In this paper, we investigate the extent to which the economic outcomes of restaurants, bars, and cafés have been affected by the introduction of anti‐smoking regulations in Europe. We use an unexploited panel database to collect a comprehensive set of information on financial indicators regarding the balance sheets of private and public companies in various economic sectors. The results show that smoke‐free policies did not significantly affect the firms’ economic performance, irrespective of the balance sheet indicators analyzed. Moreover, the results are robust to various econometric specifications and suggest that the recent enforcement of anti‐smoking legislation in Europe has improved public health without a corresponding negative impact on revenues and employment in the hospitality industry.