Almost 580 food businesses have closed since September, claims RAI

Almost 580 restaurants, cafes, and other food businesses have closed their doors in less than a year due to a hike in Vat rates, an industry watchdog claims.

Since last September, 577 have been “forced to close their doors for good” since the rise in the Vat rate from 9% to 13.5%, according to the Restaurants Association of Ireland (RAI).

The 9% rate for food was in place for 10 of the past 12 years.

The RAI claims that over the last 11 months, 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, cafes and other food-led businesses ceased trading last month, the RAI pointed out.

The largest number of closures occurred in January last with 101 closing for good, followed by 73 in December, and 71 in February.

Survey

In a recent survey of 212 RAI members, 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 a 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’, claimed that the average closure costs the State and economy up to €1.36m, with each closure also resulting in the loss of 22 direct jobs.

RAI chief Adrian Cummins said that while the pace of closures slowed slightly in the summer compared to the “tsunami” witnessed at the beginning of the year, this was “expected” by them.

Relief

Mr Cummins explained that 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 after the summer and move into the sector’s quieter months,” he added.