“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 Restaurants Association of Ireland has warned that up to half of restaurants in Ireland will close unless the government is prepared to issue an emergency grant aid package for the tourism and hospitality sector.
The stark warning follows the release of a report outlining the consequences of not supporting the restaurant sector, prepared by well-known Irish economist Jim Power.
The report details an eight-point recovery plan (see below) that it is believed will be required to support the restaurant sector, with the Restaurants Association saying it tallies closely with
the nine-point recovery plan it issued for the sector in April.
Furthermore, the association has warned that the staycations that have been promoted by the government when accelerating the easing of Covid-19 restrictions will not be possible if adequate support is not provided for the sector in the weeks, months and years ahead.
The eight-point recovery plan issued by Jim Power Economics addresses the following areas and makes the following recommendations:
- Labour Cost Support: Temporary wage subsidies provided by the government during the Covid-19 crisis should continue up to a period of 24 months.
- Local Authority Charges: Charges such as rates, water, wastewater and street furniture charges should be covered by the government by 100% during period of closures for restaurants and will require ongoing intervention for a 24-month period.
- Reduced VAT rate: 0% VAT rate for the restaurant sector should be introduced until the end of 2021, followed by reversion to 9% VAT rate on a permanent basis.
- Commercial Rents: A scheme is required to reduce the burden of commercial rents from the perspective of restaurant owners and landlords. A 100% grant mechanism is suggested during the period of closure for restaurants, gradually reducing thereafter.
- Debt Repayment Re-Structuring: Government and industry stakeholders need to get agreement from the banks to re-schedule 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.
- Liquidity: Official intervention to ensure adequate liquidity for all businesses is essential. An interest-free working capital fund of €500 million should be set up to that effect.
- Reduction in Excise Duties on Alcohol: Alcohol excise should be reduced by 7.5% in Year One and a further 7.5% in Year Two.
- Innovation Fund for Restaurant Diversification: An innovation grant has been suggested for eligible businesses (€20,000 per business) to help restaurants to develop and test new methods of doing business in light of Covid-19 social distancing guidelines.
Commenting on the report, Restaurants Association of Ireland CEO, Adrian Cummins said: “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?”
Economist Jim Power, who prepared the report, added: “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.”
