Restaurateurs struggling to manage soaring costs say tourists will be met with more vending machines and less “Céad Míle Fáilte” from an industry dying on its feet.
It is a fortnight since the Government ignored pleading from the hospitality sector and refused to cut the VAT rate from 13.5 per cent back to Covid-19 levels of 9 per cent in the budget. The hospitality sector says it is firefighting a slew of increased costs.
On Tuesday, the industry will take to the streets with their grievances, leading a rally to Leinster House to protest at the lack of support for the hospitality sector.
Adrian Cummins, chief executive of the Restaurants Association of Ireland (RAI), the sector’s representative group, says family-run restaurants are “under pressure”.
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“Things are extremely bad. We have seen 612 businesses closures in the last year and we will see another 1,000 in the next year,” he says.
Minister for Finance Jack Chambers, when asked after the budget about the hospitality sector’s disappointment at not securing the reduce VAT rate, said there were was “limited scope” to go beyond income changes to address wider wage growth in the economy.
Mick Hughes, co-owner of The Stockhouse in Trim, Co Meath, says the next restaurant he will open will be “beside Leinster House and it will be called the ‘Cock and Bull’ because that’s all we are hearing from the Government”.
He faces an extra bill of €13,000 alone due to the Government’s decision in this month’s budget to raise the minimum wage by 80 cent to €13.50 per hour from the start of next year.
“We are like farmers now going into the winter without any fodder saved to feed the cattle. We have nothing in reserve,” he says.
Hughes has 25 full- and part-time staff, of whom 90 per cent are on the minimum wage; increasing it will wipe out the €4,000 budgetary support introduced to help restaurants with energy costs.
He says that makes the energy support measure “as useful as an ashtray on a motorbike”.
“That is on top of the extra costs of supplies, double time on the new bank holiday, increased sick pay and many more little extras that are crippling small businesses,” he says.
“The busier you are now, the quicker you are losing money because of all the costs. The model is broken.”
Hughes argues that another year of a VAT reduction would have helped restaurants “get back on our feet”. Falling interest rates mean that people will have more money to spend eating out.
“We had regular customers here who now come in fortnightly rather than weekly and eat two courses instead of three or have a glass of wine instead of a cocktail so we have seen numbers drop off,” says Hughes, who has run his restaurant for almost 11 years.
“Employees will be delighted with an 80c increase in minimum wage but let’s hope their employer remains open to pay it,” he says.
Ciara Burke, owner of Sage & Stone coffee shop in Duleek, Co Meath, says she has just paid off an electricity bill of €39,000 for four months in 2022, while pay increases will cost her an additional €45,000 this year and €40,000 next year.
“That’s €85,000 extra in wages in two years,” says Burke, who has been in business for almost 15 years.
“I also have to cover €10,000 this year for the increase in employers’ PRSI, the extra sick days are costing about €8,000, insurance hikes mean our premiums have spiked to €15,000 from €8,000 and our waste charges increased by €1.50 a lift, which is an extra €950 for the year,” she says.
This comes on top of increases in food costs of about 15 per cent, meaning she has to find an additional €146,950 to meet those increases, she says.
“This is without giving sponsorship to many schools and local clubs who look to small businesses for help, without costs of banking charges and all the other add-ons,” she says.
“If I walked away, there would be 34 jobs gone, which means jobseekers’ and redundancy payouts from the Government, an unpaid tax bill and no further revenue from us.”
Burke wonders how much she can realistically charge for a coffee and a scone to absorb the costs.
“Our Céad Míle Fáilte is dying and tourists can expect to see more vending machines and less home-cooked food, served with everything that made Irish hospitality great,” she says.
Cummins says the industry’s model is “broken and changing, which is also detrimental to tourism because most eateries are now closing on Mondays and Tuesdays to make their business more viable”.
“Family-run and small independent restaurants are under pressure and we will see more international chain brands coming into the Irish market because they can ease costs by buying in bulk,” he says.
“I think there is a lack of understanding by Government in terms of what the reality is on the ground.”
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