Rampant Closures Expected to Worsen: What is Happening to Cork’s Restaurant Scene?
By News Editor David Patrick Twomey
Cork, hailed as the food capital of Ireland, received international attention post-pandemic through the ‘Cork on a Fork’ outdoor dining initiative which led to the revival of the city centre. However, after standing tall through a pandemic, recession, and floods, the Cork restaurant scene is facing an unprecedented threat of collapse pushed by Government levies on the industry.
In January of 2024 alone, four well-established Cork restaurants were forced to close their doors for good: Tung Sing, operating on Patrick Street since 1964, Pigalle Kitchen, which only last year was listed in the Sunday Times 100 places to eat in Ireland, the award-winning White Rabbit, and Nash 19, operating since 1992. Paul Montgomery, owner of Clancy’s, stated that the situation was ‘catastrophic’. This strain is a countrywide issue for a €4.4 billion industry which employs over 78,000 Irish workers: since July 2023 Ireland has seen over 280 restaurants and hospitality food businesses close. The Chief Executive of the Restaurants’ Association Ireland, Adrian Cummins, expects this crushing trend for local economies and culture to continue this year ‘unless supports are put in place’.
The English Market, Cork
Why Now?
The pandemic era could be assumed to be the worst era for restaurants and cafés, but the savvy responses from the businesses, Government assistance and consumer support kept the industry going. In the recovery period since, the restaurant industry has never truly bounced back, and recent changes put many on the precipice of collapse.
There is no singular reason to point to, rather a ‘perfect storm’ of costs according to Claire Nash of Nash 19. Last year, the Kroll Business Sentiment Survey of Restaurants & Hospitality found that almost two thirds of Irish restaurants surveyed had concerns of closing down within the next 12 months due to costs of operation. 33% reported energy bills doubling in the 6 months previous, and 51% reporting increased staffing costs, 14% expected requiring professional restructuring assistance due to debt. These explosive rises are also prevalent in rent and produce costs. Joseph Capener, chef at Stranded which scenically overlooks Garrylucas Beach near Kinsale, stated some produce has massively inflated due to harvest issues in Europe: the 5 litres of olive oil he bought for €26 last year now costs €67. A Cork restaurant stated that to take the same levels of profit from an €11 meal three years ago, it would have to charge €18-€19.
For Cork, the ‘food capital of Ireland’, the effect on the local culture, trade and tourism of mass closures will be dire for the county’s heartbeat and economy.
In an effort to retain customers, restaurants have only stringently raised prices, devouring profit margins to keep its customers. But price inflation is also constricting Irish consumer habits: during this cost-of-living crisis 86% of people in Ireland believe that dining out had become too expensive to do on a regular basis. Montgomery of Clancy’s stated that ‘There was a post COVID boost but at the moment, the consumer just can’t afford to go out.’ Despite the attempt of not pushing skyrocketing costs onto the consumers, the demise of dining culture leaves many Cork restaurants with dwindling revenue. For Cork, the ‘food capital of Ireland’, the effect on the local culture, trade and tourism of mass closures will be dire for the county’s heartbeat and economy.
The Final Nail?
The government’s 2023 budget was designed to reflect the progression of the Irish economy from COVID recovery to growth. However, Cummins states the restaurant industry ‘has still not recovered from the effects of the COVID-19 pandemic’, and the Governments hiking of business costs amid a cost-of-living crisis has already been the final nail in the coffin for some of Cork’s most iconic restaurants and cafés. To support the industry in the pandemic era, the Government reduced the VAT rate to 9% and Revenue’s tax debt ‘warehousing’ scheme (tax debt was deferred until businesses were able to deal with the debt). The Cork Business Association (CBA) had urged the Government to intervene and support small businesses facing unprecedented challenges, even briefing Minister for Finance Michael McGrath and Minister for Trade and Employment Simon Coveney throughout 2023 about Cork businesses’ massive issues.
Despite this, the Government announced the return to 13.5% VAT rate for restaurants last September (the second highest rate in the entire EU), a rise of the minimum wage to €12.70 (wages are on average over half of total costs), and PRSI changes. In an industry with its head barely above the rising tide of costs, these huge cost increases may be insurmountable for many restaurants this year. Claire Nash of Nash 19, stated that: ‘The ball of costs was out of reach, I couldn’t hold on to it, or the prospect of the coming year. I’ve nothing left in the tank.’
With 20 employees losing their jobs, the company has begun liquidation with over €250,000 of liabilities. This economic decision by the Government seems to be a naïve effort to increase revenue; as chef Capener bluntly synopsised, ‘You get no tax from closed restaurants.’
In a nation where Small-Medium Enterprises (SMEs) are the backbone of local economies, the loss of these restaurants and pubs will not only be a blow to the massive pool of employees, but the culture and tourism of Cork and towns across Ireland. Many argue that the lack of exemptions for small businesses and ‘being tarred with the same brush as large companies and corporations’ is an impossible task for many independents and small coffee shops. Joseph Capener of Stranded stated that ‘it seems like the government treats everyone like they’re in Dublin’. He lamented that many rural businesses will be hit hardest by these costs due to low footfall, and these cost hikes being implemented in the industry’s quiet season piles pressure onto seasonal locations. Although Stranded restaurant is still busy, even surrounding restaurants in ‘the gourmet capital of Ireland’ Kinsale have felt the immense pressure, with CRU Wine Bar and Bistro having closed permanently in January. This seasonal pressure of Government hikes and costs is already evident in Kerry’s Killorglin, one of the country’s most popular tourist spots in the summer seasons. Since the most recent summer season ended four restaurants and cafés have closed in the town, including Zest Café, which had successfully operated for 18 years. Before closing, Zest had faced a monthly electricity bill of €34,000.
These rising costs may continue to increase in 2024. The warehousing scheme begins many payments this April; ‘no business will be able to deal with that this year’ (Montgomery). Although restaurants face impending closure, many are expected to have to begin payments to Revenue. When asked about what the Government could do to assist, Capener replied that ‘They have to put it down. I don’t see how anyone can keep going in this situation.’ This sentiment is reflected by the RAI, who are urgently pushing a decrease of VAT to previous levels as a vital first step before further small business exemptions by the Government.
With many independent and family-owned restaurants vital to local communities and Irish culture with their head barely above the water, the impending ‘tsunami’ threatens to drown many in the €4.4 billion industry.
The outlook for the restaurant industry is an extremely grim 2024. According to Cummins of the RAI, ‘We feel we are going to see hundreds if not thousands of businesses close across the state in the next twelve months, if the Government don’t intervene and provide a rescue package for our industry as soon as they can’, with chef Gary O’Hanlon warning of ‘a tsunami’ of closures to come. The Government may argue that it has already put in substantial supports during the COVID era, but relinquishing these as the industry still finds its feet and grapples with costs may be a death sentence for local Irish businesses. Many towns and villages are expected to have no coffee shops or restaurants in the near future. According to Ross Lewis, founder of Chapter One in Dublin, ‘to survive the next six months, a business will need to be sitting on cash and not have too much debt.’ For independent cafés and restaurants, that is unlikely. Government intervention may be the only hope for many, yet their decision to hike costs for restaurants and cafés may deem this unlikely until it is far too late. With many independent and family-owned restaurants vital to local communities and Irish culture with their head barely above the water, the impending ‘tsunami’ threatens to drown many in the €4.4 billion industry.
