NEW DELHI: A new survey conducted among restaurant-goers shows that a majority of the consumers favour abolition or optional application of service charges levied by restaurants. A large number of consumers also feel that service charges are often misleading.
As per the survey conducted by LocalCircles, 77% of restaurant-goers want service charges to be either abolished or made optional while only 10% support Delhi High Court’s order to rename the charges levied by restaurants as ‘staff contribution’.
In an interim order issued in April 2023, the Delhi High Court had asked restaurant associations to replace the term ‘service charges’ with alternative terminology to prevent confusion. Customers are often not informed about the inclusion of service charges until they receive the bill.
Two different associations of the restaurants’ associations have divergent views on the interim order issued by the high court. The Federation of Hotel and Restaurant Association of India (FHRAI) were ready to implement the order while the majority of the National Restaurant Association of India (NRAI) members expressed reluctance to do so.
Taking note of NRAI’s affidavit stating that 80% of its members impose service charges on their customers as a mandatory condition and that its members did not agree to the changed terminology, the high court listed the matter for further hearing on October 3.
Given the recent developments, LocalCircles conducted a survey to find out consumers’ views on the high court order. It received over 23,000 responses from citizens located across 304 districts in India consisting of Tier 1, 2 and 3 cities and towns.
The responses of the consumers show that a total 77% of respondents want the service charge to be completely taken off the bill or made optional and only 10% of consumers visiting airconditioned restaurants agree with renaming the service charge as ‘staff contribution’. The survey also reveals that around 90% of consumers feel the amount collected under service charge is not actually being used for staff welfare.
“Our survey shows that consumers believe that restaurant management uses the funds to cover breakage, restaurant maintenance, for bribes or tips to local authorities or retain them while some amount may be shared with the members of the staff,” said Sachin Taparia, founder of LocalCircles, who conducted the survey. A previous survey conducted by the social media firm showed that 43% of the consumers had to pay service charges while 9% opted against it.