RAI Launches New Report Calculating The Average Cost of a Restaurant Closure

This morning, the Restaurants Association of Ireland (RAI) published a new report which found that the average closure of a restaurant costs the State and economy up to €1.36 million and results in the loss of 22 direct jobs.

The report titled ‘The Economic Impact of Restaurant Closures’, conducted by leading economist Jim Power and commissioned by the RAI, was launched in Buswells Hotel.

It is one of a number of reports we will be launching in the coming weeks as part of our campaign arguing in favour of the reinstatement of the 9% VAT rate for food-led businesses.

The latest figures show that, in 2024, an average of two restaurants, cafés and other food-led businesses are closing their doors for good each day, meaning a total loss of €288 million to the economy and State already this year.

According to the report, the closure of one restaurant results in the loss of 22 direct jobs on average. Additionally, there is also a significant loss of €576,554 in gross wages, €115,310 in payroll taxes to the Exchequer, €105,000 in VAT receipts, €11,874 in commercial rates to local authorities, €4,583 in water charge receipts, among other impacts.

The latest figures provided by the Department of Finance estimate that the cost of reducing the VAT rate of food and catering services stands at €545 million per annum. 

As such, only 400 restaurant closures that would not have occurred under the 9% VAT rate that the RAI is calling for will see the State begin to lose more money than a return of the 9% VAT rate would cost – a figure that will be significantly surpassed in 2024.