Restaurants are ‘devastated’ and half of them will just have to close
‘Essential element of social life’
‘Keep businesses solvent’
HALF of the restaurants in Ireland will have to shut down unless they get emergency grant aid, the Restaurants Association of Ireland has warned.
The association said the recently promoted staycations or weekends away will not be an option if the tourism and hospitality industry is not offered support.
With over 90% of restaurants currently closed, the RAI says 120,000 jobs are at permanent risk in the next two months.
This follows the release of a damning report, which was prepared by the economist Jim Power, and states that the accommodation and food services sector has been seriously damaged by the Covid-19 crisis.
It is the first fully costed recovery plan published for the industry since the coronavirus crisis forced the country into lockdown.
Mr Power said: ‘The restaurant sector has been impacted in a devastating fashion by Covid-19. Once it reopens, the trading environment will be extremely challenging as a result of socialdistancing requirements, various health protocols, the absence of overseas visitors and consumer nervousness.
‘The sector is a major employer all over Ireland and is an essential element of economic and social life, and is arguably the most important component of Ireland’s tourism offering.
‘It seems clear that many restaurants will struggle to survive in the challenging environment ahead, but it is equally clear that, in order to rebuild the economically vital tourism sector over the next couple of years, it is essential that we have an abundance of high-quality restaurants in the country.’
Mr Power said it is ‘essential that the restaurant sector gets the maximum possible support from Government to get through the difficult times ahead’.
He added: ‘The cost of such support would be far outweighed by the cost of doing nothing, in terms of job losses all over Ireland, closed businesses on the streets of towns, villages and cities all over the country, and the damage to Ireland’s tourism offering.’
RAI chief executive Adrian Cummins said of Mr Power’s findings: ‘This report is damning evidence that our sector needs support measures put in place immediately by the Government.
‘Our members are stating that a 50% staff layoff is inevitable unless they receive supports, and in the long run, we estimate that almost 50% of restaurant businesses will struggle and shut their doors if the Government does not intervene.’ Mr Cummins said the Government ‘has been promoting staycations and weekends away for the months ahead’ – but added: ‘Let me be very clear on this: there will be no staycations if our restaurants and hospitality businesses close. Indigenous businesses will be lost forever.
‘The landlords and the banks are bearing down on businesses who are already struggling.
‘How can we be expected to stay on top of payments when the new social-distancing rules will see the capacity for customers significantly reduced?’
The RAI has put forward a series of recovery measures – including extending the temporary wage subsidy beyond August.
It argued: ‘These payments must continue beyond August, and consideration must be given to continuation on a sectoral basis. It is probable that on a best-case scenario, it could take restaurants up to 24 months to return to preCovid-19 levels of activity.
‘During that 24-month period it will be necessary to continue to provide financial support on a gradually reducing basis.’
The RAI also wants rates, water, wastewater and street furniture charges to be paid by the State.
‘State intervention to cover 100% of these costs is necessary during the period of forced business closure. However, ongoing intervention in the form of a grant to cover these costs and keep the businesses solvent will be very important over the following 24 months,’ it stated.
It is also calling for a reduced VAT rate and a scheme to reduce the burden of commercial rents.
The RAI argues the costs of not supporting the restaurant sector would be enormous – explaining that if 100,000 workers were to remain unemployed for a full year, it would cost the Exchequer around €2billion in increased social protection expenditure, and up to €500million in lost payroll taxes.