This study focuses on examining the innovation practices of small and medium enterprises in restaurant industry and their involvement in the quality of service. In this sense, the data of this research was obtained through the application of a structured questionnaire and an observation guide in 158 SMEs restaurants in the Mexico City's Historical Center. The results identify and classify the types of innovation -marketing, organizational, product and process- implemented by the SMEs under study. Together, this research provides useful information about the impacts generated by innovation, such as improvement of service quality, creation of collaborative networks and cost reduction, among others. </p