Almost 600 restaurants have closed since the Government hiked their VAT bills by 50 per cent last September, an industry lobby group calculates.
Government last year ended a special 9 per cent VAT rate for hospitality businesses, increasing the tax to 13.5 per cent.
According to the industry lobby group, Restaurants Association of Ireland (RAI), 577 restaurants have closed in the 11 months since September 2023 when VAT increased.
The association compiles the figures using information from the companies’ register and media reports.
Planning regulator Niall Cussen: We can overcome the housing crisis, ‘if we put our minds to it’
On his return to Web Summit, the often outspoken chief executive Paddy Cosgrave is now an epitome of caution
Surviving a shake-up: is restructuring ever good for staff?
The Irish Times Business Person of the Month: Dalton Philips, Greencore
It maintains that the rate of closure is out of line with what would be a normal rate of attrition in the business.
For example, just 18 eateries shut their doors in January 2023, against 101 during the same month this year, when closures hit a peak as people reined in spending after Christmas.
High-profile casualties included Nash 19 and the long-established Tung Sing Chinese restaurant, both in Cork.
More recently, Myrtle in Ardee, Co Louth and Michael’s on Merrion Row in Dublin both closed.
A report from accountants Deloitte in June showed that insolvencies in the hospitality business rose 88 per cent to 77 in the first half of this year over the same period in 2023.
The firm blamed the higher VAT rate along with insurance, energy bills and rising labour costs for the surge in closures.
‘A matter of days’ from insolvency: How an Irish company came back from the brink
Those figures only covered limited liability companies and not sole traders.
Government maintained that Covid supports and other measures kept insolvency rates artificially low into last year.
The RAI figures show that 245 outlets — about 40 per cent of the total — closed between December 2023 and January and February.
According to the association, a recent report by economist Jim Power found that each closure costs the economy €1.36 million on average.
It maintains that hiking the VAT rate is costing the State more money than the €545 million that the Department of Finance says cutting the tax back to 9 per cent would cost the Exchequer.
RAI chief executive Adrian Cummins warned that many food businesses were holding on by a thread, hoping that a busy summer would allow them to survive.
“But the reality is that these businesses are still in crisis and without a return to the lower VAT rate we are guaranteed to see another wave of closures as we leave the summer behind and move into the hospitality sector’s quieter months,” he added.
- Sign up for Business push alerts and have the best news, analysis and comment delivered directly to your phone
- Join The Irish Times on WhatsApp and stay up to date
- Our Inside Business podcast is published weekly – Find the latest episode here
