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Restaurants cannot add a service charge to food bills: Goyal

New Delhi, 3 June, 2022: Minister for Consumer Affairs, Food and Public Distribution, Piyush Goyal on Friday said that restaurants cannot add service charges to food bills at their discretion and that the choice of paying tips lies with consumers. He added that restaurant owners are free to hike the prices of their food menu to be able to pay higher salaries to their employees.

Restaurant industry bodies have been arguing that the amount collected through service charges is meant for the benefit of the staff.

“You (restaurants) cannot just add a service charge on a bill… If you feel that some more benefits are to be given to employees, it cannot be forced on customers. You can raise prices to give hikes, “Goyal said in an interaction with the media on Thursday. He added that the Department of Consumer Affairs has been getting complaints from consumers against service charges levied by restaurants and hotels on the National Consumer Helpline.

‘No price controls’

He added that restaurants can hike salaries of employees’ and increase the rates of their menus as there are no price controls. “ You are free to give raises to employees and increase rates. But if there is a hidden cost, how will the people (consumers) know the real price? “he said.

Terming service charges as an “unfair trade practice”, the Department of Consumer Affairs said that it will be coming up with a “robust framework” to protect consumer interests.

This statement came after DoCA met with restaurant industry stakeholders to discuss various issues related to service charges. This include issues such as compulsory levy of service charges, adding the charge by default without the express consent of the consumer, suppressing that such a charge is optional and voluntary, and embarrassing consumers if they resist paying such a charge. Source: Thehindubusinessline.com