Final Tally: 612 Food-Led Hospitality Sector Closures One Year Since VAT Hike
A total of 612 restaurants, cafés, gastropubs and other food-serving hospitality businesses have permanently closed their doors since the VAT rate for the sector increased from 9% to 13.5% on September 1st, 2023, according to the Restaurants Association of Ireland (RAI).
The annual closure figure arrives amid the RAI’s campaign to have the 9% VAT rate on food reinstated in Budget 2025. The Association has said the Government must provide targeted support to Ireland’s hospitality sector – the industry most effected by the current sky-high cost of doing business and experiencing a heightened level of closures as a result.
To compile its monthly closure figures, the RAI commissions the company Vision Net to send it the relevant Companies Registration Office (CRO) liquidations data for the hospitality industry.
In addition to this, the RAI’s closure figures also incorporate 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 1st before making a final decision on whether to close or not.
In an April 2024 survey of 212 members of the Restaurants Association of Ireland, an alarming 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 survey’s findings followed the stark conclusions of an 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 resulting in the loss of 22 direct jobs.
The RAI says that 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 10 of the past 12 years, mean the imposition of the higher rate of VAT has now started to cost the Government more than the €545 million it says reinstating the 9% VAT rate on food would.
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
- August 2024 – 35
- Total – 612
Commenting on the closure of 612 food-led businesses, CEO of the Restaurants Association of Ireland, Adrian Cummins said: “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.
“Following 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.
“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.”
