Restaurant owners call for more government support - Crowe Ireland

Restaurant owners call for more government support

Lobby groups call for immediate supports to help save over 100,000 workers.

27/04/2020
Restaurant owners call for more government support - Crowe Ireland

An independent group of restaurant owners and advisors have put forward a recovery plan to government to prevent widespread job losses and closures in the sector. The Save Our Restaurants Coalition (SORC) is proposing a two-year, step-down plan to allow viable restaurants to survive over the next two years, or until a vaccine is widely distributed in Ireland and restrictions lifted. Crowe is delighted to be a founding supporter of this coalition.

The coalition maintains that without adjusting the cost base during this period, most restaurant businesses will not survive. The aim of their plan is to get the operating costs of restaurants into line with post lockdown sales, while making sure the support goes to those who need it most.

Step-down assistance means that help goes to those businesses that need it most, and is stepped down as revenues recover. Crowe supports this format as it shows business co-operation for the industry and allows government to invest pragmatically in the sector.

SORC’s plan consists of a range of proposals, including:

  • Government extending income supports for employees and subsidising occupancy costs for two years post restaurant sector lockdown. Occupancy costs include costs such as rent, rates, business insurance and utilities.
  • Asking lenders to reschedule the repayment of loans, finance leases, hire purchases and mortgages for two years post restaurant sector lockdown where businesses are unable to meet current debt obligations, but where loans were performing as at 31 December 2019.
  • A rebate of any preliminary corporation tax already paid for 2019 and a deferral of the Feb / March 2020 PAYE/PRSI and Jan / Feb 2020 VAT liabilities for 2 years. 
  • Establishing an innovation fund to allow restaurants to diversify their business models, for example moving into takeaway and delivery, as opposed to dine in only.

Download the SORC step-down recovery plan or visit sorc.ie for more details. 

At the same time the Restaurants Association of Ireland (RAI) launched its 9-point plan to help save and recover the restaurant industry. The RAI outlined that without urgent action as many as 9 out of 10 restaurants face permanent closure in the months ahead.

RAI’s 9-point recovery plan

  1. VAT: 0% VAT rate for tourism & hospitality for period of crisis and for 12 months thereafter and then revert to 9% for period of five years.
  2. Rents: Legislation to protect commercial lease holders & any mortgage holiday or write offs to be passed on to the lease holder. A scheme like France called the 60/20/20: Government supplements rent by 60%, landlord reduces rent by 20% and commercial tenant pays 20% for 12 months of the crisis.
  3. Banks: No banking fees for hospitality until a vaccine is found. ECB interest rates on loans and a moratorium on existing loan repayments.
  4. Insurance: Pay-outs under business interruption and notifiable disease clauses. Forbearance, in either rebates or extensions to policies for period of closure, and no suspension of cover whilst businesses are closed.
  5. Wage supports: Continued supports for restaurants and hospitality businesses until vaccine is found. Support for people over the age of 66 and seasonal workers in the PUP & Wage Subsidy Schemes.
  6. Liquidity / Grants: A DBEI package of grants for businesses to cover outgoings in the first six months following the return of normal trading.
  7. Commercial rates: Rates write-off for restaurants and hospitality sector for the full crisis period until a vaccine is found.
  8. Utilities: Ban on utility providers cutting off services and demanding payments when business are closed. Review of standing charges for closure period.
  9. Outdoor Seating: Waiver of licences for outdoor tables and chairs for one year to enable businesses to reopen and adapt to social distancing using outdoor spaces.

Crowe’s dedicated hospitality team are currently supporting a number of our restaurant and hotel clients during this difficult time. We are assisting businesses hit hardest by the COVID-19 restrictions with short- to medium-term planning and financial projections.

Reviewing cost control has never been as important and we are working with hospitality businesses to understand their break-even points, particularly when looking to the future and re-opening. We are assisting with accessing funding, and finding the optimal solutions to ensure business viability. If your hospitality business needs expert support during this crisis, please contact a member of our hotel, tourism and leisure team.

Naoise Cosgrove, Managing partner - Crowe Ireland
Naoise Cosgrove    
Managing Partner
Corporate Finance
Partner, Corporate Recovery - Crowe Ireland
Aiden Murphy  
Partner
Corporate Recovery
Brian Geraghty, Partner, Audit - Crowe Ireland
Brian Geraghty
Partner, Audit
Mairea Doyle Balfe, Director, Hotel Tourism & Leisure - Crowe Ireland
Mairea Doyle Balfe
Director, Hotel Tourism & Leisure