Government backflips over restaurant menu rules

Restaurants and cafes may no longer be compelled to display separate menus for days when surcharges are applied, typically Sundays and public holidays, after the Federal Government took on a Productivity Commission recommendation that the requirement was burdensome.

Small Business Minister Nick Sherry says the change of heart, which needs approval from the states and territories, will “reduce red tape for tens of thousands of restaurants and cafes, most of which are small businesses.”

“The Government has accepted the recommendation to have restaurant and café menu surcharges for specific days placed outside the scope of the component pricing provisions of the Australian Consumer Law,” Sherry says.

The requirements were brought in two years ago to ensure customers were aware of the higher overall charges on certain days. The changes will mean small print on menus will suffice.

John Hart, chief executive officer of industry body Restaurant and Catering, welcomes the announcement and says while the requirements were not specifically targeted at the hospitality industry, they are expensive and time-consuming for many businesses.

“We not only had to change the menus, but recalculate menu prices and change out point of sale systems,” Hart says.

Hart says he expects the states and territories to come on board, after a “hard slog” by the sector to draw attention to the issue.

He says while it’s hard to quantify how much the requirement will cost cafes and restaurants overall, menu changes are expensive, often costing thousands of dollars.

He adds that the industry body had heard from a number of companies who had been caught out not supplying separate menus on the key days, and the fines have been “quite imposing, and over $20,000 in some cases.”

Hart says there was still considerable confusion about whether cafes and restaurants were entitled to apply surcharges, typically priced at 10%, given an initial “heavy-handed” approach by the Australian Competition and Consumer Commission which included the use of infringement notices from the outset rather than warnings.

Comment was sought from the ACCC this morning on whether companies would still be pursued for not displaying appropriate menus given the Government’s new position, and its response to allegations it proceeded with infringement notices rather than warnings when the rules were first introduced in 2009.

In a Government response paper to the Productivity Commission’s recommendation that the Trade Practices Act be amended to menu surcharges for specific days placed outside the scope of the component pricing provisions of that legislation, the Government said it recognised that the change would “reduce the regulatory burden for small business in the tourism and hospitality sector.”

The Productivity Commission last year delivered 18 recommendations to slice regulatory burdens for businesses in the areas of finance, insurance, accommodation, food, science, technical services, arts and recreational services.

Commissioner Louise Sylvan said at the time that “‘notwithstanding some progress, we still find duplication and inconsistency of regulations between different jurisdictions of Australia’s federation that are hard to justify.

The report also found that “consultation processes remain a weak point when developing regulations.”

Its recommendation included “harmonising personal and corporate insolvency laws, changes to regulations related to superannuation and changes to the treatment of foreign investors in commercial real estate.”

This article first appeared on SmartCompany.