Another popular Irish restaurant closed this week. The trendy Exchequer Wine Bar in upmarket Ranelagh told customers booked in for Valentines Day that it would have to cancel their reservations because it was closing its doors after 15 years in business. It simply could not afford to remain open.
The Exchequer, a Spanish tapas restaurant with an impressive wine list and award-winning cocktails, has been a popular and charming casual dining spot in the area for a long time, but owner Peter Rock said that warehousing debt with Revenue, soaring utilities and food prices, and two minimum wage increases had forced its hand.
“We did everything to try to trade out of this, but since Covid it has been very difficult,” Rock told the Irish Times.
“We did everything. Closed Monday and Tuesday, just opened five days a week, but still it wasn’t enough to only be busy on Thursday, Friday and Saturday nights. We had to be honest with ourselves, we just couldn’t outrun it.”
It comes just days after a much-loved cafe in Bantry, Co Cork, announced it was closing because profits had become nonexistent, due to spiralling costs. West Cafe and Wine Bar closed its doors after building up a loyal following since it opened in Bantry at the beginning of the Covid crisis.
The owners pointed to similar problems, saying that they shouldered much of the fallout of Covid’s knock-on impact on hospitality, “keeping the business running while dealing with the legacy debt and the energy crisis. We’ve come to the point where it can’t continue.”
Just after Christmas, high costs also forced Galway’s famous Goyas bakery to shut after thirty years in business. Goyas, renowned for its red velvet cake, sold its last bread and cakes on New Years Eve as it became the latest in a long line of independent businesses in the area forced to call it a day due to the high costs.
Founder Emer Murray told the Sunday World that a rent increase, along with struggles to keep staff, many of whom cited a lack of affordable housing, meant that the bakery had no choice.
“I’m not doing this out of choice,” Ms Murray, who started the bakery 33 years ago, explains. “I have been overwhelmed by the reaction since I had to announce this, and I hate to see people so upset because of it.”
These are just a limited number of very recent examples. In all, more than 600 restaurants were forced to close last year. The Restaurants Association of Ireland has estimated that an average of two restaurants or cafes are now closing daily in Ireland. We are haemorrhaging hundreds of millions to our economy, yet the government has done very little to protect jobs in cafes and restaurants in towns and villages nationwide.
There are plenty who would argue that not only has it done very little, its actions have caused the closures. Who introduced the unnecessarily long Covid lockdowns? The government. Who refused to reduce the VAT rate so that independent businesses fighting for survival could stay just above water? The same shower.
It’s clear that small businesses are being forced out of towns and cities countrywide as the battle to survive becomes tougher day by day. Businesses who were thriving up until recently are increasingly being left with no choice but to throw in the towel, often after decades of hard work, while the government has remained unflinchingly stubborn and deaf to pleas to reduce the VAT rate for the hospitality sector.
Then-Taoiseach Simon Harris said last Spring that he appreciated “the seriousness of the issue” and the pressure small businesses are under, again rehashing a promise to work with government colleagues to see how best small businesses could be supported.
He alluded to possible help in the Budget. But the Budget, published in October, simply dealt another blow for the hospitality industry. There was no hiding the disappointment when it became clear that there would be no 9% VAT rate for the food-services sector.
In the wake of that news, almost 2,000 hospitality workers and small business owners protested outside Leinster House, highlighting the sector’s deepening financial woes. There was a very clear sense that to these owners, already facing competition from takeaway coffee and food chains, the government continues to act as a kind of feudal landlord that takes their money, no questions asked.
That promises things will work out ok, that tells businesses to keep going. But things are not ok. Growth is not only sluggish – it is nonexistent. The power has been taken out of the hands of Ireland’s entrepreneurs.
Hard-working business owners are not only struggling because of competition and steeply rising rents, but setbacks from Covid lockdowns, enforced by our government, are crushing them. The long shadow of Covid has not gone away. And the government refuses to admit that its own policies are part of the problem.
The tax debt warehousing scheme, introduced during Covid by the government as a measure to help under-pressure businesses with cash flow allowed business owners to warehouse tax they owed to Revenue for a period, meaning many were able to keep going. But while it provided liquidity at the time, it has now been cited as a factor for closures, and casts a dark cloud over many premises who simply cannot absorb the costs.
There is little will or creativity to deal with the problem. Why aren’t we asking whether the system, or the business model itself, is broken, when it comes to the restaurant sector in Ireland?
Despite the steady stream of closures of the very small businesses that inject that sense of charm and authenticity into our local towns, the big chains seem t be thriving.
You will have little trouble finding a Starbucks or a Costa Coffee or an O’Briens when you’re out and about. Our high streets and shopping centres are jammed with Cafe Neros and Subways and Supermacs to boot, but we cannot forget the importance of the independent cafe shop or eatery.
Not only is the food very often better, but these businesses become little havens for locals. If we eliminate the small family-run business, all we’ll be left with will be a bland sea of franchises and modern cafes that lack any of the personability of the independent business. It’s just depressing. Will we be left with nothing but the likes of Starbucks and McDonalds – souless, charmless spaces serving, in my opinion at least, pre-packaged, tasteless food.
Our family-run businesses and cafes are social spaces which have for years been the beating heart of our local areas – so why is the government making it so hard for them to survive?
The new Government Coalition has said it will finally cut the VAT rate for food hospitality services back to 9 per cent at the next budget. The cutting of this oppressive red tape is to be welcomed – but it may simply come too late for some restaurants and cafes struggling to stay afloat.