trade practice. To conduct a check on the working of restaurants and consumer experience on this, online community platform LocalCircles held a poll and asked people what has been their experience with service charge when they visited restaurants in the last couple of months. The poll received more than 8,500 responses.

The survey revealed that 30 percent of consumers did not pay service charge in restaurants (this included 21% where the restaurants did not impose a service charge and 9% where restaurants charged but the consumer got it removed). Fifty-three percent of consumers were billed a service charge which they paid, while 17 percent did not pay attention to the billing details and were unsure if the service charge was included in their bill.This stood at 27% a couple of months back which shows that more consumers are now opposing this unfair practice.

In various discussions on LocalCircles, citizens have also been saying that online food ordering sites should have a ‘service charge’ filter so that consumers can transparently choose from restaurants which do or do not impose a service charge on bills.A parallel poll showed that 68 percent of consumers believe the restaurant managements are retaining a portion of the collected service charge for themselves and only 5 percent thought it is completely shared with the staff.

This poll received 5,075 responses. The poll showed 81 percent of consumers believed that service charge collected by the restaurants are not paid to the staff leading to generation of black money. In April, the government approved new guidelines making it clear that service charge is not mandatory and it is upon consumers if they wish to voluntarily pay on a hotel or restaurant bill. The Department of Consumers Affairs also advised customers to move consumer courts if they are asked for service charge.

Paying for service
53% of consumers were charged for service which they paid, while 17% of consumers did not pay attention to the billing details and were unsure if service charge was added

About 68% consumers believe restaurants are keeping a portion of the service charge for themselves and only 5% thought that it is fully shared with the staff

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