Crowe Ireland Survey Reveals Large Amount Of Restaurant Businesses Expect To Be Impacted By COVID-19 Pandemic Long Into 2021
Audit, tax and business advisory firm Crowe Ireland has published the results of a sentiment survey of the restaurant sector, revealing that a large amount of restaurant businesses expect to be impacted by the COVID-19 pandemic long into 2021.
The survey was conducted between August 24 and September 14 when businesses were operating under level two COVID-19-related restrictions, which allowed in-house dining, and before the implementation of a three week level three lockdown, which does not allow in-house dining.
127 members of the Restaurants Association of Ireland (RAI) participated in the survey.
Crowe stated that with the likely absence of Christmas parties and corporate lunches this year, coupled with the latest level three restrictions, restaurant and hospitality business revenues for the final quarter are expected to be down by a minimum of 41% year-on-year.
79% of business that took part in the survey said that they expect their revenue to be down for at least 12 months, and a further one in five expect the pandemic's impact to last for more than two years.
35% of participants are on full payment break, 13% are on interest only and 48% said that they cannot afford to repay principal on their loans.
65% of participant said that, without additional facilities, they could run out of cash in three months.
Less than 20% of participants said that they availed of SCBI support, and 15% said they availed of Microfinance Ireland support.
However, more than 90% of participants said that they availed of both a restart grant and the wage subsidy scheme, while 80% said that they used the local authority rate waivers, and 60% said they used the deferment of VAT and PAYE.
Up to the implementation of level three restrictions, the survey's participants had managed to bring back 71% of permanent staff and 55% of casual staff on to their payrolls.
Landlords of 41% of the participants facilitated rent reductions, with four out of five applicable for less than six months. 65% of those negotiated sizeable discounts of between 41% and 100%. Amongst the 59% who did not facilitate rent reductions, 23% wrote off rent while 29% deferred rent for the closure period.
54% of participants were forced to pay an increased premium at their last renewal with an average increase of 19% in one year.
When participants were asked to rank the importance of varying supports to the sector, a waiver of commercial rates for 2020 emerged in first place and a reduction of the VAT rate in second. Participants were evenly split as to whether the 13.5% VAT rate should be reduced to the previous level of 9% or to the level in place for the UK at 5%.
Crowe Partner And RAI CEO Statements
Crowe partner Aiden Murphy stated, "As 2021 will only at best see a modest let up in business pressure points, all of the measures which when introduced were for obvious reasons temporary in their design will need to be replicated for all of next year if we are to carry on with the providing of the hand up to save these businesses and the jobs they provide."
Meanwhile, RAI CEO Adrian Cummins commented, "This independent survey conducted by Crowe demonstrates the stark reality of the impact COVID 19 has had on restaurants and hospitality not only since March 2020, but long into 2021. Independent SME restaurant, café and gastropub businesses simply will not survive without expanded wage supports, a reduced VAT rate and a hospitality aid package"
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