DUBLIN is renowned for its spirit and nightlife.
However, the hospitality sector has seen hundreds of businesses go to the wall in recent months.
Just this week, restaurant and nightspot Ukiyo joined THREE Dylan McGrath-owned businesses in a tiny part of Dublin city and closed its doors.
According to nightclub advocacy group Give Us the Night, there were 522 clubs in Ireland in 2000. But last month there was just a total of 90.
Writing in The Irish Sun, Donall O’Keeffe, chief executive of the Licensed Vintners Association, says the Government must act urgently to stop more good businesses from going bust.
ALL around the country, venues are closing.
Every day we hear news about another bar closure, another cafe going out of business, another restaurant’s doors shuttered.
All gone for good because they can’t afford to stay open.
Each of these closures means the loss of a place to socialise, to eat, drink, to meet up. It also means a loss of jobs.
You might think with so many businesses going bust the Government would be trying to get to the bottom of what’s causing this problem.
But in this case, there’s no need. We already know what’s pushing so many hospitality venues out of business — the Government’s own measures.
Over the last year the Government has imposed massive additional costs on hospitality.
They’ve increased the VAT rate on food, they’ve increased employers’ PRSI, they’ve hiked the minimum wage and they’ve increased the sick leave entitlements.
And they are soon set to announce a further increase in the minimum wage, pension auto-enrolment due to kick in for the new year and are seeking the introduction of a ‘Living Wage’ by 2026.
All these costs add up to quite a lot.
The Government did a study that found their own measures would add 36.7 per cent to the cost of payroll in hospitality by 2026.
That’s a huge jump. No business can manage cost hikes of that size.
Costs rising
What that means is the Government wants hospitality to dish out an extra €1.10 for every €3 we used to spend.
What’s worse is the Government is seeking these changes at a time when all other costs have been rising too.
Energy prices are up, interest rates, insurance costs, food costs and, of course, the suppliers have hiked prices.
In this country, the Government also applies excise taxes on alcohol that are among the highest in the EU.
It’s all too much, too fast. The hospitality sector just can’t cope with these costs. We can all see the impact.
A total of 577 restaurants, cafes and other food-led businesses closed their doors for good since the VAT rise from nine per cent to 13.5 per cent.
Minimum wage changes needed
Not long ago you’d have had a hard time finding a Dublin pub which wasn’t open seven days a week. But since all these extra costs kicked in, one in six pubs can’t afford to open on certain days.
One in three pubs in Dublin say they are going to have to let staff go if the Government goes ahead with the proposed hikes in minimum wage.
No one wants to see that happen, but the reality is that businesses won’t be able to afford as many staff if the Government insists on making it so much more expensive to employ people.
Inflation impact
Prices are rising and everyone is feeling the pinch, but it would be fairer if increases to the minimum wage were linked to the rate of inflation.
If inflation goes up by two to three per cent, then that’s how much the minimum wage should rise too.
We also support the introduction of a Living Wage. It just shouldn’t be done so fast.
We believe the Government should commit to introducing this measure over a four-year period between 2025 and 2029, giving small businesses in the hospitality sector and beyond a fair chance to prepare for these sizeable cost increases.
If the Government doesn’t get more realistic about these charges, then ultimately everyone will feel the impact.
Price hikes
In fact, almost half of Dublin pubs say they will be forced to increase their prices if the Government proceeds.
People understandably complain about the rising cost of pints, but this is what happens when costs go up.
If the Government wants to avoid these problems there are a few steps they can take.
They should cut taxes on the hospitality sector — bring back the nine per cent VAT rate on food, and reduce the insanely high level of excise taxes on alcohol, giving businesses some room to survive.
Otherwise we’ll see more hospitality businesses driven out of business, and it will be the Government who are behind the steering wheel.