Adrian Cummins, CEO of the Restaurants Association of Ireland (RAI), has called on the government to reinstate the 9% VAT rate for food-led businesses as part of its upcoming support package for SMEs.
Last week, the RAI estimated that 71 restaurants, cafés and food-led businesses closed in February.
The association previously warned the government that, based on current trends, in the region of 500 additional food-led businesses will close between March if substantial action is not taken to support the industry.
'Primary Reason'
“Countless businesses that were viable and sustainable before last September’s 50% VAT hike have been forced to shut their doors for good," said Cummins.
"When we survey those who have had to close their restaurant or café for good in recent months, the increase in the VAT rate is listed as the primary reason for closure in the vast majority of cases."
Support Package
The RAI has welcomed a report in The Irish Times that senior Fine Gael figures are privately urging presumptive Taoiseach and new Fine Gael leader Simon Harris to introduce changes to support small businesses in advance of October’s Budget, with a targeted VAT reduction for the food-led hospitality sector being suggested.
The association has cautioned that a return of the 9% VAT rate must form part of the government’s support package if it is to be of any meaningful help to small, independent restaurants and cafés.
'Only Show In Town'
“Time is of the essence here - the new Taoiseach, Simon Harris, and his Finance Minister, Michael McGrath, must bring the government back to basics and give a strong signal to small businesses that they have their backs," said Cummins.
“The Restaurants Association of Ireland has explained to ministers time and time again that, when it comes to the food-led hospitality sector which currently faces a crisis of closures, the reinstatement of the 9% VAT rate is the only show in town."
Increased Costs
The RAI claims that at recent branch meetings held across the country, restaurant and café owners have made it clear that Employers’ PRSI reductions and short-term grants would be of little help to the industry and would only be 'a drop in the ocean' when it comes to the increased costs they face.
On the other hand, the association noted that the 50% increase in the hospitality sector’s VAT rate last September represents a significant 37% of the overall cost increases facing hospitality businesses this year compared to 2023.
'Facing Closure'
“Our members are not looking for short-term support packages or other bandage solutions. We want the government to return our industry as a whole to a position of viability by reinstating the 9% VAT rate - in part, to mitigate against the 6.6% increase in payroll costs faced by the industry this year, rising to a 19.4% increase in 2026," said Cummins.
“Any support package for Ireland’s small, independent restaurants and cafés that does not include a return of the 9% VAT rate will simply not be enough to keep the doors of those currently facing closure open.”
