Irish restaurant representatives have issued a stark warning after 577 food businesses shut down since September 2023.
Many of the closures have been linked to the 50% hike in the hospitality sector’s VAT rate from 9 to 13.5%, according to The Restaurants Association of Ireland.
A large number – though not all – closures would have been prevented if the lower VAT rate remained in place, the RAI says.
Across Ireland, a total of 45 restaurants, cafés and other food-led businesses ceased trading in July. January 2024 was the worst month, when 101 restaurants, cafés and other food-led businesses closed for good after Christmas.
According to the RAI, since last September, food-led hospitality businesses have been faced with a decision to either erode their competitiveness or take a 4.5% hit to the bottom line, at a time when energy and food costs have already exploded.
Adrian Cummins, CEO of the Restaurants Association of Ireland, said: “Many food-led businesses are holding on by a thread, hoping the busy season will provide some relief and that the Government will act in October’s Budget to restore the 9% VAT rate.
“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.
“The current situation is unsustainable and our members face a broken model. Restaurants are busy but costs have risen to an extent that has resulted in margins all but collapsing. Budget 2025 will be judged by the entire hospitality industry solely on the Government’s decision to reinstate the 9% VAT rate on food or not.”
