Costs must come down, plain and simply

After speaking with Pat Crotty, chief executive of the VFI for an interview in this month’s issue it’s very evident that something needs to be done about soaring employment costs in the hospitality industry. The short term solution of one-off grants is not the answer. One-off payments do not help businesses or individuals. They are merely applying a plaster to a deep cut. The government launched the Increased Cost of Doing Business grant this month which will go some way to helping businesses manage costs during one or maybe two months but then it is back to square one. The new Living Wage and newly introduced sick pay benefits have piled on the pressure for employers and the issue is that the wage rates are still set to rise within the next few years.
It’s been said so many times but a reduction in excise on alcohol, reduced PRSI rates or a reduction in the higher VAT rate are the kinds of changes we need to be seeing in order to make a lasting difference to businesses. The VFI recently undertook a benchmarking survey which showed that 36% of pub turnover is currently consumed by labour costs alone and that figure will increase to over 40% with the introduction of a Living Wage.
And this survey also revealed that 37% of publicans are considering retirement within the next two years and a staggering 84% reporting that no family member wishes to inherit the pub. That is a really frightening statistic and one that needs to be taken seriously at government level. The whole Irish tourism sector depends on these businesses keeping their doors open. It will have devastating effects if family members decide not to carry on businesses and yet you can see why they might not see the pub trade as a desirable career choice because they have witnessed their parents or previous generation struggle.
In this issue we also talk to some really interesting people from across the sector such as Javier García Vicuña, the global advocacy manager for Diplomático John Robinson, the new director of marketing & sales for DrinksGenius and Stefi Fletcher, bar tender of Bar 1661 who was just this month awarded the winner of the Giffard West Cup Cocktail Competition. There are a host of young dynamic talent like Stefi emerging across the industry. Let’s just hope that employers can keep businesses afloat and continue to afford to employ this calibre of employee to make sure they are not tempted to take their talents overseas and we can keep the Irish pub scene as unique and inviting as it has always been famous for.
Also in this issue we have the Summer Drinks feature and a focus on Poitín and Gluten Free products. The weather has been looking up over the last few weeks so it is time to start planning for the summer months ahead and hopefully it will be a sunny and lucrative one for all.
Fionnuala Carolan
Editor
Drinks Industry Ireland