Soaring expenses have forced another Cork restaurant to permanently shut its doors as the industry continues to deal with a spate of closures.
Midleton restaurant, bar and venue Church Lane joins the running list of more than 570 hospitality businesses to close in the past twelve months, announcing on social media that its last trading day will be September 15.
The business was recently awarded Best Newcomer at the 2024 Irish Restaurant Awards.
“While we felt a huge amount of support from customers both near and far, the hard realities of the expense of our industry have made it too difficult to continue as a new business,” it posted on social media.
“Regardless of our efforts, rising running costs and the 13.5% VAT rate has made it very difficult for new and independent food businesses to thrive. As is evidenced by so many of our industry peers facing the same fate over the last 12 months.”
The restaurant, which was founded by three entrepreneurs, including two brothers, Colin and Barry Hennessy and James Cullinane opened in November last year, shortly after Strom Babet brought widespread devastation to several businesses in the area.
Despite strong support from the community since its opening, the restaurant stressed the high costs of doing business and the impact it is having across the industry.
“While it was a very hard decision to make, we know its best for us as winter approaches,” it added on social media.
Commenting on the closure, chief executive of the Restaurants Association of Ireland, Adrian Cummins said: “Sad to see another fine award-winning restaurant set to close. Government must now see the current financial model for restaurants is broken due to Government policies.
“Restore the VAT to 9% and give the sector a fighting chance.”
Church Lane is the latest Cork food business to shut its doors, following closures from well-known restaurants including Nash 19, which ceased trading in January after more than 30 years in business.
Also in January, Tung Sing, one of the first Chinese restaurants to open in Cork announced it was closing its doors as it hit its 60th year in business.
In June, another Midleton business, the well-known Sage Restaurant announced its closure after 16 years in business.
More than 570 restaurants, cafes, and other food businesses have permanently shut their doors since last September, figures from the RAI have revealed, with the business group identifying a notable spike in closures since VAT rates returned to 13.5% last year, having been set at 9% throughout the pandemic.
“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,” the RAI said.
In recent months, Fine Gael has started to lobby for reducing VAT again, with Enterprise Minister Peter Burke signalling his intention to fight for the return of the 9% rate. However, Fianna Fáil ministers, including Finance Minister Jack Chambers, are reluctant to consider the proposal.
Despite Fine Gael’s recent support for the lower rate, Minister for Public Expenditure Paschal Donohoe said he made it clear when the VAT rate was initially reduced to 9% that the move would be temporary. The move has been deemed unlikely due to its estimated price tag of €535m.