The Restaurants Association Of Ireland (RAI) has warned that the Irish food-led sector is in ‘survival mode’, with 0.8% profit margins.
This comes after a new data-driven report by Outmin and RAI exposed the financial state of Irish food-led hospitality businesses, with average net-profit margins reaching just 0.8% in the first quarter of 2024.
The report’s main insights come from an analysis of the financial data of Outmin customers from 2022 to the first quarter of 2024.
‘Budget 2025’
“It’s crucial that the Restaurants Association of Ireland and our industry as a whole continue advocating for the reinstatement of the 9% VAT rate,” said Adrian Cummins, CEO of the RAI. “This report makes that very clear.
“If the government wants to return long-term viability to small, independent restaurants, cafes, and other food-led businesses across the country, the reinstatement of the 9% VAT rate must feature in Budget 2025,” Cummins added.
Labour Costs
In the first quarter of 2024, the study found that Irish food-led hospitality businesses had an average net profit margin of just 0.8%, after suffering a net loss of 1.6% in the fourth quarter of 2023.
Additionally, the report indicates that labour costs are eating up an average of 40.8% of revenue.
Increased Minimum Wage
According to the report, the cost of sales remains steep, at 34% of revenue, with energy and food costs continuing to be ‘major hurdles’.
New measures, such as a 50% increase in the hospitality sector’s VAT rate, from 9% to 13.5% last September, the increased minimum wage and expanded statutory sick pay, are also cited as challenges.
‘Financial Pressures’
“This isn’t just another survey or estimation – it’s a critical examination of verified financial data from a growing cohort of food-led businesses across Ireland,” said Outmin co-founder David Kelleher.
“Our findings highlight the urgent need for innovative solutions to relieve the financial pressures that these businesses are facing.”
