The Restaurants Association of Ireland (RAI) has warned that more restaurants will close and more jobs will disappear unless the Government reduces the VAT rate applied to food-led hospitality businesses.

The association issued the warning amid continuing pressure on a sector that has already absorbed a string of closures. Food-led operators — restaurants, cafés and gastropubs — say the current VAT burden leaves them unable to cover rising input costs across labour, energy and supplies.

What is the sector asking for?

The RAI wants a reduced VAT rate for food-led hospitality. It argues that a lower rate would:

• protect jobs in restaurants and food service businesses across Ireland
• slow the pace of closures already hitting town centres
• support operators whose margins have been squeezed by cost inflation

The association says that without Government action, further closures are inevitable, and each closure carries direct job losses.

Why food-led businesses are exposed

Food-led hospitality is more VAT-sensitive than accommodation-led businesses because its menu pricing is competitive and its margins are thinner. Operators have repeatedly argued that the gap between their tax treatment and that of competitors in other jurisdictions, and of retail food, distorts the market against full-service restaurants.

The RAI's intervention keeps VAT at the centre of the hospitality policy debate in Ireland. The sector previously benefited from a reduced rate, and its restoration has been the association's core ask since the higher rate returned.

What happens next?

The RAI's warning puts the decision with Government. Operators and investors will watch upcoming budget deliberations for any move on the hospitality VAT rate, and the association is expected to continue pressing its case through further submissions and public campaigning in the weeks ahead.