Consumer Watchdog Cracks Down on Restaurant Service Charges
The Central Consumer Protection Authority (CCPA) has issued a formal directive to Barbeque Nation Hospitality Ltd, ordering the popular casual dining chain to immediately stop imposing mandatory service charges at its restaurants across India. This enforcement action represents a significant escalation in the government's ongoing campaign against billing practices that regulators and courts have consistently deemed unfair to consumers.
Complaint Triggers Regulatory Action
The consumer watchdog took suo motu cognisance of a complaint registered on the National Consumer Helpline (NCH) in March 2025. The grievance specifically addressed Barbeque Nation's practice of including a service charge alongside central and state goods and services tax (GST) on customer bills. The complainant sought a refund of ₹335 that had been levied as a service fee.
According to the CCPA order, the restaurant initially proposed adjusting the amount against a future bill. However, following escalation through the helpline mechanism, Barbeque Nation issued a full refund directly to the consumer in April 2025. The refund was officially acknowledged on the NCH portal, leading to formal closure of the grievance.
Barbeque Nation's Business Profile
Founded in 2006, Barbeque Nation Hospitality Ltd operates approximately 200 outlets throughout India, with an additional six locations in the UAE, Malaysia, and Oman. The company reported consolidated revenue of ₹1,233 crore for FY25, accompanied by a net loss of ₹27.79 crore. This represents a slight decline from the previous fiscal year's revenue of ₹1,254.5 crore, though the net loss increased from ₹13.41 crore in FY24.
Broader Enforcement Context
This action against Barbeque Nation follows similar enforcement measures taken by the CCPA against other restaurant chains. In December, the authority imposed a ₹50,000 penalty on China Gate Restaurant Private Limited, which operates the Bora Bora restaurant chain in Mumbai. The penalty was levied for imposing mandatory service charges in violation of established consumer protection norms and a Delhi High Court ruling from March 2025.
Queries sent to Barbeque Nation Hospitality Ltd regarding the CCPA order remained unanswered at the time of reporting.
Legal Precedent and Industry Implications
Consumer advocacy groups and legal experts have welcomed the CCPA's decisive action, noting that it establishes a clear precedent for the entire restaurant industry.
"When service charges are not permitted, the CCPA's action against a large food chain sets a clear precedent for others," emphasized Ashim Sanyal, CEO of Consumer Voice, a prominent consumer advocacy organization. "Levying a mandatory service charge is illegal, and restaurants must comply with the law."
Manish K. Shubhay, partner at The Precept-Law Offices, explained the broader legal significance: "A reasoned order was necessary even in the absence of a continuing violation. By formally recording compliance and directing discontinuation of the practice, the CCPA has reinforced the Delhi High Court's ruling and created a clear enforcement benchmark, which will be relevant for future cases involving restaurant billing practices."
Legal Foundation of the Order
The CCPA's directive to Barbeque Nation explicitly reiterates the Delhi High Court's landmark ruling that service charges or tips constitute voluntary payments that cannot be automatically imposed on restaurant bills. The court determined that such mandatory collection practices amount to unfair trade practices under the Consumer Protection Act, 2019.
Furthermore, the order affirms the validity of the CCPA's July 2022 guidelines, which explicitly prohibit automatic service charge collection and authorize enforcement action against violators. Although the investigation revealed no continuing violation by Barbeque Nation following the high court ruling, the CCPA exercised its powers under Sections 20 and 21 of the Consumer Protection Act to issue specific directions for immediate discontinuation of the practice.
The order was formally signed by Chief Commissioner Nidhi Khare and Commissioner Anupam Mishra, underscoring the regulator's commitment to strict enforcement of consumer protection norms related to restaurant billing practices.
National Consumer Helpline's Role
Established in August 2005 by the Department of Consumer Affairs, the National Consumer Helpline serves as a pre-litigation grievance redress mechanism designed to advise consumers and facilitate complaint resolution. The helpline receives over 60,000 complaints annually, with official data indicating that between April and December 2025 alone, 67,265 grievances were successfully resolved, resulting in refunds totaling approximately ₹45 crore to affected consumers.
