WEST CORK jobs, tourism and local economies are at risk unless the Government fulfils its promise to reinstate the 9% VAT rate, the Restaurants Association of Ireland (RAI) has warned.
In its pre-budget submission the RAI said the food-led hospitality sector faces further closures, job losses alongside long-term damage to Ireland’s tourism industry, particularly in counties like Cork where restaurants, cafes and gastropubs are vital to city and rural life and economic survival.
The closure of restaurants and pubs in Cork is contributing to the hollowing out of towns and villages, increasing dereliction, rural isolation and weakening the social fabric of communities, the RAI stated.
A spokesperson for the association added: ‘These establishments are not just places to eat, they are gathering points, employers, cultural hubs and essential supports for local suppliers and tourism operators.’
The RAI last week launched its pre-budget submission, outlining urgent policy measures needed to safeguard thousands of restaurants, cafés and gastropubs across Ireland.
The submission highlights the specific risks faced by counties like Cork, where food-led hospitality is a key employer and community anchor.
At 13.5%, Ireland has one of the highest VAT rates on food services in the EU.
More than half of EU countries apply reduced VAT rates to hospitality, recognising the sector’s unique social and economic contribution.
The estimated €545 million cost of restoring the 9% VAT rate should be viewed as an investment, not a loss, argues the RAI.
Independent analysis by leading economist Jim Power shows that the closure of 500 restaurants could result in a €680 million hit to the wider economy when job losses, tax revenue decline, and increased welfare dependency are considered.
A 2024 report projected that a 10% drop in tourism numbers, linked to reduced food service availability, could result in a worst-case scenario of €1.045 billion in lost tourism spending. Figures from the Central Statistics Office show a 17% fall in tourism numbers in the first five months of 2025.
An RAI spokesperson noted: ‘Despite spiralling costs, menu prices in the sector have risen only modestly, by just 3.3% in the past year and 29.8% over five years, well below actual cost inflation.
‘Businesses are absorbing massive increases because they know customers can’t afford more. One example: while coffee commodity prices have risen by 156% since October 2023, consumers haven’t seen anything close to that reflected on menus.’
The RAI is calling for: reinstatement of the 9% VAT rate; future minimum wage increases aligned with inflation; halving the employer PRSI rate for one year; a food tourism strategy; and urgent insurance reforms.
The average food-led business in counties like Cork employs 22 people and contributes to a broader economy that sustains more than 220,000 jobs. So far this year 200 restaurants have closed across Ireland.
Adrian Cummins, CEO of the Restaurants Association of Ireland, said: ‘Budget 2026 must be a turning point,’ said Adrian Cummins, CEO of the RAI.
‘Temporary measures are not enough. We need a pro-SME, pro-hospitality budget that supports survival now and enables long-term growth.
‘If we lose our food-led businesses, we lose not just jobs and investment, but the very soul of rural life. The knock-on effects of closures in Cork include lost tourism revenue, rural isolation and irreversible damage to the city, towns and village centres.’
