The challenges facing the Irish dining sector were the focus of an RTE Prime Time special, with over 600 closures last year and an anticipated 1,000 more by October 2025 due to rising costs.
Chef and restaurateur JP McMahon highlighted the increasing financial pressures from factors such as Covid-19, the war in Ukraine, rising wage costs, and adjusted VAT rates, leading to unsustainable profit margins.
Industry experts suggest that consumers may need to accept higher prices to support a thriving independent restaurant scene, while concerns grow over the viability of many establishments amidst economic strain.
The Restaurants Association of Ireland calls for a reduction in the VAT rate to 9pc, arguing that without this support, many restaurateurs are considering permanent closures, compounded by significant operational challenges and rising living costs for hospitality workers.
JP McMahon told Prime Time: the economics that chefs are taught in college and have guided pricing for decades are now being confounded, saying that the general rule was that out of the money that comes into the restaurant, 30pc goes to wages, 30pc is rent and energy, 30pc on food and drink, ideally leaving the restaurant with 10pc profit. These days, that 10pc is simply unrealistic. It has got to the point now, where you could be doing two or three percent and you need everything to be lined up to get that two or three percent..
Chief Economist at the Institute of International and European Affairs Dan O’Brien told Prime Time that the case for the reduction was never clear to him. “Consumption taxes, like VAT, are better than taxing people’s income. Most of our tax comes from people’s personal income. It’s better to tax people when they consume than to tax people on what they do with their time and work,”
