What is the outlook for the hospitality sector as costs, inflation, and wage increases continue to erode profit margins. Photograph: iStockare the latest casualties of a sector in free fall. With more than 600 restaurants shutting their doors in the past year alone, the outlook for the industry looks increasingly bleak.the Government failed to respond to widespread calls for a restoration of the VAT rate from 13.
“Banks won’t give us money because it’s such a sh*t business to loan to,” says Marc Bereen, who, with his brother Conor, opened three restaurants in the past two years: Orwell Road, Row Wines and Coppinger. “The Government gave all these loans to people in the form of this Covid fund to get us through it, and then they’re expecting it back. We had outdoor areas, so we didn’t do any of that.
“When it comes down to it, if you have a Government that needs money to go to housing, and you have a choice to give it to us or to housing, housing should come first, it’s a more important thing,” he says. “The restaurant landscape has changed. Fridays and Mondays are gone. But businesses change, and you’ve got to work with it, and you need to change your model slightly and work with what you have.
There has been a certain amount of attrition, with some operators deciding it was as good a time as any to get out of the hospitality business. Other operators closed to adapt to changing market conditions. In the case of Happy Endings in Aston Quay, Dublin, it was an evolution in July into Achara, a more upscale style of restaurant; and with Farmgate in Co Cork, it was a move from its flooded premises in Midleton to Lismore, Co Waterford.
“When I first started in hospitality, there’d be an expectation that you would be achieving anywhere from 10 to 30 per cent in terms of a margin, whereas now you’re in low single digits,” says Conrad Howard, co-owner of the Market Lane group of restaurants in Cork. “Once you’re lower than 5 per cent expected profit, then that’s within the margin of error.