Eat’s not right the restaurant service charge issue is about an important consumer rights principle

Eat’s not right the restaurant service charge issue is about an important consumer rights principle

Some may wonder whether restaurants’ billing practices should merit central government attention. Perhaps, more than the scale of consumer harm, it’s the principle that’s important – businesses should not be able to get away with dodgy practices by being clever. Restaurants’ arguments that the service charges are (a) not illegal; and (b) help pay staff are, respectively, irrelevant in the context and a zero-evidence assertion. Service charges don’t break a law because there isn’t a law dealing with this as yet – what they do break is the well-understood principle of transparency. Restaurants mostly aren’t upfront about this charge, they almost never make consumers aware that as per 2017 GoI guidelines paying this charge is voluntary, and in bills the charge is listed in proximity to taxes, giving it an appearance of legitimacy it cannot actually claim. Restaurants also conveniently ignore consumer court verdicts against service charges. In January this year the Kolkata Consumer Disputes Redressal Commission had directed a restaurant to hand back the service charge it had forcibly collected from a customer, along with a compensation amount. That a 2018 survey by LocalCircles showed just 12% of customers were asking restaurants to remove service charge from their bills shows how low consumer awareness is.

As for the noble-sounding argument that service charges help restaurants give better salaries to their staff, it’s instructive that over all these years the issue has been debated, restaurant owners have never sought to back this claim with evidence. As Piyush Goyal pointed out, restaurants are free to increase prices to cover their wage costs. There’s little doubt that restaurants are a tough business, with a high failure rate. It’s also true the pandemic hit the sector brutally. But the argument that restaurants need to levby a service charge to make the business stable is disingenuous – bad practices cannot be sanctified by citing operating environment difficulties.