The hospitality poor mouth

Sleepy

https://www.boards.ie/discussion/comment/122563971#Comment_122563971

I appreciate the data-driven approach but I think you're missing a few data points. I don't have the figures to hand but I suspect the reason the hospitality industry is struggling lies in your 1.1% differential between price increases in Restaurants & Hotels and the below:

How much have domestic rents increased since 2016 and how has that changed as a percentage of take-home pay?

I believe the main issue facing the hospitality industry is that disposable income has been stagnating (i.e. falling in real terms) for the past decade so while their costs have been increasing in line with inflation, consumers discretionary income isn't increasing at the same rate. This makes them both appear more expensive than they actually are in real terms and means they're not just competing against other hospitality businesses but also anyone else selling products/services that would be considered discretionary spending (Fashion, Concert Tickets, Cinema, Travel etc.)

Deebles McBeebles

https://www.boards.ie/discussion/comment/122628780#Comment_122628780

https://www.boards.ie/discussion/comment/122628804#Comment_122628804

I've gone from chatting to Marco Moretti and Paolo Peroni to an old friend, Séamus Smithwick. €1.50 saved on every pint and lessens the hangover. He's a good man, Séamus.

breezy1985

https://www.boards.ie/discussion/comment/122629194#Comment_122629194

The big international brands got so bad for price that it is often cheaper to drink the local craft stuff here in Limerick which is great but also a complete flip on how it started out.

Guinness drinkers are the worst. They will bitch and moan but never make the switch because the marketing has them convinced it is some magic unbeatable manna of a beer.

enricoh

https://www.boards.ie/discussion/comment/122628864#Comment_122628864

Talking to a lad yesterday sold his pub around 2000 went at construction and has a multi million business now. His old place is derelict now , closed after Celtic tiger died. Got a great decade from 1990-2000, Jack Charlton years n meath football humming

Said he wouldn't take on a pub now if he got one for free- no money in the majority of them n no quality of life. Says it all really

Fr Tod Umptious

https://www.boards.ie/discussion/comment/122628864#Comment_122628864

Why would you do it.

You do it because you can drive around in a BMW 7 Series that you change every year :)

DataDude

https://www.boards.ie/discussion/comment/122629049#Comment_122629049

Again the data just doesn’t support this view. Household disposable income growth is outpacing Household expenditure growth. People are able to save a higher percentage of their significantly higher disposable incomes than they were able to pre-COVID.

https://www.cso.ie/en/releasesandpublications/ep/p-hs/householdsavingq12024/

The rental one is a nice narrative to point to but proportionally not that many people pay open market rents.

Owned mortgage free: 31%
Owned with mortgage: 39%
Social Housing: 11%

Private Rent: 19%

If you hear any cafe or restaurant owner banging on about VAT9now ask them 2 questions:

1) will you pass the VAT decrease to your customers?

2) how much tax do you already owe Revenue in debt warehousing, and why should they give you more tax assistance now?

Sleepy

https://www.boards.ie/discussion/comment/122629465#Comment_122629465

Interesting, figures on the demographic spread of that disposable income outpacing household expenditure would be interesting to see too (or even median rather than mean figures). A relatively small cohort of high net worth or high earning individuals could be wildly skewing that dataset…

Just looking at the hospitality sector as a consumer: prices are extremely high compared to our European counterparts (I'd say 150% to 200% of that which I experienced in France's tourist regions of Normandy two weeks ago so not comparing to Costa Del Sol, Portugal or other poorer regions of Europe.), input costs have undeniably increased and on-premise alcohol consumption has dropped significantly but is this enough to explain the raft of seemingly busy restaurants (many operated by high-profile restaurateurs with successful track records) closing their doors? Or is the general consensus that the majority of these closures are an exercise in getting warehoused tax liabilities written off in the liquidation of Limited Companies before starting afresh under a new trading name?

https://www.boards.ie/discussion/comment/122629936#Comment_122629936

1 very high profile restaurant owner who recently shut 2 businesses, has never been successful with said businesses and has had huge debts written off via SCARP and still couldn't keep the business alive.

Being high profile and being successful are 2 different things.

There are definitely loads of restaurants closing due to warehoused tax liabilities being called in by Revenue, but that doesn't suit the Restaurants Association of Ireland agenda so they blame VAT rates.

Mr. teddywinkles

https://www.boards.ie/discussion/comment/122629936#Comment_122629936

That and a lot of young adults live at home now due to home ownership totally out of reach. Income that would be put into paying for a home. Which technically paints a bad picture other than lots of wealth and disposable income

Rows Grower

https://www.boards.ie/discussion/comment/122627607#Comment_122627607

You have cut through all the waffle and all the smoke and mirrors with this post.

The people running the hospitality industry need to up their game or get into a different game. For years all most of them have concentrated on is cheap labour and huge profit and it's gotten to the stage now they think they're entitled to special treatment.

https://www.boards.ie/discussion/comment/122632255#Comment_122632255

All while they as an industry owe a fortune in tax debt to Revenue. What's the saying, don't look a gift horse in the mouth. Between debt warehousing and temporary VAT reduction (which they did pocket, and then increased prices to reflect the restored VAT rate) they've been well looked after. And they're back out with the begging bowls.

Hotblack Desiato

https://www.boards.ie/discussion/comment/122629971#Comment_122629971

This fella

https://www.thejournal.ie/chef-dylan-mcgrath-closes-brasserie-sixty6-and-rustic-stone-6463976-Aug2024/

“No doubt we will miss the restaurants, but selling on the leases and concentrating on Fade Street Social currently is what’s needed. We wish the new occupiers all the success for the future,”

he's confident other restaurants will be opening in those premises soon, dare I say it but maybe ones which are less pretentious and overpriced will do better. Lots and lots of restaurants in that area and most customers aren't mugs willing to pay "celeb chef" prices.

https://www.boards.ie/discussion/comment/122633413#Comment_122633413

New accounts filed by McGrath’s Prime Steak Ltd show the firm achieved debt writedowns of €2.25 million to connected firms arising from Prime Steak Ltd entering and successfully exiting the Small Company Administrative Rescue Process (Scarp) in the 12 months to the end of June 2023.

https://www.irishtimes.com/business/2024/05/28/dylan-mcgrath-firm-swings-to-profit-after-225m-debt-write-downs/

tayto lover

I was in a pub in the midlands recently and it was doing a very good trade. The publican had decided to charge a fiver for all pints. Good bit of business imo. Sell more cheaper and make as much money overall.

https://www.boards.ie/discussion/comment/122633627#Comment_122633627

Unfortunately it appears that the hospitality industry and it's lobbyists are not intelligent enough to realise that lowering prices in line with VAT reductions (which doesn't cost them 1 cent) would most likely lead to increased footfall and custom.

Quitelife

https://m.independent.ie/irish-news/i-cried-tears-of-rage-and-exhaustion-journalist-working-undercover-in-irish-hotel-shares-her-terrible-experience/a349628943.html

Very stark story in todays paper about the pressure Hotel Cleaners are put under in Ireland and all the sharp practice used to underpay staff …. Is it any wonder so few Irish work in hotels anymore

breezy1985

https://www.boards.ie/discussion/comment/122633661#Comment_122633661

Then why are the more expensive pubs so often the busy ones. Even in a non tourist area like Limerick ?

Down here the busy pubs are the ones offering the best "product". There is certainly markets for cheap beer with people like students or scumbags but it's quite clear just from walking around that the busy pubs are the well run ones despite the price.

There is no sign so far of a new wave of Tuborg or similar like during the recession.

tayto lover

https://www.boards.ie/discussion/comment/122633940#Comment_122633940

You can't make assumptions that all who drink in pubs with the 5 euro pint are students or low class !1 That's a very arrogant statement. A bit like some of the owners of more expensive pubs might say.

breezy1985

https://www.boards.ie/discussion/comment/122634267#Comment_122634267

I didn't mean the pub in the midlands because I have never been there but it's obvious in Limerick that those are the demographics who will drink anywhere for the cheaper drink.

The vast majority are still following the quality establishments or the ones offering a good niche product. I see nothing to suggest that price is such an overwhelming issue that people will go somewhere just for the price so the idea that becoming an "everything for 5" pub being such a no brainer selling point doesn't hold up.

Rows Grower

https://www.boards.ie/discussion/comment/122634267#Comment_122634267

I'd honestly say that anyone with a scintilla of business experience would not be ignorant enough to write what that poster did.

More likely a punter that wishes for the bygone days of Tuburg or whatever cheap booze that they could actually afford in real life back in the day.

https://www.boards.ie/discussion/comment/122633940#Comment_122633940

Classic bit of ignorance from you mate. VAT on alcohol is 23% , so isn't even what is being discussed by the industry. I was referring to the reduction of prices on food services, in line with the reduction of VAT on same.

Back into your hole now, good lad.

Fr Tod Umptious

https://www.boards.ie/discussion/comment/122634299#Comment_122634299

I see nothing to suggest that price is such an overwhelming issue that people will go somewhere just for the price so the idea that becoming an "everything for 5" pub being such a no brainer selling point doesn't hold up.

An "everything for 5" pub would not make a blind bit of difference in many towns and villages because there are not enough drinkers anymore to make it worthwhile.

That sort of tactic only works if you are trying to stand out in a area that is already busy, like trying to lure the people that go to the pub across the road over to you.

It's not some sort of silver bullet.

Glenomra

Many pubs in the Limerick-Clare area deliberately charge a dearer price than their local competitors to ensure that they attract a certain cohort of patrons or rather that they don't attract the patrons who are very price conscious.

breezy1985

https://www.boards.ie/discussion/comment/122634932#Comment_122634932

Ya if you had a number of pubs of equal quality and one went "5e pints" then it could potentially work but it's more likely most would stay put in the pub of their preference or continue to frequent all the pubs.

More important is to give customers worthwhile for the money they spend. Way too many lazy unimaginative publicans out there who just open the door and seel what every Diagio tells them to. They are the ones start crying about "outside forces" when things don't go well.

tom1ie

This is kinda going off topic but what beers could publicans sell that wouldn’t be as expensive as Heineken or Diageo products?
What cheaper than bulmers but as good a quality as bulmers offerings are there that public and can sell?

As far as I can see all craft beers are much dearer.

The only stout I know of that’s close to par with Guinness and cheaper, is beamish.

breezy1985

https://www.boards.ie/discussion/comment/122635059#Comment_122635059

Local craft beer is sometimes cheaper now for lager because the macros have gone so high. For the other stuff it can get pretty pricey depending on the type of beer.

But ya your options are limited to the likes of Beamish or Tuborg mostly. Cant think of any ciders that are significantly cheaper.

Something they could easily affect is the price of mixers. Thankfully I don't drink them but the lack of guns and the disappearance of dashes has added a silly amount to the price of spirits.

VinLieger

https://www.boards.ie/discussion/comment/122635059#Comment_122635059

Pubs can sell everything cheaper, the reason they keep raising their prices is to offset the drop in customers and people consuming alcohol. Most publicans honestly feel like they are entitled to peoples custom and have no clue how to actually entice or pull people into their premises, they believe that if they just offer the most basic place to have a pint, a couple of crappy screens for football and incredibly mediocre food then people will come flocking because that's the way it has always been but as is evidenced in this thread people are far more concerned these days about how they spend their money and getting bang for their buck which the majority of pubs just arent giving these days. A big issue which they also refuse to understand is our alcohol consumption as a country has been dropping year over year for just under 2 decades now, there simply isn't a need for as many pubs as there used to be.

They are so entitled that they supported MUP which would only raise prices for home drinkers as a way to try and push them back into pubs.

Also craft beer will always be more expensive than diageo, heineken et al due to the economies of scale the latter operates on which the former can never match.

L1011

https://www.boards.ie/discussion/comment/122635452#Comment_122635452

Right now, most craft breweries sell to pubs for less than the macro breweries. They haven't been as greedy with price increases; and they have the 50% duty rebate.

Its the publicans who realise they can charge a premium for it, and keep doing it.

Raichų

https://www.boards.ie/discussion/comment/122633907#Comment_122633907

ah come on, that’s one hotel and its a one sided report with absolutely no evidence.

I’m not saying it didn’t happen but it’s a bit unfair to say “look how cleaners are treated! Look!” as though it’s just the standard. Come on.

tom1ie

https://www.boards.ie/discussion/comment/122635452#Comment_122635452

So how much profit does the public a make on a Guinness?

How much does a keg of Guinness cost from Diageo?

How many pints in a keg?
How much does the gas for the pint cost?

Viscount Aggro

I went back to a Chinese buffet place near me..

Recall it being about e15 for the all your can eat, buffet troughs.

Nah, its now e26.95.. and the place was empty.

VinLieger

https://www.boards.ie/discussion/comment/122635832#Comment_122635832

Pretty easy to find that out yourself, took me one google.

https://www.thejournal.ie/price-of-a-pint-diageo-6337793-Mar2024/

As for the gas its c02 so look into it yourself and ive no clue on the how quick they get through a canister

Geuze

https://www.boards.ie/discussion/comment/122635059#Comment_122635059

Publicans seem to blame the State for their woes, rather than their suppliers, or their overheads.

They want excise cut, even though excise hasn't increased in years.

They ignore and don't mention that Diageo put up the cost four times since COVID.

Why don't more pubs offer Beamish?

Why don't 100 or 1,000 pubs join forces, and approach a brewer to buy in bulk, at much lower cost?

One of the larger Irish brewers, other than Diageo/Heineken/C&C.

Spoons can sell Ruddles Best for under GBP 2.00 in Britain, as they are the largest buyer of Ruddles Best.

Why don't 1,000 pubs approach Greene King to buy beers in bulk? If they could even get the price down to 5.00 in Dublin and 4.00 outside, that would help.

I don't think they want to innovate.

breezy1985

https://www.boards.ie/discussion/comment/122635452#Comment_122635452

Wrong about the craft beer. I drink places where Treaty is cheaper or the same price as the macro stuff.

Any who thought MUP was going to get people back to pubs were fooling themselves. Way more factor than price goes into why people might drink at home. Clamp down on drink driving for instance done way more damage than price especially when you factor in the Irish list for suburbs and all the people who had to more to countryside estates.

I agree there are "too many pubs" though. You see people lament the loss of pubs in a tiny tiny village that used to have a pub for every 10 residents or pubs that offer absolutely nothing in a city full of better run pubs.

breezy1985

https://www.boards.ie/discussion/comment/122635759#Comment_122635759

I do notice that Irish hotels always have the latest check in times and the earliest check outs. That would lead me to believe that they are using far less staff for the same amount of rooms.

tom1ie

https://www.boards.ie/discussion/comment/122635861#Comment_122635861

great post well done.

Geuze

https://www.boards.ie/discussion/comment/122635832#Comment_122635832

Bear in mind that the GP on stout is one of the lower GP across the product mix.

For example, the GP on mixers is massive.

One of the attractions of Spoons is that the mixer is included in the price of the spirit.

I'd say a well-run pub, with high prices, can make 65-70% GP.

I recall news articles about Dublin pubs making 25% net profits.

Spoons makes under 10% net profits, as it passes the savings to its customers.

breezy1985

https://www.boards.ie/discussion/comment/122635874#Comment_122635874

I imagine even if 1000 pubs got together it wouldn't be worth it to contact someone like Greene King to sell a lad of beers Irish people haven't heard of.

Being a nation of free houses there are opportunities out there to improve a pub which a lot of publicans are too lazy or unimaginative to take advantage of though. Maybe not cheaper stuff but at least diversify.

Quitelife

Pubs are been hit by a number of factors

1. The increase in ESB & Rates & Insurance etc
2. Many Punters having less disposable income due to Rents, increased Bills, little left for a few pints
3. Many young peoples disposable income going on drugs ie cocaine with nothing left for alcohol

VinLieger

https://www.boards.ie/discussion/comment/122635874#Comment_122635874

Its not even that they don't want to innovate they don't think they should have to innovate, if you ever listen to a publican or a rep from the VFI or LVF giving and interview they come across as thinking they are entitled to peoples money and custom. Its why they supported MUP they couldn't countenance people deciding to enjoy themselves in their own homes.

breezy1985

https://www.boards.ie/discussion/comment/122635911#Comment_122635911

Also a lot of young people who don't want drugs or alcohol and tent to live healthier than previous generations.

ebbsy

https://www.boards.ie/discussion/comment/122635911#Comment_122635911

Try telling that to some people.

MrMusician18

https://www.boards.ie/discussion/comment/122635832#Comment_122635832

I think the wholesale cost of Guinness is about €2.06 including excise. The rest is to cover gas, expenses, profit and vat. A very lean low cost high volume operation could conceivably sell at €3.20/pint. The average pint of stout is €5.86, so that's €1.09 in vat and €2.71 for the publican or a margin of 132%. Using a publican methodology another 6c on the wholesale cost results in a 17c overall increase, 6c to the wholesaler 6c for the publican and the balance to the government.

Publicans don't really do pricing properly, they all use margin pricing. They fix their margin so when the base cost moves up, the final price moves up. If all Publicans are independently using a similar system you get equal price movements across the industry without the need for coordination. Margin pricing basically allows for little real competition and poor cost control.

tom1ie

From that article posted a pub that charges €6 per pint, makes €2.88 per pint in profit, after tax has been paid and after Diageo has been paid (basing this on Guinness)

Out of that €2.88 per pint various overheads are subtracted, including staff costs, rent, insurance energy bills, upkeep, etc.  

So €6- €2.88= €3.12.

Therefore €3.12 of the pint that your drinking goes between the government and Diageo.

The split of the €3.12 is:

first the VAT is €1.12 (23% of 6 divided by 1.23)

€6 – €1.12 = €4.88

Of the remaining amount, €1.46 goes to Diageo:

€4.88 – €1.46 = €3.42

Then, there is the excise to subtract. According to the Government, the excise duty on a 4.3% ABV beer (like Guinness) is 54 cent. 

€3.42 – €0.54 = €2.88

So:

Diageo are making €1.46 on every pint of Guinness you drink.

The government are collecting €1.12+.54= €1.66 in taxes for every pint of Guinness you drink.

The publican are making €2.88 for every pint of Guinness you drink.

Dick phelan

I've no doubt running a hospitality business can be tough with cost increases but, it might be hard to admit but some owners need to ask themselves what are they offering to people. There's really stiff competition now, I work in a city center location, between kiosks bakeries cafes etc I can count 21 places within a 10 minutes walk I can buy coffee. I only ever go to 2 places both locally owned cafes, one makes exceptional coffee and does a very clever monthly blend which I always like trying new coffee beans. The other is a really nice cafe with extremely good staff and service. Still under 3 quid for an Americano too. They are both busy most days I go.

Pubs the same how many of them offer literally the same drink choices, few screens for matches, same standard pub food, burger, goujons, curry etc. A pub I really like always has a tap or two which changes regularly and offers a pint from a local or Irish brewery. Again it's usually doing a good trade. A bit of innovation in such a competitive market is needed if they want to survive.

Dick phelan

Pubs also have to just accept consumer preferences have changed, people are more health contious and not drinking as much regardless of price. There's more options for things to do as well. The days of having a pub in every little village is gone, that's just the way it is now. No harm people drinking less in all honesty.

Hotblack Desiato

Diageo charging the trade €1.46 ex VAT per pint is an absolutely huge rip-off.

They're selling (ex VAT and duty) into the off-trade for less than that, even though it has to be canned or bottled.

BlueSkyDreams

Whatever happened to the cap on the number of licensed premises being removed?

If more venues could avail of a license, we might start to see more niche, cafe bars opening; places that can offer a different variety of drinks than your standard same old-same old brands.

Also, what happened to the late opening and reduction of late license costs that the govt kept selling to us a year or so back?

VinLieger

https://www.boards.ie/discussion/comment/122636590#Comment_122636590

The Cafe bar bill from the noughties died a very quick death due to how many FF members were publicans at the time.

If the tried to do it again now they would run into the same lobby groups who pushed for MUP and lied through their arses to get it passed.