Shortage of Chefs threatens the success of Tourism Industry Recovery – Restaurants Association of Ireland

The Restaurants Association of Ireland (RAI) today launched its Pre-Budget Submission 2017, “Putting Tourism, Hospitality and Food at the Centre of Our Recovery.” The plan outlines the RAI’s key issues that need to be addressed for the Restaurant and Hospitality sector ahead of Budget 2017.

  1. Shortage of Chefs has now reached crisis levels, and threatens the success of the Tourism and Hospitality Industry. 5000 Chefs required each year from 2017 to 2020 to meet the needs of the industry.
  2. 9% VAT rate must be retained until 2021to ensure continued job growth in tourism and hospitality.
  3. A freeze in the minimum wage until 2021 is recommended in order to preserve the competitiveness of the Restaurant sector.
  4. Cost of doing business; Budget 2017 should reduce the cost of government imposed red-tape on business, in part by streamlining regulatory enforcement activities out of a merger and rationalization of existing structures and agencies.
  5. An investigation into the factors that are driving insurance costs higher needs to be undertaken and measures introduced to alleviate those pressures and make insurance affordable for individuals and for business.
  6. The RAI are calling for €1 Reduction in Excise Duty on a bottle of wine and a 15% reduction in excise duty on beer and spirits.
  7. The RAI are calling for investment invest in tourism and Ireland’s Lakeland
  8. The RAI are calling on the Government to lift the ban on the sale of alcohol on Good Friday.
Shortage of Chefs threatens the success of Tourism Industry Recovery - Restaurants Association of Ireland

Picture Conor McCabe Photography

The Restaurants Association of Ireland’s pre budget submission suggests putting tourism, hospitality and food at the centre of our recovery. The following are a number of suggestions:

 

  1. Shortage of Chefs threatens the success of Tourism Industry Recovery
  • The shortage of chefs throughout the country has reached crisis point, where it will even threaten the success of Tourism Industry Recovery.
  • There is not enough chef training centres. Currently 1800 chefs qualify each year from certified culinary training programmes.  There is a deficit of 5000 chef trainees annually.
  • The Restaurants Association of Ireland is calling for investment in training and the re-establishment of CERT, the former State Tourism Training Agency.

Speaking on the Chef Shortage crisis, RAI Chief Executive Adrian Cummins commented, “CERT, the Former National Tourism Training Agency was established in 1963.  It ceased to operate and was closed down in May 2003. The restaurant sector are calling for the immediate re-establishment of CERT, which the tourism and hospitality sector held in high esteem while it was operational.  It was fit for purpose and serviced the industry with skilled labour during its operational years.”

 

  1. Retention of the 9% VAT until 2021
  • Since the reduction of the VAT rate for the tourism industry in July 2011, our industry has created 45,260 jobs- and the number would have been higher if we had access to chefs to fill the needs of the industry. The decision to retain the rate of VAT to 9% for tourism products would provide a much needed boost for the sector by allowing restaurants and cafés to create jobs, especially in rural Ireland.
  • The RAI are calling for the retention of the 9% VAT rate in Budget 2017.

Mr Cummins warned that it is critical that the reduced VAT rate is kept in place until 2021, in order for the Irish economy to remain competitive. “When the economy went into decline, restaurants endured falling numbers of diners, rising prices and great financial uncertainty, with many having to close their businesses. Money generated by this reduced VAT rate has kick-started a reversal of fortunes.

Since the VAT cut, employment in the restaurant and tourism sector has increased by approximately 31,000 direct jobs with an additional 14,260 indirect jobs. This gives a total employment increase of 45,260 new jobs. This growth will continue if VAT at 9% remains in effect.”

He continued, “The VAT rate is crucial to the survival of restaurants the length and breadth of the country particularly in rural and border counties. Restaurateurs are entrepreneurs; the government needs to be reminded of that. When a restaurant opens or expands, they will create several jobs and generate business for the area and their suppliers. Restaurants all over Ireland are relying on the VAT to remain at 9% for the survival of their business.” 

 

  1. Freeze National Minimum Wage until 2021
  • Any further increases in the minimum wage will have a disproportionate negative impact on restaurants outside of the Greater Dublin Area and will lead to cut in hours and job losses in the Restaurant Sector nationwide.
  • Ireland will have the second highest minimum wage in Europe after Luxembourg and our competitiveness will be destroyed.
  • The RAI recommends a freeze in minimum wage until 2021 in order to preserve the competitiveness of the restaurant sector. 

 

  1. Cost of Doing Business

For a service export like tourism, international competitiveness is absolutely crucial to success. If the tourism product is not competitive, foreign visitors will be diverted to other cheaper markets, and domestic tourists will have a stronger incentive to go overseas.

Ireland’s international competitiveness deteriorated significantly between 2000 and 2008 as all of the costs of doing business were allowed escalate in a very damaging way. From 2009 onwards, there was a significant improvement, helped by the weakness of the euro against sterling and the dollar, but also an improvement in the costs of doing business as the economy contracted.

Over the past year there has been some deterioration again. The Real Harmonised Competitiveness Indicator (Real HCI) increased by 3.8% between April 2015 and June 2016. The Nominal Harmonised Competitiveness Indicator (Nominal HCI) increased by 4.7% over the same period. Exchange rate movements have made a significant contribution to this deterioration in competitiveness. For example, since April 2015 the euro has appreciated by 5.7% against the dollar and by 20.4% against sterling. However, there is also clear evidence that many of the costs of doing business are increasing in line with the economic recovery.

The Costs of Doing Business in Ireland 2016 (Costs of Doing Business in Ireland 2016’, National Competitiveness Council ) report does give some cause for concern in relation to the recent trends in business costs. Its key findings include:

  • Ireland remains an expensive location in which to do business with a price profile, which can be described as ‘high cost, rising slowly’;
  • In the year to Q3 2015, Irish labour costs grew by 2.1%, compared with growth of 1.9% in the EU-28 and 1.2% in the euro area;
  • In 2016, Ireland had the 2nd highest monthly minimum wage and the 5th highest in PPP terms of 18 countries considered;
  • Ireland is the 6th most expensive location in the euro area for prime retail rents. Rents increased by 22% in 2015;
  • Commercial rate increase as a proportion of total Local Authority revenue from 24% in 2002 to 38% in 2015/ Over the same period, the proportion received from Central Government fell from 46% to 29%;
  • Ireland was the 5th most expensive country in Europe for diesel in January 2016;
  • Industrial electricity prices for SME energy users are 6% higher in Ireland than the euro area, making Ireland the 6th most expensive location. Between 2010 and 2015, Irish prices for SMEs increased by over 20%;
  • Water and waste-water costs for industrial users compare favourably to those in competitor markets; and
  • Irish interest rate on business loans have been consistently higher than equivalent euro area rate. In December 2015, the interest rate on loans of up to €0.25 million was 80% higher than the euro area average, and 60% higher for loans of up to €1 million.

Utility costs as well as Local Authority rates are charges are a significant cost burden on SMEs. Many of these costs have been increasing at a rate above inflation since the recession commenced. The cost of operating a tourism business in Ireland continues to be higher than the EU average across a range of metrics, putting the sector at a disadvantage internationally.

Labour costs account for over 35% of turnover in restaurants. Electricity, Waste Water, Outdoor Seating Charges, Music Rights Licences, Business Improvement District Levies, and Fats, Oils and Greases licences all add considerably to the cost of running a restaurant business.

 

  1. Commercial Insurance Costs
  • Data from the CSO show that private motor insurance costs have increased by 38.3% in the year to July 2016 and have increased by 69.8% between July 2013 and July 2016. In line with the increase in private motor insurance, commercial insurance costs are also rising strongly. Members of the RAI are reporting that commercial insurance costs have increased by up to 50% over the past 12 months. Restaurants that operate a ‘take away / delivery service’ have seen their motor insurance premiums increase by 100%.
  • Figures from the Central Bank of Ireland in2013 found that insurance companies were operating at an overall combined operating ratio of 114%, in other words they were operating at a loss of 14%.
  • The National Competitiveness Council highlighted in their January 2016 Bulletin on Insurance Costs, that insurance costs are one of the issues of “greatest concern to businesses” in the country. The Restaurants Association of Ireland supports the NCC’s findings and recommendations of their January Bulletin.
  • The RAI are calling for an investigation into the rising costs of commercial insurance.

 

  1. Reduce the Current Rate of Excise Duty
  • The savage increase in Excise Duty in Budget 2014 has crippled many restaurants. The RAI is calling for the current rate of Excise Duty to be reduced by €1 per bottle of wine.
  • Tourists and Irish consumers compare Irish prices with those in other tourist destinations, e.g. Spain, Italy, Portugal, Greece and Germany where there is no duty on wine. Wine served with a meal in a restaurant should attract the rate of 9% VAT applicable to food in restaurants.
  • A reduction would have a positive impact on excessive unregulated home drinking as well as encouraging sensible drinking in a regulated environment.
  • The RAI are calling for a €1 reduction in excise duty on a bottle of wine.

 

  1. Tourism Policy. Investing in Rural Ireland – Ireland’s Tourism Lakelands Brand.
  • The development of the Wild Atlantic Way, Ireland’s Ancient East and the Dublin brand has been most welcome to operators in these areas. These brands are and will continue to reap benefit. There are however, many areas that do not fall into these brands.
  • The strategy for the next three years should be to ensure the development of the Lakelands brand encompassing the River Shannon flowing through Cavan, Leitrim, Longford, Roscommon, Westmeath, East Galway, Offaly, Tipperary, Clare, Limerick and all of its tributaries plus the canal network across the Midlands.
  • The RAI are calling for capital investment in Tourism and development of the Lakelands brand.

 

  1. Lift Good Friday Alcohol Sale Ban
  • The ban of alcohol sales on Good Friday must be lifted. The outdated, religious law is unacceptable in a multicultural society and at such a busy time for the tourism, restaurant and hospitality industry.
  • The law offers exemptions allowing the sale of alcohol to those travelling by sea, rail and air. It also exempts greyhound stadiums, licensed theatres, national cultural institution or guests staying in a licenses premises, such as a hotel, as long as it is with a meal. Restaurants should not be discriminated against.
  • A change in legislation to allow for the sale of alcohol on Good Friday this year would be worth €25 million to the hospitality industry and €6 million to the government in taxes.
  • The RAI are calling for a lifting of the ban on sales of alcohol in restaurants on Good Friday.

The full Restaurants Association of Ireland Pre-budget Submission 2017 can be found online here: www.rai.ie/pre-budget-submission-2017.

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