Disgruntled Delhi HC consumers stay on restaurant service charge

July 26, 2022, New Delhi: Just when the sentiment of eating out was expected to surge, the Delhi High Court’s July 21 order suspending recent CCPA guidelines banning hotels and restaurants from Automatically deducting a service charge from food bills has come as a shock to consumers, a new LocalCircles survey reveals.

The High Court’s order on a petition by the National Restaurant Association of India (NRAI) and the Federation of Hotel and Restaurant Associations of India challenging the 4th of July guidelines of the Central Protection Authority (CCPA) reopened the contentious issue of the collection of service charges imposed on consumers who eat in air-conditioned restaurants.

While leaving the choice of eating in a restaurant to consumers, the HC ordinance specifies that the stay is subject to the members of the petitioners ensuring that the collection of service charges in addition to the price and taxes and the customer’s obligation to pay the same is duly and visibly displayed on the menu or elsewhere.

Ordering restaurants not to levy a service charge on takeout or delivery, the HC scheduled the case for a rehearing on Nov. 25.

To understand what consumers think about the suspension imposed by the Delhi High Court on CCPA guidelines limiting the collection of service fees, LocalCircles conducted a nationwide survey that received more than 21,000 responses from consumers located in 291 districts of India. 66% of respondents were men while 34% were women. 44% of respondents were from Tier 1, 33% from Tier 2 and 23% from Tiers 3, 4 and rural districts.

In the first survey, consumers were asked about their contribution to the Delhi High Court’s stay order on CCPA and the approach they will take when visiting restaurants. Of 10,244 survey respondents, 70% of respondents revealed their intention to refuse to pay it or avoid restaurants that would charge it. The consumer claim is that most customers in air-conditioned restaurants tend to tip staff in the normal course based on the quality of service. A breakdown of those opposed to service charges shows that 20% plan to fight and not pay the additional charge, 37% of respondents plan to avoid restaurants that charge service charges, while 13% plan to avoid eating in restaurants. In other cases, 28% expressed a willingness to pay a service fee if it was part of the bill, while 2% of respondents were undecided about their course of action. Consumer sentiment clearly seems to have deteriorated.

Restaurant service charge issue: While Delhi High Court upholds CCPA ruling banning service charge, 20% of consumers say they will fight and not pay service charge, while 37% say they will avoid restaurants that charge them.

Restaurant service charge issue: While Delhi High Court upholds CCPA ruling banning service charge, 20% of consumers say they will fight and not pay service charge, while 37% say they will avoid restaurants that charge them.

Since 2017, LocalCircles has been working to raise awareness on the issue of service charges levied by air-conditioned restaurants. The consumer community via LocalCircles has also repeatedly escalated the issue to the Department of Consumer Affairs (DoCA), which is part of the Department of Consumer Affairs, Food and Public Distribution, leading to the government declaring the restaurant service charges as an unfair business practice in 2017. With the problem persisting until 2020 and even after the pandemic, the Central Consumer Protection Authority or CCPA revisited the issue, held discussions with restaurant associations and released guidelines on July 4 limiting the collection of enforced service charges by restaurants. Most restaurant associations maintain the position that service fees help employees and also consumers. However, consumers have collectively been clear since 2017 that the biggest issue is paying service fees in situations where the service experience has not been good. Some restaurateurs maintain that these situations are rare.

To understand the frequency of these consumer experiences, LocalCircles asked consumers if they had one or more such experiences in the past 5 years where an air-conditioned restaurant service fee was charged but the service was less. expectations to. 71% of respondents said they had had such an experience in the past five years. Of those who had poor or poor service experiences, 23% said it had happened once or twice, 18% said it had happened three to five times, and even worse, 24% of respondents revealed that this had happened up to 6-10 times, while 6% were among those who had a poor service experience despite the service charge being deducted from the bill, more than 10 times. The poll reflects why the majority of consumers are so opposed to enforced service charges.

71% of consumers who have visited an air-conditioned restaurant in the past 5 years report having had one or more experiences where they were charged a service fee when the service was below expectations

71% of consumers who have visited an air-conditioned restaurant in the past 5 years report having had one or more experiences where they were charged a service fee when the service was below expectations

In summary, the survey clearly indicates that consumers as a whole are not happy with the Delhi High Court’s CCPA guidelines which restricted the levying of service charges by restaurants. 20% of consumers are likely to fight at restaurants to reverse it, while 37% will avoid visiting restaurants that charge service fees. Another 13% are likely to stop eating out to avoid the dilemma and uncertainty of embarrassment. Additionally, the survey found that poor or poor service experiences were not that uncommon, with 71% of consumers surveyed saying they had one or more such experiences in the past 5 years and a service charge for them. have been billed. Overall, the survey says the writing is on the wall for restaurateurs: eliminate service charges and if the economy isn’t working, raise food prices, but make sure consumers have a high certainty and good quality experience with food and service to keep them coming back.

LocalCircles will share the findings of this report with the CCPA and the Department of Consumer Affairs as they move to advocate for consumer rights, they have access to consumer momentum.

Survey demographics

Over 21,000 responses from consumers located in 291 districts of India. 66% of respondents were men while 34% were women. 44% of respondents were from Tier 1, 33% from Tier 2, and 23% from Tiers 3, 4 and rural districts. The survey was conducted through the LocalCircles platform and all participants were validated citizens who needed to be registered with LocalCircles to participate in this survey.

About Local Circles

LocalCircles, India’s leading community-based social media platform, empowers citizens and small businesses to escalate issues of policy interventions and enforcement and empowers government to develop citizen-centric and small business policies. companies. LocalCircles is also India’s No. 1 pollster on governance, public interest and consumer issues. To learn more about LocalCircles, visit https://www.localcircles.com

All content of this report is copyright of LocalCircles. Any reproduction or redistribution of the graphics or the data contained therein requires that the LocalCircles logo be accompanied. In the event of a violation, LocalCircles reserves the right to take legal action.

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