Cafe hit with $20,000 fine over component pricing breach

The Australian Competition and Consumer Commission has sent its strongest warning on component pricing laws yet, after the former owners of a Canberra cafe were fined a staggering $20,000 for failing to use inclusive pricing on its Sunday and public holiday menus, when the restaurant charged a 10% surcharge.

The component pricing regime, which was introduced in July 2009, require companies to set out the price of each component of their product and service. The ACCC has focused particularly on industries such as the gym sector and travel, where companies would advertise prices as being “from” a certain amount, or would use fine print to hide extra charges that a consumer could not avoid.

But the sector most under fire has been the cafe industry, where it is common practice to include a small note on the bottom of the menu explaining that a surcharge will be charged for public holidays and Sundays.

However, under the component pricing laws, using these small notes is a breach of Section 53 of the Trade Practices Act.

While surcharges can be charged, cafes and restaurants must have special menus for Sundays and public holidays, setting out prices for each item on the menu inclusive of the surcharge.

Earlier this year, the ACCC surveyed cafes and restaurants and warned those non-compliant businesses to get their menus in order. Those who failed to change their menus were issued with infringement notices, and those that failed to pay the infringement notices were taken to court.

AI Constructions, the former owner of Babar Café and Bar in the ACT, was one of those taken to the Federal Court.

Yesterday, the Court declared the former cafe owner (the business has since been sold) had breached the Trade Practices Act and was fined $20,000.

This follows fines of $13,200 handed down in November against two Sydney restaurants for the same conduct.

ACCC chairman Graeme Samuel hopes the message is now getting through to cafe and restaurant owners.

“The penalties given to restaurants over the past two months for breaches of section 53C of the Act should act as a deterrent to any business contemplating hiding charges by not stating a single, all inclusive price for any good or service available for sale.”

But not everybody is happy with the ACCC’s stance and the relatively large fines, which would clearly be a big burden for any business operating in the current soft retail environment.

Restaurant and Catering Association chief executive John Hart has previously described the compliance program as “pretty vicious” and has questioned whether smaller businesses have been targeted by the consumer watchdog.