A third of Irish publicans believe there is a moderate chance their businesses will close for good, while half of venues have reduced their staff numbers permanently, a new study has found.
The research was conducted by trade group the Drinks Industry Group of Ireland (DIGI), which surveyed 1,085 business owners in the country’s drinks and hospitality sector from 1 to 5 October 2020.
To date, half of Irish pubs have cut their staff numbers permanently as a result of the coronavirus pandemic, while 52% of those surveyed are worried they will have to let more staff go in the future. Of those who expect to cut their employee numbers, 80% report this is due to reduced capacities and demand, while 24% fear that they will have to let more staff go if their business cannot reopen soon.
The DIGI said that Irish pubs have witnessed the longest lockdown in the European Union, pointing to the example of drinks-led venues which were closed from 16 March to 21 September before being told to shut again on 7 October. The trade group added there has been no strategy or criteria for lockdowns.
One-third of those surveyed state that there is a moderate chance that their business will close permanently.
Of venues that have been allowed to reopen under government guidelines, one in four reported a more than 50% drop in trade compared to 2019. An additional 40% said that reduced demand and Covid-19 restrictions have caused a decline of more than 60% in profits on the same period last year.
In addition, 60% of publicans said they would struggle to find another job outside of the hospitality industry. Meanwhile, one in four businesses have accumulated more than €20,000 (US$23,615) in debt, while 15% of pub owners have more than €50,000 (US$59,000) in debt due to the pandemic.
Of those surveyed, 90% said they believe that the government does not understand the full scale of the challenges facing the on-trade.
More than one-fifth (22%) said they have experienced ongoing costs of between €1,000 and €2,000 (US$1,180-US$2,361) per week for items such as wages, salary top ups, rent and maintenance, among others, during the lockdown.
Furthermore, 60% of pub owners said the government subsidies cover only 20% or less of their costs per month.
The DIGI also cited a recent report by DCU Economist Anthony Foley, called the ‘Impact of Initial Covid-19 Support Package, July Jobs Stimulus and August Package on the Hospitality Sector’. It looks at the impact of the government’s Covid-19 enterprise support package on the hospitality industry.
The report noted that the country’s Pandemic Unemployment Payment (PUP) scheme supports the income of the pub owner but not the continuing fixed costs of the venue.
Furthermore, the value added tax (VAT) reduction announced in July 2020 produces an additional income of only €16.26 (US$19.20) weekly for a venue if they sell €1,000 worth of alcohol per week.
The report also stated that different rates of support per sector should be considered, depending on the impact of Covid-19.
‘Targeted support measures’
Liam Reid, chair of the DIGI, said: “The impact of the Covid-19 lockdown on the drinks and hospitality sector in Ireland continues to be severe.
“As the entire country is placed on level three, the drinks and hospitality industry is effectively operating under level four restrictions and Dublin ‘wet’ pubs under level five.
“With further restrictions an inevitability, coupled with a lack of a coherent strategy or any certainty, the sector requires a direct response and targeted support measures.
“Our survey of publicans shows plainly that there have been very serious financial implications for those publicans who have fought to protect their business throughout the pandemic. This has led to massive personal strain: more than two thirds of publicans say that their mental health as suffered as a result of the Covid-19 restrictions.
“Now is the time for the government to act. They simply cannot delay any longer. Ireland’s drinks and hospitality industry has suffered through the longest lockdown in the EU. In order to recover, we need long-term, practical and targeted supports that will truly make a difference.”
Ahead of the Irish Budget 2021 tomorrow (13 October), DIGI is reiterating its call for a 15% cut on excise alcohol tax, which could help generate a “more pro-business environment for the industry”.
Via The Spirits Business