Although hospitality industry is an important sector providing comfort to the customers in the form of shelter, food and refreshment but the operations of the hotel also impact environment in many ways like CO2 emissions, water pollution and waste generated. In Pakistan hospitality industry is growing and flourishing and it is the need of time to assess the adoption of the Hotels and Restaurant Act 1997 followed by customers’ willingness to pay for green foods. The present study examined the customer’s willingness to pay for standard food items (Pakistani, Chinese, Continental & Seafood) and also assessed the adoption of Hotels and restaurant Act 1997 in Islamabad. Besides, the impact of monitoring on the revenues of restaurants was also estimated. For this purpose, primary data had been collected from managers and kitchen staff of 35 restaurants and 400 customers through questionnaires in Islamabad. The findings of the study revealed that cleanliness and quality of service, education, income of customers have positive relationship with customer’s willingness to pay (CWTP) for standard food item but noisy location of restaurant has negative relation with CWTP. The revenue of the restaurant have positive relation with frequencies of audit, chain affiliation, penalty, security guards, open kitchen and number of customers. The restaurants are not following all the prescribed laws of the Hotel & Restaurant Act. Based on the findings of the study, it is recommended that Managers should consider the customer’s preferences and choices and properly train the kitchen staff about health, hygiene and food practices. Production area should be made compulsory open and ban the washroom in production area. The existing penalty amount should be revised and the laws should provide heavy penalty to restaurant to avoid violations. Supervisor:- Dr. Anwar Hussain