Warning of 'crisis' in restaurant industry

RESTAURANTS WILL close at a rate of 10 a week this year if measures to help owners are not introduced quickly, the Restaurant Association of Ireland has said.

Adrian Cummins, chief executive of the association said the industry is in crisis.

In the last two years, approximately 700 restaurants and coffee shops have closed nationwide, according to the association.

At its annual conference in Dublin yesterday, Mr Cummins said he did not like to use the term “crisis” frequently, but his organisation has been two years looking for help from government and restaurant owners had “gone to the edge”, but no help had been given.

“One restaurant or coffee shop has closed every day in the last two years across the country,” he said.

If new measures to help restaurant owners were not implemented immediately, this year the rate of closure was likely to escalate to 10 a week, he said. “The industry is in a very dark position at the moment with no uplift in business.

“Business has dropped about 40 per cent on average across the board in the last two years and it is unsustainable.”

The domestic market would further contract this summer, Mr Cummins said, and although they were expecting a slight increase in numbers of overseas visitors in 2011, that figure would still be a million down on five years ago.

Mr Cummins said 64,000 people were employed in the industry, but businesses were “hamstrung” by Joint Labour Committee pay scales.

These had enforced an effective minimum wage ranging from €9.32 an hour for restaurants. High local authority rates and Sunday premium wage rates also contributed to owners’ problems.

Mr Cummins also complained of “sunshine tax”, the cost to a restaurateur of being allowed to put tables and chairs on the footpath outside their premises. Ireland was the most expensive country in Europe to run a restaurant, he said. He called for the abolition of catering industry wage agreements and the Sunday premium, as well as a reduction in rates.

Addressing the conference, Minister for Tourism Leo Varadkar said his Government would review the wage-setting system and would “seek to abolish” upward-only rent reviews.

It would also give tourism a priority, which would help the industry and reduce VAT and PRSI on jobs paying up to €356 a week.

He knew restaurants had been “hit hard” and had responded by reducing costs and prices and by changing menus and promoting special offers.

“We cannot pass a law to restore economic growth and we cannot afford a giveaway budget to put money back in your customers’ pockets,” Mr Varadkar said. “However, there are things we can do for the sector and we mean to do them and do them quickly.”