Disappointing Budget for Hospitality: Restaurants Association of Ireland says businesses will close due to lack of action in Budget 2024

OCTOBER 10TH, 2023 – The Restaurants Association of Ireland (RAI) has today said Budget 2024 failed to deliver significant enough measures to support small and medium-sized food-led and hospitality businesses across the country, adding that business closures will occur as a result of its lack of meaningful action.

The RAI outlined a number of specific areas where the Government failed to listen to industry concerns:

The Government needed to return food-led businesses to a 9% VAT rate as our industry continues to struggle with sky high costs and razor tight margins. In failing to do so, and by letting Ireland remain at the European Union’s second-highest level VAT rate for hospitality, many restaurants, cafés and gastropubs across the country will now be forced over the edge and have to close over the coming period.

The Government needed to deliver a meaningful replacement for the Temporary Business Energy Support Scheme (TBESS) – which itself was too complicated and did not help enough businesses that needed it. It failed to do so and businesses will continue to be plagued by energy costs as a result.

The Government needed to provide a bespoke package for food-led businesses struggling to keep the doors open – particularly those in areas that are witnessing large reductions in footfall and tourism as a result of Government contracts for accommodating refugees and asylum seekers in local hotels. In failing to provide details around any such package, it missed an opportunity to ensure a sustainable future for our industry.

The Government needed to take into account various pieces of legislation coming into effect next year that will place even more costs and pressure on local food-led businesses. These changes – coming one after the other with no opportunity for establishments to sustainably adapt –  include an increase in both the minimum wage and paid sick leave entitlements, as well as the planned roll-out of the pension auto enrolment scheme. The Government instead delivered piecemeal that will not be enough to keep many small and medium-sized businesses open.

Commenting on the details of Budget 2024 and the implications for food-led businesses, CEO of the RAI, Adrian Cummins, said:

“The hospitality and food-led sector has time and time again warned the Government that, by increasing the VAT rate for our industry to 13.5%, it will be issuing a death warrant to many businesses that will not be able to withstand yet another cost increase.

“The Government has today ignored our warnings by failing to return Ireland’s restaurants, pubs and gastropubs to a 9% VAT rate – the right rate for our industry. It has also failed to take meaningful action to support food-led businesses with the exorbitant energy costs they continue to face. 

“It was recently reported that Tourism Minister Catherine Martin and Finance Minister Michael McGrath are considering reverting food-led businesses only to a 9% VAT rate in the medium-term, but restaurants and cafés across the country cannot wait until then.

“The RAI will continue to engage with Government Ministers and other key departmental stakeholders in the hope that they come to their senses and take immediate measures to support our industry, which has still not recovered from the effects of the Covid-19 pandemic.”