A total of 612 restaurants, cafes, gastropubs and other food serving hospitality businesses have closed over the last year, research from the Restaurants Association of Ireland has found.
The organisation has blamed the level of closures on the increase in the VAT rate from 9% to 13.5% on September 1 last year.
The association says the Government must provide targeted support to Ireland’s hospitality sector in October’s budget to avoid further closures.
The RAI said that to compile its monthly closure figures, it commissions Vision Net to send it the relevant Companies Registration Office (CRO) liquidations data for the hospitality industry. As well as this, its closure figures incorporates sole traders which are not included in the CRO data.
These sole trader closures are identified and verified by the RAI through its own membership database, local media reports and social media.
Last month alone saw 35 businesses close, while the RAI says that many others are merely waiting for Budget 2025 on October 1 before making a final decision on whether to close or not.
In an April survey of 212 members of the Restaurants Association of Ireland, 74% of respondents said they would have to strongly consider closing down their business within the next year if the 9% VAT rate on food is not reinstated in Budget 2025.
The RAI said the economic carnage being caused by restaurant closures, coupled with the bumper tax receipts provided by the hospitality sector when the 9% VAT rate was in place for ten of the past 12 years, mean the imposition of the higher rate of VAT has now started to cost the Government more than the €545m.
The CEO of the Restaurants Association of Ireland, Adrian Cummins, said that while government departments may suggest that for every restaurant closure across the country another one opens, the reality is that this is not the case – particularly in rural and regional Ireland.
“The public is well aware of the abnormal level of closures within the industry, with recent Amárach Research polling showing that 67% know of a small business closure in their local area this year. Additionally, 75% are concerned that large chains will replace independent operators and 63% feel the Government isn’t doing enough to support SMEs,” Mr Cummins said.
He said that after recent meetings we have held with him, Minister for Finance Jack Chambers is now fully aware of the hospitality industry’s unified appeal for Budget 2025 – the reinstatement of the 9% VAT rate on food, not accommodation, to safeguard the sector’s future.
“Our members are not asking for short-term grants, but for long-term viability. This can only be achieved by restoring the correct VAT rate for our low-margin, labour-intensive industry, which has faced immense cost pressures in recent years,” he said.
“If the Government wants to stop the closures, to secure a future for small, independent businesses and to win the support of the 270,000 people employed in our industry for the upcoming general election, it must make the right choice in Budget 2025,” he added.