Minister to lobby for cut in VAT rate amid local restaurant closures

In the wake of the closure of two popular cafes in Athlone this weekend, local Minister for Enterprise Peter Burke has confirmed that he will advocate for a cut in the VAT rate for the hospitality sector in forthcoming budget negotiations.

Kafe U, which has been operating for the past eight years on the Dublin Road in Athlone, opposite the TUS campus, admitted that “rising costs across all areas of the business" left them making the difficult decision to close their doors on Sunday next, June 30, with the loss of 16 jobs.

The owners of the business, Ballycumber-based couple Ken Robinson and Ultan Keena, also cited the increased VAT rate, alongside other costs, including labour, food and energy having contributed to their business being “no longer viable.”

In a Facebook post the couple said it was with “heavy hearts” that they made the decision to close their business, and thanked their thousands of “valued and loyal customers” for their support over the past eight years.

"We are very proud of the business we have built up in Athlone but it is time for a new chapter and it's always nice to finish when you are on top," the post concluded.

In January of this year, a second branch of Kafe U, which was located in Clara in Offaly, closed its doors after 18 months in operation, also citing the increased VAT rate with contributing to making the business no longer viable.

Meanwhile, a second Athlone cafe, which has been in operation for the past 14 years, is also set to close on Sunday next, June 30. A new restaurant under new ownership will open in the same premises in the coming weeks.

Nino, Giovanna and the Magliocco family have been operating the Coffee Haven in Inish Carraig Business Centre in Golden Island since 2010, but announced the closure of the local business in a post on social media last week, and thanked all their loyal customers and staff for their support .

"With sadness there will be happiness and new beginning and we would like to wish the new owners the best of luck with the new adventures in the premises” the owners said.

The Coffee Haven name is set to disappear from the local business landscape, as the Magliocco family have confirmed that the re-opened premises will bear the new name of 'Spanners Cafe.'

It is understood that the existing staff of up to a dozen people, will be given the opportunity to work under the new owners, but they have also advertised for a range of full and part-time positions in their new venture, including waiting staff, chefs, baristas and kitchen porters.

In a post, Spanners Cafe said: "We deeply appreciate the trust and support from the Coffee Haven team and all their loyal customers. It's a privilege to have the opportunity to fill the void they are leaving and continue the legacy of excellent coffee and food in Athlone."

Minister for Enterprise, Trade and Employment and Mullingar-based Fine Gael Peter Burke has confirmed that he is “fully behind” the call by the Restaurants Association of Ireland (RAI) for a reduction in the rate of VAT being charged to the hospitality sector.

The VAT rate for tourism and hospitality was cut from 13.5% to 9% during the pandemic to protect businesses affected by public health restrictions. Having been extended on a number of occasions, the rate reverted to 13.5% on September 1 last, a move which was described by the RAI as “the final nail in the coffin” for many small businesses.

Minister Burke has pledged to work towards securing a cut in the VAT rate, and said it will form part of his submission to the Department of Finance ahead of budget negotiations. As a local TD for Westmeath he said he recognises “the vital contribution” that restaurants and the hospitality industry make to the national and local economy and also to “job creation in regional and rural Ireland."

The Minister added that he would be advocating for a cut in the VAT rate both at Cabinet and to the Minister for Finance.