'We're not crying wolf': Vat will shut businesses, warn Cork hospitality leaders

Leading figures in Cork’s hotel and restaurant trade have warned that more hospitality businesses will close down by the end of September if there isn’t a strong indication before then from the Government that the 9% Vat rate on food will be restored.

Mike Ryan, proprietor of the CoqBull and Cornstore in the city, and Michael Magner, owner of the Vienna Woods Hotel and president of the Irish Hotel Federation, issued the warning as a coalition of the leaders in the hospitality organisations reiterated their calls for the reduction of the rate from 13.5% to 9% as part of a pre-budget submission to the Government.

“The Government realise the impact it has on businesses, we’re not crying wolf,” said Mr Ryan.

“Last year we were hit by a double whammy — one was the Vat and the other was the minimum wage which pushed up the baseline because you have an awful lot of people working above that rate but everybody wanted to be the same metric above the new rate.”

According to Mr Ryan, the increase in the Vat rate added 40% to costs for an average restaurant, while the minimum wage increased added a similar proportion to the costs.

“Really good premises will go under because of their ethos, because they’re using local produce and employing local workers — the picture people are not seeing is what fills the space after they’re gone,” Mr Ryan said.

He warned that there would be closures in September if ‘light at the end of the tunnel’ did not materialise in the form of the restoration of the 9% Vat rate for food.

Mr Ryan said it would be similar to what happened after last Christmas when a number of prominent Cork restaurants announced their closure.

Mr Magner said he agreed with Mr Ryan’s warning on likely closures. “He’s not wrong, I would concur with him,” said Mr Magner.

“I would say the hotel sector is probably more resilient as it has accommodation as part of its business mix because accommodation is profitable.”

He pointed out that the food and beverage offering was used to fill the hotel rooms — so a Vat reduction would be helpful to the hotels too.

He also said the Government’s €500m estimate of the cost of the restoration of the 9% rate would be mitigated by €250m in savings for a failed business support scheme.

Mr Magner said the restoration of the Vat rate shouldn’t be temporary.