The Delhi High Court on Wednesday suspended Central Consumer Protection Authority (CCPA) guidelines banning restaurants from adding service charges to food bills. Judge Yashwant Varma observed: “If you don’t want to pay, don’t enter this restaurant. It’s a question of choice. The matter would require further investigation, the hearing concluded. In the meantime, all restaurants have been asked to prominently display the service charge levy.
“It affects the livelihoods of staff. Almost 30-40% of their expenses are covered by service fees,” says Akshay Anand, co-founder of Cozy Box. Zorawar Kalra, founder of Massive Restaurants, also applauds the decision: “It’s a huge relief for the thousands of employees working in this sector.”
Describing the CCPA guidelines as “arbitrary”, Swadeep Popli, founder of The Chatter House, said: “It has created a lot of confusion for consumers and business owners. It is the right of any business to set a price for its services and for people to make a decision based on the same stated upfront!
Relief for catering organizations
Kabir Suri, Chairman of the National Restaurant Association of India, said: “The NRAI is relieved as this (the CCPA guidelines) would have had a negative impact on the human capital employed in the business. As a responsible body, the NRAI will soon send notices to all its members on the terms set out by the Delhi High Court and urge them to fully comply with them.
“The Federation of Hotel and Restaurant Associations of India (FHRAI) and its members strive to ensure that consumers and customers are well informed about the collection of service charges. We are happy that our employees continue to enjoy the agreed benefits under the service charge,” said Gurbaxish Singh Kohli, Vice President, Federation of Hotel and Restaurant Associations of India.
“We charge a service fee, but we waive it if the customer requests it. I think that’s where the happy medium lies that is satisfying for both parties,” says Naveen Sachdeva, Founder of Deja Brew. Echoing similar sentiments, Shikha Begwani, owner of Ophelia, says, “In the hotel business, we want to provide the best experience through excellent services. If a customer does not want to pay the service fee, we will respect their choice.
How it works
Sharad Madan, co-founder of Khubani, says, “Service fees never go into the pockets of restaurateurs. It’s a small benefit that is evenly distributed among all staff. On top of that, Naresh Madan, co-founder of Imperfecto, says the charge acts as “additional income and incentive, which motivates staff to perform at their best at work.” Mohammed Anas Qureshi, brand manager at Ivoryy – The Cocktail Garden and Aviary Cocktail Nest, believes it’s not illegal as long as the owners are transparent. “When you tip a service person individually, it goes to a specific person, but the service charge is split equally,” he says.
More than an income supplement
Many also believe that the service charge works as a token of appreciation. Vikrant Batra, Founder of Cafe Delhi Heights, says, “It’s not just a source of extra income, but also a sign of appreciation that inspires them (staff) to perform at their best. For Amit Bagga, co-founder of Daryaganj, the Delhi court order brings a sigh of relief, as staff had previously been concerned about managing their expenses with the removal of service charges.