These are the darkest of days for Irish hospitality. Many restaurants are facing massive pressures with some buckling under the strain while pubs in cities, towns and villages across the country are facing existential threats that would have been unthinkable a decade ago.
More than 600 food operations have shut up shop in the past 12 months alone and while restaurants rarely go out of business because they’re making too much money, there persists a widespread belief among many consumers that they’re being gouged and forced to pay through the nose because of the greed of those working in hospitality.
It is hard not to have sympathy for all concerned – the businesses that can’t make a buck and the punters who can’t afford to spend one – but the story is as layered as it is complicated.
Hotel and restaurant prices have risen by 3.9 per cent over the past 12 months – the highest increase among goods and services consumed by Irish people in that time, according to data from the Central Statistics Office (CSO).
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Owners say such increases are hardly a surprise in the face of an enduring energy crisis, the reinstatement of the 13.5 per cent VAT rate for hospitality businesses, and the rise in costs of labour and raw materials.
And as if all that wasn’t bad enough, many in the sector fear things are likely to get worse, with further increases in the weeks leading up to Christmas.
There are multiple angles from which to view the challenging and depressing world of Irish hospitality today.
Eithne McManus is from Tipperary but lives in Dublin. For her parents’ 60th wedding anniversary, her extended family booked a weekend’s worth of hotel accommodation in Galway.
“My mum loves Salthill and loves Galway,” she says. “We just booked it in August. We’ve two teenagers and two adults in our family. I suppose, compared with everything in Ireland, this would be not overly expensive. But for two nights, bed and breakfast, it was €785. That was the cheapest I could get here.”
McManus’s sister-in-law didn’t book as quickly and was quoted more than €1,000 for the same sized room. Driving up from Clare, her family chose to cut the first night of their stay and book a different hotel for one evening.
This family budgeted for the special occasion, but it is not a trip they would typically make.
“It’s eye-wateringly expensive to go away in Ireland,” McManus says. “When my kids were small, in 2010 and in the downturn, we’d come to Galway on midterm breaks. I used to get really good hotel deals. We just do not do that any more and we both have professional jobs in Dublin.”
In Galway city, a number of restaurants have closed over the past couple of months, including Barnacles, Umbrella Asian Tapas and Polka Polish Cuisine. Many local food businesses operate less frequently than they used to, with plenty of restaurants staying closed on Mondays and Tuesdays.
“It has made it a lot harsher,” Ivan Brophy, who lives in the city, says of rising prices. “When you’re too busy to go home and cook after work, you’re just getting a takeaway and now it’s over 20 quid for just small things.”
His partner, Rachel Keane, agrees: “You’re talking 40 quid for takeaway for two people, if not more. We’re definitely more conscious now.”
Brophy says: “[Eating in a restaurant] is more of an event so I don’t mind so much spending the money. The financial hit is worth just being out and having a good evening. There are definitely some amazing places in Galway.”
In Dublin, it can seem as though there is no issue around consumer demand, particularly on Friday and Saturday nights when the city is full. However, Jacinta Wilson, who lives in the Liberties, thinks eating out in the city centre has become unfeasible.
“Not any more, especially not in town,” she says of going to restaurants. “I stay more locally. There is [more value]. The bars are cheap up there. All my grandchildren and everything – all they’re doing is complaining about prices in town and it’s a shame because town is lovely.”
Over the pandemic, Down native Rory King set up Rory’s Travel Club. About 120,000 members avail of the service, paying €1 a month for access to travel deals around Ireland and abroad. King believes prices in Ireland’s hospitality sector are competitive with the rest of Europe.
“I know the likes of London and Paris would be more expensive than Dublin and Cork for example, which is kind of to be expected,” he says. “Across Europe, you will find, especially in major cities, the price of accommodation can be higher than what some people expect it to be.
“Just yesterday, we had the four-star Connemara Coast Hotel in Galway. We had bed, breakfast, a three-course meal and a bottle of prosecco and it was €220 for two people – so €110 per person. And that included for Friday and Saturday nights, which is excellent value for such a high standard hotel 20 minutes from Galway city.”
That’s the consumer perspective on where we are, but what about the businesses?
Anthony Gray is the owner of Sligo restaurants Eala Bhán and Hooked. While consumer demand is high at weekends and in certain parts of the country, the more rural the business’s location, the harder he believes it is hit by rising operating costs.
“You don’t have the footfall,” Gray says. “You might have the footfall for maybe six months of the year, but you come down to Sligo on a November night or a January, February, March night – my God, it’s a dismal scene. And that’s the same scene across every small little town and village in rural Ireland.”
As part of Budget 2025, the Government introduced a one-off Power Up grant of €4,000 for businesses in retail and hospitality. It met strong criticism from the industry for failing to address long-term issues.
“I have restaurateurs ringing me asking me should they take out a loan to pay their VAT bill,” Gray says. “I don’t want a handout from the Government – the Government don’t realise this – I want to walk into my business and be able to run my business where it’s viable, it’s profitable and I’m able to sustain it.”
Sean Collender, who co-owns Dublin restaurants Kinara, Kinara Kitchen and Kajjal, believes the Government was helpful during Covid, but the few measures it has deployed to improve hospitality since then have been ineffective.
“A grant of €4,000 is vastly insignificant,” Collender says. “Some of the new increases that have been imposed on, say a business that does €1 million in turnover, you’re looking at €90,000 extra a year based on just the recent increases. Never mind all the other increases in the past year or two.”
For a year, Collender says his restaurants’ energy costs tripled in price. The bill for one outlet’s monthly energy went from €3,000 to €12,000. Though that rise has settled, it left its mark. Another issue is housing – staff cannot find affordable accommodation and it becomes harder to retain valuable workers.
Like many others, Collender has been advocating for a split reduction in the VAT rate for hospitality – one that would afford food businesses some leeway without bunching them together with the rest of the sector.
He notes that hotels operate a different model.
“Whether you agree with it or not, they offer a different pricing structure that is certainly more fluctuating,” he says. “We can’t do that. We can’t dramatically change our prices just because somebody is in town for the weekend.”
Michael Magner is the owner of Cork’s Vienna Woods Hotel and the president of the Irish Hotels Federation (IHF).
Almost three-quarters of the IHF’s members, he says, are located outside of Dublin, where the majority of their turnover comes from food and beverages.
“Just because we have the word hotel outside our front door, that doesn’t mean all hotels are equal,” Magner says. “When we look outside the capital and we move into regional, rural Ireland, the majority of our hotels operate on a very similar model to that of the restaurant and the pub or drink industry.
“Accommodation is there but they don’t have the multiple hundreds of bedrooms. And in order to fill their bedrooms, they must have a hook. The hook might be the area, but they also tend to have a bar or a restaurant connected to their hotels.”
Magner acknowledges that Irish hotels are not closing their doors like the hundreds of restaurants that have gone under in recent years. Still, he says, both businesses face similar issues around profit margins.
“It’s a terribly labour-intensive industry and the margins are so narrow. I read a statistic there recently and I couldn’t believe it. It was a report that was done by Anthony Foley on behalf of the sector in advance of Budget 2025. Margins on food, in some cases, are now below 2 per cent. I mean that’s just unsustainable.”
He says that while hotel closures are scarce, “as an industry the costs of doing business are becoming increasingly challenging. You might see the hotels and our sector reimagining how they deliver a product.”
Reimagining the product means dialling back luxury services, closing hotel restaurants for the early stages of the week and putting off any renovations or upgrades to the hotel’s facilities.
Paul Lenehan owns three gastropubs in Kildare, as well as Firecastle – a market shop, deli and cafe with 10 bedrooms. He says a split in VAT reduction can be achieved, but agrees that small, rural hotels that rely on the food and beverage side of their business need to be in the conversation. In Lenehan’s view, higher prices in restaurants have not benefited owners enough.
“The average spend per head in all my three locations hasn’t changed at all really in the past three years,” he says. “What’s happened is our margin has decreased a huge amount because our costs have gone up.
“Generally, the public coming out – if John and Mary are going out for dinner, they’re spending only a hundred quid. They have an idea of what they’re going to spend.”
Where and when they choose to spend it – if they can afford to spend it at all – can be the making or the unmaking of a business.
