The restaurant industry is taking its last breath

When Minister for Finance Pascal Donohoe delivered his budget for 2022 our sector was coming to the end of 12 weeks of good trade; the summer weather was excellent, the conditions for outdoor dining were very good, and any restaurant with a bit of outdoor real estate could do well. When we finally got back indoors the momentum continued. Customer confidence was back and vaccination levels were rapidly increasing into the 90 percentile. Christmas bookings were really ramping up. My business, Scholars Townhouse Hotel, had filled its roster back to 100% employment. I had multiple dates fully booked for December and I was very confident that we would fill the gaps. We were beginning to see an end to the most turbulent time our industry has ever experienced.

But now all of that momentum appears to have stalled, and the future of the restaurant industry is looking far less optimistic.

This pandemic has highlighted systemic problems with Irish healthcare that have existed for decades;  we have had a major capacity problem in our hospitals nearly every year during the viral season for as long as I can remember. Nearly two years into the pandemic it’s unclear why more hasn’t been done to deal with these issues so as to ensure the health service and public were as ready for this winter as possible.

Six weeks ago I noticed a steady rise in case numbers, and the booster conversation started hitting the headlines not long after that. Immunity was beginning to wane off from the vaccine, leaving those who had been vaccinated as a priority due to their age, employment in the healthcare sector, or susceptibility to the virus, in an increasingly vulnerable position as we went into winter. The booster programme will be rolled out relatively quickly as we are seasoned now in vaccinating the population.

However, ICU capacity continues to fill quite quickly and the first reaction from our CMO is to reduce contacts. He said “The responsible thing” for public health is not to plan any “major socialisation events” like Christmas parties. This followed a “work from home where possible” message from government. Because of these comments customer confidence begins to fade. There is an enormous cohort of society that hangs on every word our CMO and NPHET have to say. Further messaging from government re-iterates reducing social contacts. Professor Philip Nolan asked for society to reduce social contacts by 30%. A very precise figure, although one presumably based on science.

Our guidelines on how we operate have been amended 37 times

Two weeks ago the Journal released a poll asking if people would reduce contact with others – 67% said “Yes”. The work from home message almost immediately sets the tone for the staff Christmas party. There is only one decision that a “responsible” business can make to ensure the business is on the right side of the fence and that is to listen to the CMO. The most important matter here is having a health service that can function in emergency scenarios. If ICU capacity is full, treating patients with appendicitis or treating injuries from car crashes becomes very difficult. I think anybody with a bit between their ears can understand that.

The issue here is the messaging. The hospitality sector have been extremely compliant over the last 21 months; we have done everything that we have been asked to do. Our guidelines on how we operate have been amended 37 times. We have continued to ensure public safety is our number one priority. Regardless of that, messaging from government has essentially closed us down without ‘officially’ closing us down.

Our “living with covid plan” rolled out a detailed set of restrictions levels, from 1-5. Levels 3/4/5 activated a targeted set of supports which kept our industry afloat during that time. But the Government has not announced what level we currently are at and so vital government supports to businesses are currently dormant. Those supports have been the lifeline for our industry. The most important of all is the employment wage subsidy, the EWSS. This support enabled us to get our workforce retrained and ensured we could maintain our rosters during the quiet times such as when we operated at level 3, which only allowed 15 covers outside.

We were not earning enough to survive but we were earning too much to access supports

Today, the 1st of December, our EWSS has been reduced from €350 to €151.50 – a 42% drop in a support that is critical to keeping our head above water. The CRSS has a strict set of criteria – businesses needs to be trading at a deficit of 75% on 2019s figures and the Government must have declared we are at least at level 3 restrictions and above for this to be activated. In my own scenario we were trading at 40% whilst being open as a takeaway. We were losing money every day because we were in no mans land. We were not earning enough to survive but we were earning too much to access supports. Many other businesses found themselves in exactly the same situation. These supports need to be amended to take account of turnover – supports are supposed to be “supportive” afterall. 

The hospitality industry employs 270k people and contributes €15 Billion to our national GDP.  It is an industry worth protecting until we come out the other side of this period of the pandemic. Many restaurants are taking a last breath, lets hope they can hold it until confidence comes back or the government makes a much needed U-turn.

This o-ed was authored by Mark McGowan, President of the Restaurants Association of Ireland and the Managing Director of Scholars Townhouse Hotel.

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