Consumer watchdog orders Barbeque Nation to discontinue service charge

THE Central Consumer Protection Authority (CCPA) has directed Barbeque Nation Hospitality Ltd to stop levying a service charge at its restaurants, reinforcing the government’s tightening stance on billing practices that regulators and courts have repeatedly flagged as unfair to consumers.

In an order that Mint has reviewed, the country's apex consumer watchdog said it took suo motu cognisance of a consumer complaint registered on the National Consumer Helpline (NCH) over Barbeque Nation's inclusion of a service charge in addition to central and state goods and services tax (GST) in its bills.

The complaint, filed in March 2025, sought a refund of a ₹335 service fee. According to the CCPA order, while the restaurant initially offered to adjust the amount against a future bill, it later issued a full refund directly to the consumer in April 2025 following escalation through the helpline. The refund was acknowledged on the NCH portal, after which the grievance was formally closed.

Founded in 2006, Barbeque Nation Hospitality Ltd is a casual dining chain that operates around 200 outlets in India and six in the UAE, Malaysia and Oman. The company reported consolidated revenue of ₹1,233 crore in FY25 and a net loss of ₹27.79 crore, compared with revenue of ₹1,254.5 crore and a net loss of ₹13.41 crore in FY24.

In a related enforcement action, the CCPA in December imposed a ₹50,000 penalty on China Gate Restaurant Private Limited, which operates the Bora Bora restaurant chain in Mumbai, for levying mandatory service charges in violation of consumer protection norms and a Delhi High Court ruling from March 2025, Mint reported on 30 December.

Queries emailed to Barbeque Nation Hospitality Ltd remained unanswered.

'Sets a clear precedent'

Consumer groups said these actions send a strong signal to the restaurant industry that mandatory service charges will not be tolerated, while legal experts said that the order was important even though the company was no longer levying the charge.

“When service charges are not permitted, the CCPA’s action against a large food chain sets a clear precedent for others,” said Ashim Sanyal, CEO of Consumer Voice, a consumer advocacy group. “Levying a mandatory service charge is illegal, and restaurants must comply with the law.”

“A reasoned order was necessary even in the absence of a continuing violation,” said Manish K. Shubhay, partner at The Precept-Law Offices.

“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,” he added.

The CCPA’s order in the Barbeque Nation case reiterates the Delhi High Court’s ruling that a service charge or tip is a voluntary payment and cannot be imposed automatically or by default on restaurant bills, and that such mandatory collection amounts to an unfair trade practice under the Consumer Protection Act, 2019.

It further affirms the validity of the CCPA’s July 2022 guidelines barring automatic service charge collection and authorising enforcement action in case of violations.

While the investigation found no continuing violation by the company after the high court ruling, the CCPA issued a specific direction for immediate discontinuation of the practice, if any, through its powers under Sections 20 and 21 of the Consumer Protection Act.

The order was signed by chief commissioner Nidhi Khare and commissioner Anupam Mishra, underscoring the regulator’s intent to strictly enforce consumer protection norms relating to restaurant billing practices.

The National Consumer Helpline was established in August 2005 by the Department of Consumer Affairs as a pre-litigation grievance redress mechanism to advise consumers and facilitate the resolution of complaints.

It receives over 60,000 complaints annually, and between April and December 2025, 67,265 grievances were resolved and refunds of about ₹45 crore were secured, according to official data.