Sir, – Further to “Almost 1,600 restaurant job losses put down to Government measures” (Business, March 21st), I would like to sketch out some details, having run a day-time café for 20 years, of how difficult conditions are today.
Having come through Covid, energy prices, rampant structural inflation, a huge VAT increase, wage increases and finally the Covid tax warehousing bills coming due in May, I am left wondering who’s got their hand on the wheel of the hospitality sector.
This sector for VAT collection consists of hotels, B&Bs, restaurants, day-time cafes, takeaways and hairdressers. In my view, the one-size-fits-all approach in assessing VAT at the one rate of 13.5 per cent is a lazy way to approach collection of VAT.
My reasoning is based on the presence of two pricing structures in the sector. Those that charge more when they get busy, ie accommodation services, and the rest, who have fixed pricing in place. Imagine if in your local cafe the price went up at the weekend.
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The average net profit in a cafe is 5 per cent to 10 per cent, so if you have sales of €500,000 in a year, at 5 per cent, you are left with €25,000, which, at the numbers of hours worked, is below minimum wage. A good saying in business is make sure you are not working only for your customers, suppliers and employees.
The various associations in the sector do not highlight the need to implement a two-tier rating of 13.5 per cent for accommodation services and 9 per cent for food due to the vested interests of the big boys, who support the associations. Finally, the tsunami of Covid tax warehousing is coming, followed by more employee costs. All of the above cost increases lead to closures and inflation. Where is the macro view for the small guys in the sector? – Yours, etc,
DEREK BENNETT,
Harry’s Cafe Bar,
Dún Laoghaire,
Co Dublin.