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Most consumers want service charge to be abolished or made optional, says a survey

Should service charge be levied on restaurants bills or not has been the topic of debate among consumers and restaurant associations have even gone to court to argue that they can lawfully impose the service charge. Now, the latest survey done by Local Circles states that 77% respondents want service charge to be abolished or made optional. The survey received over 23,000 responses from citizens located in 304 districts.

Sixty two percent respondents were men while 38% respondents were women. Forty five percent respondents were from tier 1, 32% from tier 2 and 23% respondents were from tier 3, 4 and rural districts.

The High Court had directed 3,300 members of the Federation of Hotel and Restaurant Association of India (FHRAI) to replace the term ‘service charge’ with ‘staff contribution’. Justice Pratibha Singh in her order said, “It is directed that the members of FHRAI shall use the terminology ‘staff contribution’ for the amount of service charge that they are currently charging. The same shall not be more than 10% of the total bill amount, excluding GST. The menu card shall specify in bold that after the payment of staff contribution, no further tip is to be paid to the establishment.”

As per the survey 53% percent respondents stated that service charge needs to be banned completely and 77% respondents wanted service charge to be abolished or made optional and only 10% of consumers going to air conditioned restaurants were fine with renaming service charge and charging it to ‘staff contribution’.

When asked about the allocation of service charge among restaurant staff members, 34% of respondents indicated that part of service charges is likely “used to cover breakage, restaurant maintenance, some distributed among staff, remaining kept by management or used for bribes/tips to local authorities.” Eleven percent respondents said that it is “entirely distributed among staff” and 13% felt “some part of it is used to cover breakage, restaurant maintenance and the rest is distributed among staff.”

Oct 03,2023

Source: Times of India