50% of restaurants face closure without emergency grant aid package
A new report warns that up to 50% of restaurants in Ireland face closure unless an emergency grant aid package is issued by the Government.
The latest Restaurants Association of Ireland report also warns that recently promoted staycations or weekends away will not be an option if the tourism and hospitality industry is not supported.
Prepared by Jim Power Economics, the report stated that the accommodation and food services sector has been seriously damaged by the Covid-19 crisis.
Jim Power said that once the restaurant sector reopens, the trading environment will be extremely challenging.
This will be as a result of social-distancing requirements, various health protocols, the absence of overseas visitors and consumer nervousness.
The economist said the restaurants sector is a major employer all over Ireland, adding that it is an essential element of economic and social life and is arguably the most important component of Ireland’s tourism offering.
“It seems clear that many restaurants will struggle to survive in the challenging environment ahead, but it is equally clear that in order to rebuild the economically vital tourism sector over the next couple of years, it is essential that we have an abundance of high quality restaurants in the country,” Jim Power said.
“It is essential that the restaurant sector gets the maximum possible support from Government, to get the sector through the difficult times ahead,” Jim Power stressed.
“The cost of such support would be far outweighed by the cost of doing nothing, in terms of job losses all over Ireland, closed businesses on the streets of towns, villages and cities all over the country, and the damage to Ireland’s tourism offering,” he added.
Today’s report suggests eight recovery measures for the sector.
These include labour cost support, the dropping of Local Authority Charges, a reduced temporary VAT rate of 0%, reduced commercial rents, debt repayment restructuring, liquidity measures, a cut in excise duties on alcohol and an innovation fund for restaurant diversification.
The report also warns that if 100,000 workers were to remain unemployed for a full year, it would cost the Exchequer around €2 billion in increased social protection expenditure as well as €500m in lost payroll taxes.
The Exchequer would also be hit by around €240m in lost VAT receipts, while local authorities would be down about €52m in lost commercial rates.
Adrian Cummins, the CEO of Restaurants Association of Ireland, said today’s report is “damning evidence” that the sector needs support measures put in place immediately by the Government.
“Our members are stating that a 50% staff layoff is inevitable unless they receive supports, and in the long run, we estimate that almost 50% of restaurant businesses will struggle and shut their doors if the Government do not intervene,” Mr Cummins said.
Noting that the Government have been promoting staycations and weekends away for the months ahead, Adrian Cummins warned that there will be no staycations if the country’s restaurants and hospitality businesses close.
“Indigenous businesses will be lost forever,” he stressed.
“The plan put forward in this report is very comprehensive in both how it will be executed and how much it would cost. But more importantly, it highlights how much it will cost us in the long run to do nothing,” he added.