150 restaurants closed in first quarter of 2025 due to business costs, survey shows
The Restaurants Association of Ireland (RAI) unveiled the findings of its Cost of Doing Business 2025 survey, highlighting the mounting financial pressures facing restaurants and hospitality businesses across the country.
With over 170 business owners participating, the results offer a sobering snapshot of an industry grappling with rising costs, shrinking margins, and growing uncertainty about the future, RAI said.
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The pressure on the sector continues to result in closures, with 150 restaurants, cafés, gastropubs and food businesses shutting their doors in the first three months of 2025 alone.
RAI said these figures underline a deepening crisis and reinforce the urgent need for meaningful support.
65 per cent of respondents reported a decline in financial performance in 2024 compared to the previous year.
Business owners identified wage increases and escalating operating costs as the most pressing challenges. The impact of these pressures is already being felt, with many restaurants forced to reduce staff, raise menu prices and seriously question their long-term viability.
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The survey reveals that payroll costs now account for nearly 39 per cent of turnover, a significant increase from just under 32 per cent in 2022.
Food costs and wages
Food costs have also surged, rising from 28 per cent to over 34 per cent of turnover, while insurance and utility bills have climbed by 32.89 per cent and 25.81 per cent, respectively, over the same period.
Employment trends reflect the strain, with full-time staff levels dropping by 10 per cent and part-time roles by seven per cent since 2022.
Wage increases between 2022 and 2025 have been particularly steep with minimum wage increasing by over 28 per cent. Meanwhile, menu prices have not kept pace with soaring input costs, increasing by just 16.92 per cent for lunch and 18.75 per cent for dinner.
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The cost of ingredients and energy has also seen dramatic inflation. Between 2022 and 2025, the price of fruit and vegetables rose by nearly 50 per cent, beef by 96 per cent, and chocolate by a staggering 157 per cent, RAI said.
At the same time, gas costs increased by over 58 per cent per kilowatt-hour, and electricity by more than 96 per cent.
Looking ahead, 94 per cent of businesses expect food costs to continue rising in 2025, while 88 per cent foresee increases in beverage prices.
Four in five restaurants anticipate cutting staff hours due to wage inflation and increased costs, while 70 per cent expect to reduce overall staff numbers.
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Commenting on the findings, Restaurants Association of Ireland chief executive, Adrian Cummins, said: "These findings are a glaring red alert for the Government and every politician in the country. The food-led hospitality sector is under relentless financial pressure and the consequences are playing out in real time.
"Without immediate and meaningful supports which include cost containment measures I can guarantee the pace of closures and job losses will continue in every town, city and village across Ireland.
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"Restaurants are not just under pressure; they are on the edge. Restoring the nine per cent VAT rate isn't a luxury, it's a lifeline. It's the breathing space businesses need to survive rising wage costs, unaffordable energy bills and extreme food inflation.
"Yes, recent Government steps to support business are welcome. But the promise to restore the nine per cent VAT rate, a commitment already made in the Programme for Government must now be honoured and confirmed to give businesses clarity on their futures.
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"We've already seen 150 restaurant and café closures in the first three months of 2025. If this trend continues, we are on course for another catastrophic year of shutdowns and job losses.
"When a restaurant or café closes in rural Ireland, it's almost always permanent. These aren't just economic losses; they rip through communities. Our towns are being gutted. Our villages are being hollowed out. We cannot let this continue any longer."
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