Restaurant Closures Not Letting Up: Total Rises To 577 Since VAT Hike
The Restaurants Association of Ireland (RAI) has today revealed that the number of restaurants, cafés and other food-led businesses forced to close their doors for good since the 50% hike in the hospitality sector’s VAT rate from 9 to 13.5% last September has reached a total of 577.
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. As such, a large number – though not all – of these closures would have been prevented if the lower VAT rate remained in place, the RAI said.
A total of 45 restaurants, cafés and other food-led businesses ceased trading in July, bringing the cumulative number of closures to 577 since the VAT rate rose from the 9% rate it stood at for 10 of the past 12 years.
In a recent survey of 212 members of the Restaurants Association of Ireland, an alarming 74% of respondents believe they will have to close their businesses if the VAT rate on food is not reinstated to 9% in October’s Budget. Furthermore, 66% of respondents admitted they would have already shut their doors if not for the ongoing campaign advocating for the return of the lower VAT rate.
The survey’s findings follow the stark conclusions of a recent economic report by leading economist Jim Power, which detailed the far-reaching impact of restaurant closures on the economy. The report, titled ‘The Economic Impact of Restaurant Closures,’ found that the average closure costs the State and economy up to €1.36 million, with each closure also resulting in the loss of 22 direct jobs.
The RAI has long called for a return of the 9% VAT rate for food-led businesses to ensure long-term viability for the industry – a proposal the Department of Finance estimates would cost in the region of €545 million per annum.
According to the representative body, closures have now reached a level that means the higher rate of VAT on restaurants and cafés has started to actually cost the State money because of unintended knock-on economic impacts which the Department’s modelling fails to acknowledge.
Commenting on the latest closure figures, Adrian Cummins, CEO of the Restaurants Association of Ireland, said:
“While the pace of closures has slowed slightly during the summer compared to the tsunami we witnessed at the beginning of the year, this was expected.
“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.”
Month
Number of closures of food-led businesses
September 2023
43
October 2023
46
November 2023
58
December 2023
73
January 2024
101
February 2024
71
March 2024
40
April 2024
33
May 2024
32
June 2024
35
July 2024
45
Total
577
The RAI’s monthly closures list is based on liquidations data provided by Vision Net, combined with verified notifications of non-CRO registered closures through the media, social media and the RAI’s own membership
