Restaurants warn there will be no boost in staycations unless they are supported

Estimates from the sector suggest that between 80% and 90% of restaurants could not operate with strict social distancing in place.
Restaurants warn there will be no boost in staycations unless they are supported
Estimates from the sector suggest that between 80% and 90% of restaurants could not operate with strict social distancing in place.
Estimates from the sector suggest that between 80% and 90% of restaurants could not operate with strict social distancing in place.

Restaurants in Ireland say it will cost the State almost €3 billion a year if 100,000 of their workers remain unemployed.

The Restaurants Association of Ireland (RAI) today published a report stating that 50% of its members face closure unless Government intervenes with an emergency grant aid package.

The association also warned that there could not be an increase in staycations and holidays in Ireland this year if their members cannot reopen and operate effectively.

The report, which was prepared by economist Jim Power states that the cost of such support would be far outweighed by the cost of doing nothing, in terms of job losses, closed businesses and the damage to Ireland's tourism offering.

It states that if 100,000 workers were to remain unemployed for a full year, it would cost the Exchequer around €2 billion in increased social protection expenditure, a further €500 million in lost payroll taxes, approximately €240 million in lost VAT receipts and would cost local authorities around €52 million in lost commercial rates.

"The Restaurant Sector has been impacted in a devastating fashion by Covid-19," Mr Power said.

"Once it reopens, the trading environment will be extremely challenging as a result of social-distancing requirements, various health protocols, the absence of overseas visitors, and consumer nervousness.

"It seems clear that many restaurants will struggle to survive in the challenging environment ahead, but it is equally clear that in order to rebuild the economically vital tourism sector over the next couple of years, it is essential that we have an abundance of high-quality restaurants in the country.

"It is essential that the restaurant sector gets the maximum possible support from Government, to get the sector through the difficult times ahead," Mr Power said.

Similar to other sectors, the report states that strict social distancing measures will have an ongoing impact on the sector even after restaurants reopen.

"Estimates from the sector suggest that between 80% and 90% of restaurants could not operate on this basis without significant support for the 18 to 24 months or so during which these protocols are likely to have to apply."

"Given the economics of the restaurant sector, these necessary Covid-19 measures will render the business model extremely challenging."

Restaurants Association of Ireland CEO, Adrian Cummins said the report is 'damning' evidence that their sector needs support measures put in place immediately by the government.

"Our members are stating that a 50% staff layoff is inevitable unless they receive supports, and in the long run, we estimate that almost 50% of restaurant businesses will struggle and shut their doors if the government do not intervene."

"The government have been promoting staycations and weekends away for the months ahead. Let me be very clear on this.

"There will be no staycations if our restaurants and hospitality businesses close. Indigenous businesses will be lost forever."

"The plan put forward in this report is very comprehensive in both how it will be executed and how much it would cost.

But more importantly, it highlights how much it will cost us in the long run to do nothing. This report lines up almost perfectly with the asks from our own RAI 9-point crisis recovery plan.

The eight recovery measures highlighted in the report include an extension of the wage subsidy scheme beyond August and grants to cover rates, water, wastewater and street furniture for 24 months.

Other measures include a zero % VAT rate for the restaurant sector until the end of 2021 and a reduction in alcohol excise by 7.5% followed by a further 7.5% reduction a year later.

The report also calls for an interest-free working capital fund of €500 million and an innovation grant to help restaurants develop and test new methods of doing business.

"The cost of such support would be far outweighed by the cost of doing nothing, in terms of job losses all over Ireland, closed businesses on the streets of towns, villages and cities all over the country, and the damage to Ireland's tourism offering," Mr Power added.

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