The LVA (Licensed Vintners Association, LVA) chairman said the hospitality sector is at a “critical” time as rising energy bills are having a “scary” impact on business.
Lison Kealy owns Kealy’s of Cloghran near Dublin Airport, a third generation family business founded in 1964.
Ms. Kealy said gastro-pub energy costs for the second quarter of this year increased by €21,000 compared to the previous quarter, which she says is an increase of 38 percent.
“It is becoming more and more obvious that the energy costs in this winter period will become a complete financial crisis for the country and we need measures related to the energy costs,” she said Irish Independent.
“We expect the government to try to give us some price certainty in this market and to get support in this sector so we can all keep the lights on this winter. We’re just very concerned about how things are going.
“It’s unsustainable and it’s putting such pressure on margins that people can’t do business if they’re making losses.”
Ms Kealy said it was “really important” that the lower 9 per cent VAT rate for hospitality introduced in the 2021 budget is extended into next year.
She said margins were being “squeezed” from all sides of the business and insurance was also up 35 percent this year.
“With inflation rising and costs rising, we really don’t want to have a VAT increase on the grocery side of the business because we’re just passing the grocery price increases on to our customers and we’re really trying to keep things competitive on our side,” she said.
“We’re constantly being hit with really big price increases, the energy crisis is also hitting the grocery store because you keep importing cooking oil and the increase is 120 percent in our store.
“Before the pandemic our cooking oil cost us €18 per barrel and now we are at €44 per barrel. Margins are being squeezed into companies from all sides. We are under enormous pressure from suppliers to increase prices.
“We then, of course, went through pay increases for the staff and then we had big energy increases.
“Our insurance costs in our business have increased by 35 per cent this year, so our insurance is now up to €70,000. So it’s just one cost increase after another all the time and we don’t pass that on to our customers, it just erodes our margins.
“I just think the government would really help us if they extended the 9 per cent VAT rate because so far all we know is that it’s until February and if we could extend it and there was certainty by 2023 that would be help.
“We’re also targeting a reduction in the alcohol tax rate, so we’re targeting a 7.5 percent cut in the 2023 budget and then another 7.5 percent cut in the budget. Irish Excise is simply exceptionally high by international standards.
“We would like to be a little bit more competitive with Europe to lower the alcohol tax.”
Ms Kealy said the hospitality industry has had “terrible problems” hiring staff in the wake of the pandemic.
“We were very fortunate that we were very busy, so we needed more people all the time. So it’s been difficult to get people into the industry because obviously when we’ve been closed for so long, people made a choice to leave the industry,” she said.
“I don’t think people wanted to return to the non-social hours but it’s turning now, we’ve put a lot of work into it and we have good recruits over the summer time and people who are serious about coming back into the market.”
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