Restaurants are in a bind. Energy bills are rising just as inflation eats into customers’ spending power. Many have been forced to increase their prices — and the days of the €20 main course are over, according to one leading chef. Offering a quality meat or fish main course for that price is “impossible”, says Gareth “Gaz” Smith, who runs three busy restaurants in south Co Dublin and has just won a major international award for his cookbook And For Mains.
espite having a large, loyal customer base, he says he is far from immune from the pain being felt in his industry. Escalating costs and more price-conscious consumers mean the run-up to Christmas this year is an especially challenging one for hospitality.
“You’d have sleepless nights,” he says. “The price of absolutely everything has gone up, not just gas and electricity bills, although they’ve gone through the roof.”
He has had to raise the prices in his restaurants — Michael’s, Big Mike’s and Little Mike’s — and says it’s a balancing act. “You have to charge fair prices while also being mindful that, for many customers, their spending power has been reduced this year,” he says.
Inflation has hit everyone’s pocket. Each of Smith’s three restaurants carries the same menu and one dish stands out — the fillet steak for €38. “It should really be €42 for us to meet our margins,” he says, “but I’d end up losing my long-term, extremely loyal clientele who stuck with us through the lockdown, so to put up that price now would be very short-sighted.”
He loathes the idea of the “€30 three-course” dinner option that some restaurants offer, in the hope that they can make profits through wine. “You have to ask yourself, how they are paying their suppliers, their staff, the rent, the costs, the gas bill? It’s a suicide mission for restaurants to go down that route.”
Although Smith offers a vegetarian main course dish for just under €20 in his restaurants, he believes “the numbers don’t stack up” if a good restaurant wants to offer quality food for that price when meat and fish are involved.
He has faith, however, that a restaurant meal still falls under enough people’s definition of an affordable luxury.
“I think most people would prefer to pay €36 for a really great steak, homemade chips and a good pepper sauce and know exactly what they’re going to get on a night out,” he says, “rather than two nights out eating €20 steaks that might be shite.”
Adrian Cummins, spokesman for the Irish Restaurants Association, warned that restaurant closures could become a daily occurrence. In Dublin alone, three neighbourhood restaurants, Circa in Terenure, Dorian in Donnybrook and Lenihan’s Bar & Grill in Rathmines closed within a few weeks of each other. Circa blamed “seemingly constant price increases facing us from all sides and staff shortages”.
Dorian closed after 10 months. A statement on social media said: “Sadly, with the devastating rising costs matched with the increasing struggles of running a restaurant in these times, we have had to make the difficult decision to close the restaurant for the foreseeable future.”
A long-established owner-chef in Co Waterford, who does not wish to be named, believes many other restaurants will go to the wall in the new year. “It’s not just about the survival of the fittest,” he says, “but of the best located, the best resourced, and the luckiest too.
“Restaurateurs and chefs are proud people and few want to put their head above the parapet if they’ve had to close their business, but it’s not enough just being a really good cook and offering good value for money,” he says.
“The customers aren’t there like they used to be. Everyone is feeling squeezed with rising inflation — my mortgage repayments have gone up massively in the past few months, so I understand that dining out is sometimes the first thing to go. And even those who dine out a lot might be feeling that they have to cut back.”
A recent mid-week visit to Dublin was eye-opening for the chef. “I couldn’t get over how quiet it was. I ate in a fantastic, very well-known place and it was half-full on a Wednesday night and, as far as I could see, it was a glass or two [of wine] per diner and not a full bottle on the table. Every second guest seemed to be ordering the fish pie — which is fantastic there — and it’s the second-cheapest dish in the mains. I think that tells you something about the consumer being a bit more frugal on a night out.”
Máire Ní Mhaoile runs 57 The Headline, a gastropub in Dublin 8 — the district named by Time Out magazine in October as one of the world’s coolest urban neighbourhoods.
She says steep increases in energy and other restaurant costs have been a heavy burden in recent months. “The cost of everything has gone up,” she says, “and I mean everything — napkins, straws, the sort of things the customer doesn’t think of — so you’ve no choice but to raise the prices on your menu. We don’t want to sacrifice on quality and the customer doesn’t want us to do that either, but there’s only so much you can raise the prices by.”
She opens the doors six nights a week and has tried to be innovative to entice custom in the early midweek evenings, a traditionally quiet time for the trade. “Taco Tuesdays has just started in the past few weeks and it’s gone really well. It’s a fun night and it offers people something that bit different,” she says.
Ní Mhaoile says she is thankful that her restaurant is in a busy residential area. “There’s great local support,” she says. “I think people see real value in supporting local restaurants and businesses and [post-pandemic] they want to eat out, rather than have the restaurant experience at home.”
Sham Hanifa runs The Cottage, a popular restaurant in Carrick-on-Shannon, Co Leitrim. The Malaysian native has recently expanded his operation, introducing a cafe and “an artisan food shop”, and has taken on additional staff.
Although business has been busy of late, industry-wide problems have affected him too. “I’m not going to lie — it’s been tough,” he says. “The uncertainty is frightening. The cost of running this business has doubled in every way — gas, electricity, food — but I always say to my team that rather than moan about it, if we keep on doing things right and keep on doing them consistently, the customer coming through the door won’t mind paying for quality. We have to shine when things are tough.”
Hanifa says he tries to make savings where he can, but not at the expense of the quality of the food. “As a business, the customer trusts you to produce quality in-house. You can’t take short-cuts. If you do that, you won’t last long in the business, especially in this time. It’s people’s hard-earned money, and when they spend they want to have had good food and good service and to know that their money is going back to the local community, to our butcher and our local suppliers.”
Husband and wife team John and Sally McKenna have been running Ireland’s best-known restaurant guides for more than three decades and John says the current environment is especially difficult.
“Hospitality is a major part of our economy and I’m not sure how many people in the political world are really aware of that,” he says. “The best example of that is how the various parties have used the lower VAT rate [9pc, in place until February] as a political guillotine to threaten the industry and when things are going well, we’ll put it up [to 13.5pc]. This comes around every year and hangs over the industry and it shouldn’t be used in that way. Every industry is entitled to some certainty about things like VAT rates, so they can plan ahead, and I think what we’re seeing is a government that’s not serious about treating restaurants with respect.
“Hospitality is a significant element of what modern Ireland is, not just for people who live here, but for those who come to visit,” he adds. “But the government don’t get that and that’s why, so far, their reaction to restaurants saying that energy costs and restaurant bills have gone through the roof has been to drag their heels.”
McKenna believes Ireland should follow in the footsteps of Germany and put a cap on energy bills. “We have the second-highest electricity costs in Europe, and rather than restaurants having some certainty about what they’ll have to pay, it’s a heart attack when you open the post. And when people get that shock, one of the first things they do is lay people off because the model is no longer sustainable.”
Some restaurants have pivoted to a new way of doing business, often inspired by the limitations introduced during the pandemic. The Merrion Tree in south Dublin used to be a conventional dine-in bistro. Now, its offering is entirely built on food-to-go.
Founder Eileen Bergin, who established the Butler’s Pantry chain of delicatessens in the 1980s, says the business was already moving in that direction before the pandemic. “I had already reduced the restaurant by a third in 2017 or 2018 in order to facilitate a takeaway facility for our customers who were already coming to the restaurant to eat, but also wanted the experience of dining at home,” she says.
Covid meant the dine-in aspect had to close temporarily — as was the case for all restaurants — and it sped up the Merrion Tree’s decision to go fully down the takeaway route. “I was always very keen on customers dining in restaurants,” she says, “because it’s a very personal business and we had regulars who came two or three times a week. [Had the pandemic not happened] I’m not so sure that we would have closed the restaurant entirely.”
As the pandemic wore on and the takeaway business flourished, it made business sense to keep it going when the restrictions were eased. Bergin believes dining habits have changed as a result of the pandemic and many people have continued to favour dining at home.
Like every restaurant, however, hers has had to contend with ever-steeper bills. “The costs have increased exponentially since the war in Ukraine and each month we’re hit with increase after increase. My son, rather than trying to put prices up, is trying to reduce costs and packaging expenses, but it’s getting more and more difficult to do that. For a particular product [a pack of boxes], the price went up from €8 to €29.”
It’s an experience echoed by the chef-owner of a small but acclaimed restaurant in Dublin city centre. “Every single cost has increased this year,” he says. “I’ve worked in this business a long time, and I’m usually very optimistic, but I just don’t see much light at the end of a tunnel, especially when people have less money in their pockets. Let’s get real — town is dead during the week.”
He says he plans to make the most of the December rush. “We’ve lots of bookings, parties of eight and 10 are back and we’re taking deposits to counteract the no-shows. But January? It’s there at the back of my mind all the time. When I find myself wide awake at four in the morning, it’s January I’m thinking of, and there’s one question I keep asking myself, ‘How the hell am I going to make it work?’”