The Worst, is yet to Come, one Dark, Bleak, Winter, is Looming, for Many people, in Ireland?

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COST CRISIS 

Irish hospitality sector faces ‘crisis’ as food, drink and energy costs soar – and profit projections drop significantly

  • 13:09, 12 Sep 2022
  • Updated: 13:09, 12 Sep 2022

IRELAND’S hospitality sector is facing a “crisis” as food, drink and energy costs soar.

And restaurant profit projections are down from 7.3 per cent to 3.5 per cent, according to new numbers.

The Irish hospitality industry is facing a 'crisis' with rising costs
The Irish hospitality industry is facing a ‘crisis’ with rising costsCredit: Getty Images – Getty
DIGI confirmed that electricity prices were 60 per cent higher than the EU average
DIGI confirmed that electricity prices were 60 per cent higher than the EU averageCredit: Alamy

An “alarming” report found that food products increased by 8.1 per cent, meat products went up by 11.3 per cent, poultry products increased by 13.4 per cent and dairy products increased by 50 per cent.

But it’s the spiralling energy prices that pose the biggest concern for restaurants and pubs.

The report by Drinks Industry Group of Ireland (DIGI) confirmed that electricity prices were an eye watering 60 per cent higher than the EU average.

While business gas users experienced a price increase of almost one quarter.

Commenting on the findings, DIGI Chair, Kathryn D’Arcy said: “The findings of the report are very distressing and alarming for the hospitality sector.

“The findings of this research demonstrate the need for policies that reduce the costs facing thousands of businesses throughout the country.”

She called on the government to reduce excise taxes by 7.5 per cent.

D’Arcy added: “Small businesses would be able to utilise the cost reduction to offset the rising costs elsewhere in their businesses namely; food, energy and labour costs.”

While the hospitality sector remains vulnerable as costs soar, the industry is also facing a crisis with staff shortages.

In the first quarter of the year, hospitality hourly earnings were €15.45, up 16 per cent at the same period in 2019.

The cost situation for hospitality will further deteriorate and continue declining into 2023.

Expected increases in interest rates, water charges and employment taxes will cause further damages.

The report’s author, Professor Foley warned that survival will be the main aim over the next year for the hospitality industry.  

Professor Foley said: “The economic turbulence in the hospitality sector is clear.

“Severe inflationary pressures on core costs mean we are looking at a crisis situation across much of the sector.

“Survival over the next six to 12 months will be the goal for many in the sector, with ever tightening margins a reality for most.

  • “The sector is going through a phase of real upheaval.”

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