Bleak February for restaurant business with 70 closing down
SEVENTY restaurants, cafés and other food businesses closed down during the month of February, as chefs and restaurateurs step up their calls for a reduction in VAT.
A total of 50 food-led businesses were dissolved, and a further 20 sole traders shut up shop.
The Restaurants Association of Ireland said the grim total of closures backed up, and even exceeded, its warning at the start of the month that two restaurants were closing every day.
It had said that 320 businesses had shut their doors in the previous six months – from September – when the VAT rate rose from the temporary Covid reduced level of 9% back up to 13.5%.
It had warned that a ‘tsunami’ of others would follow unless the VAT rate was brought back to 9% well in advance of the next budget in October.
Figures obtained by the Irish Daily Mail through Companies Registration Office data for February show that 26 of the 50 business closures happened in the capital. They included restaurants, bars, cafes and hotels with restaurants.
Three closures took place in Cork, together with three in Galway and three in Kerry. There were two each in Kilkenny, Donegal and Westmeath.
The remainder were scattered across Kildare, Louth, Mayo, Meath, Offaly, Roscommon and Sligo. In addition, there were at least 20 sole traders who decided that they would no longer continue in business. RAI chief Adrian Cummins said last night: ‘The figures show how difficult it is for food-led businesses to survive, including restaurants, pubs serving food and cafes.
‘The delivery of a 9% VAT rate for restaurants needs to be made soon, or we will see many more close down.’
He said some restaurants would have opened up during the same time period, but that this number was much smaller than the number of closures, reflecting a lack of viability of the sector at a time of soaring staff costs, including minimum wage rises and pension contributions, along with rising food prices and high energy bills.
One sole trader who closed was food entrepreneur Damien Twohig, who ran
Burnt Pizza on Princes Street in Cork. He said the Government’s decision last September to raise the VAT rate had eroded already fine margins.
Speaking about the financial struggles of recent years, he told The Examiner: ‘The Government can’t do much about Covid and the war [in Ukraine].
‘But then the Government increased the minimum wage – that had a knock-on effect on other staff who looked for an increase, then they changed holiday and pension entitlements, and then restored the VAT rates.
‘I don’t know who the Einstein is that’s making these decisions and thinks that it’s not going to have an effect on an industry that is already under pressure.’
Last month, the chedf at Ireland’s newest two Michelinstarred restaurant called for the Government to support small restaurant businesses by slashing VAT rates.
Vincent Crepel, chef patron of Terre at the Castlemartyr resort in Co. Cork, told the Mail that while running a restaurant is a passion, staff are often barely surviving on the wages restaurants can afford to pay.
‘How can we invest in our staff and in our businesses, if we are
A struggle: Chef patron of Castlemartyr Resort’s Terre, Vincent Crepel
paying such high taxes?’ he asked. ‘Businesses are really struggling to provide the best for their team and their customers.
‘As much as the Irish Government supported us during Covid, and we should be grateful for that, they should also reconsider the VAT charged to standalone businesses and support those local and rural businesses.’
New analysis by the Department of Enterprise, Trade and Employment has found that small hospitality businesses could experience an increase in payroll costs of up to 37% by 2026, as a result of the cumulative impact of employment rights policies introduced by the Government.
These include the introduction
‘It needs to be cut soon or more will close’ ‘Payroll costs could rise by up to 37%’
of pension auto-enrolment, parental leave and benefit alterations, the addition of statutory sick pay, the new public holiday in February, the transition to a Living Wage and the right to request remote working.
The report found that overall the measures will only have a modest effect on the economy as a whole, with estimates of an increase in the range of 1.8% to 2.2% in wage costs.
However, it said that those in hospitality and retail would experience a sharper increase in costs compared to other sectors. Smaller hospitality firms could see their costs rise by nearly 7% this year and 19% by 2026, the study claims.