Kinara Restaurant: Food Costs, Not Gold Bars – Irish Times
Restaurants Face Existential Threat as Rising Costs Squeeze Margins
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Dublin, ireland – The Irish restaurant sector is grappling with unprecedented cost pressures, threatening the viability of many businesses and forcing difficult decisions, according to industry leaders. From soaring energy bills to increased labor costs, restaurateurs are finding it increasingly challenging to maintain “steady business models.”
Labour Costs Surge, Impacting Staffing and Pricing
the impact of rising costs is acutely felt in the labour market. the Restaurants Association of Ireland president, paul Collender, recently highlighted the strain on his own businesses. “We had to take the unfortunate step of closing on Mondays and Tuesdays for all three restaurants post-Covid, it was just getting too difficult,” Collender stated. “The concern around costs, even at that point, was a real issue. It is a shame we had to do that because, obviously, we had to reduce our staffing as well.”
collender explained that traditionally, labour costs in his group of restaurants hovered around 33% of net turnover. However, recent increases to the minimum wage have pushed this figure to “an extremely fine line,” with some locations struggling to maintain it below 43%, and one even reaching 50%.
While acknowledging that no one opposes efforts to increase the minimum wage to a living wage,Collender expressed concern about the practicalities for businesses. “How do you run a business? How do you make a margin? How do you look after locals? Because everyone has a price point where thay go, ‘That’s enough.'”
Energy Bills skyrocket, Adding to Financial Strain
The pressure extends beyond labour, with notable increases across all operational costs. Kinara, Collender’s restaurant group, has experienced a dramatic rise in utility bills. An electricity bill that typically stood at €3,000 per month for one of their spaces has surged to €12,000 in recent years due to external pressures. Similarly, gas costs have escalated from approximately €1,800 for the same period to €5,500.
“Thes are huge, huge costs – and we don’t sell gold bars, we sell food,” collender emphasized, underscoring the disproportionate impact of these increases on a sector that operates on tighter margins.
Price Increases and VAT Concerns Loom
In response to these mounting costs, Kinara has implemented “three small increases” to its prices over the past year. “As we would have been in serious trouble if we didn’t,” Collender explained. Despite these adjustments, the future remains uncertain.”Even with those, we are looking at it and saying, if the VAT rate doesn’t go back to 9 per cent then we have an issue,” he warned.The potential delay in the government reducing the VAT rate for the hospitality sector until mid-2026, as reported, further exacerbates these concerns for businesses already operating on a knife’s edge. The sector is calling for urgent support and a review of policies that impact their ability to remain lasting and continue serving local communities.