Rising costs and lack of staff worry hospitality businesses

Austin Hickey, Director in BDO's Consulting department, provides his analysis of the sentiment survey carried out by BDO among members of the Licensed Vintners Association, the Restaurants Association of Ireland and the Vintners’ Federation of Ireland.

Business owners in the hospitality sector do not have confidence in the future of their venues, citing increasing costs and a lack of staff as major problems.

The BDO survey of nearly 1,000 restaurants and bars found that while 49% are optimistic about the future of hospitality, 46% – many of them rural publicans – admitted they are not.

Despite concerns, the majority of respondents (93%) expect to be in business this time next year. However, one in three (39%) said they do not have a business plan in place to navigate their way out of the current crisis.

Lobby groups within the hospitality sector have been outspoken about the Government’s handling of the pandemic and the pushing back of reopening dates. Yet the vast majority of respondents (87%) rated the Government’s response to businesses as fair to good, with only 13% finding it poor.

Increasing business costs were identified by 80% of respondents as one of the biggest threats to the future of the sector, with one-quarter struggling with debt and financial funding. Difficulties attracting and retaining staff are also a concern for 70% of businesses.

Prior to Covid-19 the hospitality sector was facing a staff shortage, and that has now been compounded by the pandemic.

The sentiment survey was carried out by accounting firm BDO among members of the Licensed Vintners Association, the Restaurants Association of Ireland and the Vintners’ Federation of Ireland.

Austin Hickey, a director at BDO’s consulting department, said it is clear from the responses that “overall sentiment from rural publicans is weaker than that expressed by Dublin publicans and restaurants operating nationally”.

“Rural publicans are more pessimistic and downbeat,” he notes. “We did work before Covid to devise a strategy for the rural pub sector. There’s an acceptance that in some rural areas there are too many pubs for the demand to exist. We were working to help them reimagine their business, but Covid came at the wrong time.”

Austin said the main standout for him from the survey was that a large number do not have a business plan in place.

“93% of them expect to be in business, with many saying that the financial support received from the Government has been a huge help, but one would have to question how realistic that is when some of them have no plan,” he said.

“These businesses need to plan for various contingencies as business volumes are going to be below pre-Covid levels until international visitation starts to grow. There are also staff shortages. The sector at its peak employed 250,000 and a lot of these lost their jobs, some permanently and some temporarily. Fáilte Ireland said one in four people currently working are new to the sector and anecdotally you’re hearing from people that service has been hit and miss. As a country we’re known for our hospitality and the aim is to attract more staff back to the industry.”

Some businesses were unsatisfied by the level of support received from their bank or lender.

Just over a quarter rated the response as bad, while half found it fair and 24% rated it as good.

“In our experience, having a robust plan would be a prerequisite for funding,” Austin adds. “One of the interesting findings is there were overall high levels of satisfaction with Government supports. I think this has been critical to many businesses still being around.”

Content originally published on Irish Independent.

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