Costs hitting hospitality business viability – research
Pubs and the wider hospitality sector are struggling to keep up with rising costs which are threatening to make many businesses unviable, new research has indicated.
New research highlights how soaring costs are jeopardizing the financial viability of pubs and the broader hospitality industry in Ireland. According to a report by Dublin City University economist Anthony Foley, expenses such as electricity, labor, insurance, and beer prices have surged by double-digit rates, leaving many businesses struggling to stay afloat.
The hospitality sector is heavily reliant on labor and comprises a large number of small enterprises operating with thin profit margins. This makes the industry particularly vulnerable to cost pressures and unable to buffer against substantial financial shocks, particularly in the wake of rising energy costs following the Ukraine conflict and the ongoing Middle East unrest.
Energy prices, for instance, jumped by nearly half (48.8%) over the three years from July 2023 to July 2026, while electricity costs increased by an even more staggering 61.7%.
Insurance rates also rose by more than a quarter (26.6%) in the same period, despite industry reforms that were anticipated to lower these costs. The research, commissioned by the Drinks Industry Group of Ireland (DIGI), comes on the heels of a report showing that 2,205 pubs closed permanently in the past two decades, representing a quarter of the total.
DIGI secretary Donall O Keeffe emphasized that the findings underscore the urgent need for the government to significantly reduce alcohol excise by 10% in the upcoming budget. He noted that small, family-owned pubs in rural areas are especially hard hit by the rising costs on one side, while declining consumption on the other side.
Despite a recent reduction in VAT on hospitality to 9%, the benefits have largely bypassed pubs that do not serve food, which are grappling with mounting expenses and decreasing patronage. Consequently, an average of 110 pubs close annually, leaving a noticeable void in the communities they serve. Despite this wave of closures, the government maintains the second-highest alcohol excise tax among European nations.
Written by urgent.news from RTE News's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
