Kroll, in association with the Restaurants Association of Ireland, recently concluded a survey on the 2023 business sentiment for Ireland’s hospitality sector.
Kroll surveyed 133 restaurants and hospitality businesses across Ireland. Around two-thirds of restaurants and businesses surveyed expressed concerns that they might be forced to close in the coming 12 months as a result of inflationary and staffing pressures.
These findings follow news of the extension to the reduced VAT rate for the hospitality sector but at a time when businesses are no longer able to warehouse additional revenue liabilities. Over a quarter (27%) of businesses surveyed, which availed of the tax warehousing scheme, indicated they would not have been able to pay the associated debt in the next 12 months if the Revenue’s Tax Warehouse Scheme wouldn’t have been extended, while a further 12% were unsure if they would be able to repay the debt.
The survey throws fresh light on the ongoing energy crisis and staffing challenges faced by the hospitality industry in Ireland post-COVID-19. A third (33%) of those surveyed reported an increase in energy bills of more than 100% in the past six months. A further 24% reported increases of 75%, and 31% of businesses saw increases of 50%. As a consequence of rising energy bills, businesses are contemplating various actions. These include:
- Forty-five percent of respondents are open to reducing operating hours
- Thirty-six percent will reduce their head count
- Thirty percent will reduce menu options
- Eighty percent will need to increase prices
More than half of businesses (51%) surveyed reported their staffing costs are increasing due to a challenging labor market, with 84% of all surveyed expecting to increase staff wages in order to retain employees. This, in part, is due to inflationary pressures faced by employees of the hospitality sector. However, almost half (49%) the businesses surveyed do not plan on increasing staff levels in 2023.
