The abrupt shutting down of two restaurants, Brasserie Sixty6 and Rustic Stone, owned by Dylan McGrath, has caused turmoil in the hospitality sector. Increasing expenses and economic strains were the reasons given on the restaurants’ websites for the closure, further stating that the sustainability of the hospitality business in Dublin is at stake. The impact of the situation on the city centre and the restaurant scene over the past four years is indescribable.
According to Adrian Cummins, the CEO of the Restaurants Association of Ireland (RAI), from September 2023 until July 2024, there have been 577 reported closures of restaurants. This statistic equates to two restaurant closures per day, on average.
Despite the bleak situation, Cummins was taken aback by the recent closures announced by McGrath. He suggests that if such issues could affect a well-known, high-profile brand like McGrath’s outlets, their impact on other businesses would be considerable.
Cummins expressed concern over the broken business model, calling it inefficient in generating satisfactory profit margins for businesses. He emphasized that while there is consumer demand, it hasn’t escalated enough to offset the incremental costs.
There have been numerous recent casualties in the hospitality industry, including Michael’s restaurant in Mount Merrion in Dublin, Myrtle in Louth, Sage in Midleton, Co Cork, Nell’s Wine Bar in Cork, and Perch Coffee in Athlone, Co Westmeath.
Mentioning the tough market conditions and radial cost hikes, Sofie Rooney and Garret FitzGerald are set to close their Terenure branch of Chimac restaurant in Dublin on Sunday. Rooney states that due to extremely challenging trade circumstances prevalent in the hospitality sector, their Terenure location wasn’t profitable. As their lease was approaching its expiration, it presented a convenient occasion to reassess their business strategy with a long-term perspective. They will continue operations at their Aungier Street site, where tourists have been the primary support for business continuity.
Aisling Rogerson, proprietor of The Fumbally in Dublin’s Liberties district, is currently re-evaluating her business infrastructure. The Fumbally announced its temporary shutdown today to reassess its operations, as Rogerson voiced her opinion on the instability of the current hospitality sector via an Instagram video on The Fumbally Stables account. Rogerson spoke about how many small-scale food businesses across Ireland are facing challenges in their operational journey. “The surge in closing down of businesses since the start of the year is not startling.”, she expressed. Businesses wrestling consistently with multiple pressure points are destined to capsize, she added. The Fumbally is slated for reopening on 3rd September, post a comprehensive system overhaul.
Rogerson’s sentiment seems to be echoed by numerous other restaurant owners who are opting for a scaled-back operation by trimming down the number of their owned hospitality outlets. Gareth “Gaz” Smith, who owns and operates Big Mike’s restaurant in Blackrock, talks about his Mount Merrion restaurant closure, primarily due to the lease closure. He reflects on how the business cannibalisation became evident after he closed Michael’s. Gaz, who now runs his business five days a week from the same location, has witnessed an increased customer footfall.
Sunil Ghai, owner and head chef of Camden Street’s Pickle restaurant, had contemplated launching a new outlet on George’s Street. However, he retracted from the proposition realising its financial unviability. Ghai divulged that escalating food costs, which have seen a two-fold or even three-fold increase over the span of the past three years, are playing a significant role in this. He cites the inability to completely transfer this cost inflation to the customer base as a compounding problem. Ghai shared the plight of business owners operating under financial uncertainty and their resulting fear. The inability to pay off accrued debts is leading many to shut down their businesses.
Ghai also mentioned the evolving dining habits triggered by the pandemic. Remote work practices have adversely affected the hospitality industry by crimping corporate and lunch-time business. In response to this change, he halted lunchtime operations at Pickle at the start of the year.
Liz Matthews from Etto, located on Merrion Row, reports that despite a recent decrease in lunchtime patronage, they’ve managed to stay buoyant thanks to tourist influx over the summer. She expresses relief and gratitude for their geographic position when considering the struggles other venues seem to be facing over the past months. With a notion of uncertainty, Matthews acknowledges a rise in costs and a fall in consumers which often makes running a profitable business challenging. The mandatory service charges that they have to impose just to barely break even is a concern, as she fears they have already hit their market limit.
Along with the challenges of rising wages, inflated food prices and accumulating debt, the Restaurants Association of Ireland (RAI) cautions of widespread shutdowns in the industry if the existing Value Added Tax (VAT) of 13.5 per cent continues. Appeals for a return to the old 9 per cent VAT for the hospitality sector are escalating in volume.
Matthews admits to being unsure about the path of the VAT issue. The switch back to the 9 per cent VAT would be beneficial but the probability of such a move is unclear, as there is no indication of any price decrease in sight, rather an overall price spike. She feels it’s hard to predict what the future holds considering the industry is volatile and closures often unexpected.
Matthews also seems unsure of what the next year will bring and whether any changes to the VAT are on the horizon, but she hails any such change as a glimmer of hope for many struggling businesses.