Written by Will Goodbody, Business Editor- RTE
“The Irish economy could lose up to €288m annually as a result of the closure of more than 200 restaurants, cafes and other food-led businesses so far this year, a new report claims.
The analysis estimates that every time such a firm here shuts its doors for good, it could result in the State losing out on a total of up to €1.36m in value each year and 22 people losing their jobs on average.
The report, which was commissioned by the Restaurants Association of Ireland (RAI) and completed by economist Jim Power, says each closure results in €576,554 in gross wages being lost, as well as €115,310 in payroll taxes to the Exchequer.
A further €105,000 in VAT receipts are also lost each year it claims along with €11,874 in commercial rates to local authorities and €4,583 in water charge receipts.
If the workers laid off had to go on social welfare payments, the annual cost would work out at around €440,000.
The RAI says that so far in 2024, a total of 212 restaurants, cafes and other food-led businesses have closed down, with a cumulative annual cost to the economy of up to €288m.
"For the first time, this new report lays out the stark economic reality of how damaging food-led hospitality closures are to the State and the economy," said Adrian Cummins, CEO of the RAI.
"The assumption among civil servants and in certain other quarters that where one restaurant closes down, another will shortly open is unfounded - particularly in parts of the country outside of Dublin."
"When a local restaurant or café closes and its staff are laid off, it is not a simple case of them finding another good job nearby or the business reopening under new ownership."
The RAI and other small business groups have claimed that a raft of recent Government policy changes in the area of labour rights have heaped additional costs on their members.
It wants to see a return of the 9% VAT rate, but for food-related businesses only, which the Department of Finance has said will cost €545m a year.
The RAI claims that if 400 restaurants eventually close, the State will begin losing more money than it would have cost it to lower the VAT rate.
"This report makes it clear that the question for the Government is now not whether it can afford to return the 9% VAT rate or not, but how it can possibly afford not to," Mr Power said.
"If the Government waits until October's Budget to take meaningful action to save Ireland’s local, independent restaurants and cafés - as it appears it currently plans on doing - it will result in substantial losses for the State, while communities will be deprived of cherished social outlets."
Recent data has pointed to an increase in the numbers of hospitality related businesses that have become insolvent in the first three months of the year.
However, other sectors of the economy are also seeing a rise in closures too, amid rising costs, elevated interest rates and growing pressure to repay warehoused tax debt.
Restaurants Association of Ireland CEO Adrian Cummins said a return to the 9% VAT rate is "the only show in town" if restaurants and food businesses are to remain viable.
Speaking on RTÉ's Morning Ireland, he said the closure of one food business has a number of knock on effects for employees, the exchequer and other businesses.
He said the major impact of closures is being felt in regional and rural Ireland.
People may be able to get other jobs, he said, but it could involve extra travel to different towns and pose difficulties.”
The truth is in those figures, compiled by economist Jim Power for The Restaurant Association of Ireland. Long-term planning is essential if we (independent run food, drink, tourism businesses in Ireland) are to survive. Greed creates monsters. Short term planning creates fools and huge financial loss! Let’s look at the benefits of entrepreneurial innovation and thinking in Irelands Food & Drink sector and understand how valuable it is and why!!!!!
That third space- that is what Irish hospitality offers us (the locals to each business) and our tourism sector which also comprises of an enormous amount of domestic visitors to each village, town and county. Without this third space, without this entrepreneurial element and activity then we will see our culture slowly die.
What about Irish producers and growers who are slowly losing their livelihoods each time a business closes. What about the layers of service providers, tradespeople who are now down clients!!! What about the empty building. What about the grief and loss that business owner suffers and endures due to losing the business they battled so hard for- what about the emotional pain and suffering caused by closure? I know what that is like because I closed an award-winning cafe during the first crash of my generation! Nothing prepares you for that loss, grief, pain, suffering and confusion. This has to end- support must be given before entrepreneurship is kicked out of the country!
VAT 9!
This is the starting place!
