Nearly half of Dublin pubs report business decline amid rising prices due to VAT increase

Almost half (48%) of Dublin pubs serving food have experienced a decrease in business following the recent VAT increase, according to new research conducted by the Licensed Vintners Association (LVA).

VAT increase affects hiring and pricing strategies

Seven out of 10 food pubs in the capital reported that the VAT increase has made them less likely to hire new staff. 73% of these pubs have raised their menu prices in response to the higher VAT.

Specifically, 24% of the pubs increased the cost of an average dish by €1, 22% raised prices by €1.50, and 17% implemented a €2 increase per menu item.

Decline in food orders

The survey indicated that 42 per cent of Dublin pubs serving food have noticed a reduction in lunch and dinner orders since the VAT increase was implemented. 14% of these establishments have seen a decrease in dessert purchases, and 11 per cent reported a drop in breakfast orders.

Operational challenges

Two out of three Dublin pubs serving food operate every day of the week. However, one in six food pubs reported that it is not economically viable to remain open every day.

The survey also revealed that almost 6 out of 10 (58%) of all Dublin pubs, whether they serve food or not, believe that the Government has not treated the hospitality sector well recently.

Only 14 per cent expressed a positive view of the Government’s approach to the sector.

Financial impact on pubs

Food typically accounts for 35% of the turnover for Dublin pubs, with this figure reaching as high as 50% in many establishments. Over 350 pubs from across Dublin participated in the survey, representing approximately half of the total number of pubs in the capital.

Currently, about 550 pubs in Dublin serve food.

Licensed Vintners Association’s response

Donall O’Keeffe, Chief Executive of the LVA, emphasised the detrimental effects of the VAT increase on the hospitality sector.

He stated that the statistics underline the importance of reducing the VAT rate on food, noting that the 50% hike imposed by the Government last year has caused significant struggles for businesses in the sector.

He criticised the blanket increase, arguing that it damaged the viability of the sector at a time when the Government is financially stable.

O’Keeffe called for the Government to address this issue in the upcoming Budget by reinstating the 9 per cent VAT rate on food. He stressed that the entire hospitality sector is advocating for this change, which he believes is crucial for the sector’s recovery.

Future outlook

The survey highlighted a high level of discontent within the hospitality sector regarding the Government’s policies. This dissatisfaction is likely to increase if the VAT rate is not addressed in the forthcoming Budget.

The LVA and its members are urging the Government to consider the adverse effects of the VAT increase and take action to support the struggling hospitality sector.