RAI Says 50% Of Irish Restaurants Face Closure Without Government Aid
The Restaurants Association of Ireland (RAI) has said that up to 50% of restaurants in Ireland face closure unless an emergency grant aid package is issued by the government.
This follows the release of a report on the consequences of not supporting the restaurant rector by Jim Power Economics, which states that the accommodation and food services sectors have been seriously damaged by the COVID-19 crisis.
"Impacted In A Devastating Fashion"
Economist Jim Power, who prepared the report, said, "The restaurant sector has been impacted in a devastating fashion by COVID-19. Once it reopens, the trading environment will be extremely challenging as a result of social-distancing requirements, various health protocols, the absence of overseas visitors, and consumer nervousness. The sector is a major employer all over Ireland and 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. It is essential that the restaurant sector gets the maximum possible support from government to get the sector through the difficult times ahead. 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."
"Immediate" Support Measures Needed
Meanwhile, RAI CEO, Adrian Cummins commented, "This report is damning evidence that our 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.
"The government have been promoting staycations and weekends away for the months ahead. Let me be very clear on this. There will be no staycations if our restaurants and hospitality businesses close. Indigenous businesses will be lost forever.
"The landlords and the banks are bearing down on businesses who are already struggling. How can we be expected to stay on top of payments when the new social distancing rules will see the capacity for customers significantly reduced?
"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. This report lines up almost perfectly with the asks from our own RAI nine-point crisis recovery plan."
Desired Recovery Measures
The eight recovery measures for which the report calls are as follows:
- labour cost support for up to 24 months on a gradually reducing basis as it could take restaurants up to two years to return to pre-COVID-19 levels of activity;
- ongoing intervention in the form of a grant to cover local autority charges, rates, water, wastewater and street furniture charges and keep the businesses solvent for the next 24 months;
- a 0% VAT rate for the restaurant sector until the end of 2021, followed by a reversion to the 9% VAT rate on a permanent basis to assist recovery, create certainty, and secure a viable and sustainable future for the sector;
- a scheme to reduce the burden of commercial rents;
- agreement from the banks to reschedule the repayment of term loans, overdrafts, business mortgages, finance leases and hire purchase loans for a two year period from the date of the forced closure of the business, where businesses are unable to meet current debt obligations, but where loans were performing as at December 31, 2019;
- an interest free working capital fund of €500 million, which would impose a marginal cost on the exchequer as the Irish government is currently able to borrow for 10 years at a rate of just 0.15%;
- a reduction of alcohol excise duties by 7.5% in year one and a further 7.5% in year two;
- and a €20,000 per business innovation grant for eligible businesses to help restaurants develop and test new methods of doing business in the face of restaurants' need to implement social distancing measures.
© 2020 Hospitality Ireland – your source for the latest industry news. Article by Dave Simpson. Click subscribe to sign up for the Hospitality Ireland print edition.