Closed Restaurants Could Cost €288M
The Irish economy could lose up to €288m annually as a result of the closure of more than 200 restaurants, cafes and other food-led businesses so far this year, according a new report from economist Jim Power.
The analysis, commissioned by the RAI, estimates that every time such a business shuts its doors for good, it could result in the State losing out on a total of up to €1.36m in value each year and an average of 22 people losing their jobs .
The report says each closure results in €576,554 in gross wages being lost, as well as €115,310 in payroll taxes to the Exchequer. A further €105,000 in VAT receipts are also lost each year, it claims, along with €11,874 in commercial rates to local authorities and €4,583 in water charge receipts. And if the workers laid off had to go on social welfare payments, the annual cost would work out at around €440,000.
The RAI says that so far in 2024, a total of 212 restaurants, cafes and other food-led businesses have closed down, with a cumulative annual cost to the economy of up to €288m.
"For the first time, this report lays out the stark economic reality of how damaging food-led hospitality closures are to the State and the economy," said RAI CEO Adrian Cummins.
"The assumption among civil servants and in certain other quarters that where one restaurant closes down, another will shortly open, is unfounded - particularly in parts of the country outside of Dublin."
The RAI wants to see a return of the 9% VAT rate, but for food-related businesses only, which the Department of Finance has said will cost €545m a year. The RAI claims that if 400 restaurants eventually close, the State will begin losing more money than it would have cost it to lower the VAT rate.
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