FOOD BUSINESSES ANTICIPATE another year of “survival mode” as they didn’t get the VAT cut they’d hoped for in the Budget.
The government has been accused of ignoring mass closures, as nearly 600 restaurants shut their doors in the last year, according to the Restaurants Association of Ireland.
VAT for the tourism and hospitality sectors was reduced to 9% during the Covid-19 pandemic, but the previous 13.5% rate was reinstated last August.
A month ago, Public Expenditure Minister Paschal Donohoe rejected calls to bring it back to 9%, but the sector was still hopeful up until yesterday’s Budget announcement.
In July, the Department of Finance’s Tax Strategy Group estimated that the cost of the measure could cost between €545 million to €764 million for the full year.
One support offered in the business package was a €4,000 energy bill subsidy. This amounts to less than €77 per week, which one restaurant owner described as “negligible”.
Paul Dignam has been running The Revolution in Rathgar, Dublin 6 for nearly 10 years. It’s a busy restaurant, but he says with what’s left at the end of the month sometimes, “you wouldn’t know it”.
This isn’t a new problem as the last four years have each presented their own challenges.
“The Covid years were difficult, but a lot of restaurants showed resilience … and there was government help.
“2022 was very difficult because all the help dried up, but customers were still nervous and not going out as much.”
The energy crisis caused by the war in Ukraine meant the restaurant’s bills “went up 400%” between 2018 and 2023. “That was an extra €40,000 we had to find,” said Dignam.
“It’s hard when we’re paying high utility fees and you see these utility companies making record profits.”
Between that and increases in rent, insurance and food costs, he says they feel like they’re always playing catch up.
“We have put our prices up numerous times over the last few years,” he said.
You have to put the prices up if you want to survive.
He says a decrease in VAT would’ve allowed him more room to grow the business, but now he’s in survival mode for another year.
Eimear Killian, owner of Builín Blasta in Spiddal, Co Galway, increased prices at the café last year and she’ll likely have to do it again in light of the continuous pressures.
“It wasn’t just that the VAT went up. Once the VAT went up, then the minimum wage went up, PRSI went up,” she told The Journal.
“Chocolate alone has tripled in price due to a crisis with chocolate plantations.
“It’s just one thing after another.”
From 1 January, the minimum wage will go up to €13.50, an 80 cent increase.
Killian says this has a “ripple effect” on everyone’s pay, not just minimum wage workers.
“You might walk into the café here and say, ‘oh jeez, Eimear’s really busy’ … but at the end of the day when you add it all up and you take out your costs, the margins have just gone.”
There were 24 staff working at Builín Blasta this summer, many of whom are young people saving money for college.
A café closure would mean fewer jobs for young people in a rural village and more parents having to help their children out financially.
“[Spiddal] is medium sized village and if we were to close in the morning, that has a ripple effect on the whole area.
We sponsor lots of people, between the GAA and the local creche and the coffee morning for the hospice and all that sort of stuff … So that’ll all be lost as well.
Jérôme Fernandes owns Guinea Pig restaurant in Dalkey, South Co Dublin.
He’s been a chef in Ireland for 30 years, previously running a restaurant in Ranelagh. He says the current crisis is worse than what he’d seen 2008.
At the start of this year, statutory sick leave – where employees get a portion of their pay when they’re ill and can’t work – was increased from three to five days.
The incoming auto-enrolment pension scheme is also a stress for business owners.
It will mean that employees will contribute to their pension, with their contributions set to be matched by their employer as a percentage of the employee’s gross income. This contribution will then be topped up by the State.
Fernandes says that while staff need to get paid properly, with the multitude of measures implemented in recent years “you don’t feel like the State supports small enterprises like us”.
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