Rising costs forcing pubs to cut jobs as rural sector faces "existential threat"

Representing more than 3,500 publicans nationwide, the VFI will present new survey findings showing that 22% of pubs have reduced staffing levels over the past 12 months.

According to respondents, ongoing cost pressures were the primary factor behind employee cutbacks.

The federation said the trend mirrors wider challenges across the hospitality industry.

Recent Central Statistics Office data indicates that employment in the food and beverage sector fell by 15% over the past year.

In its submission, the VFI will highlight significant increases in operating costs over the last five years. Electricity bills have risen by 70%, wages have increased by 40%, while water tariffs rose by 30% in 2024 and increased by a further 10% this year.

VFI Chief Executive Pat Crotty said the figures illustrate the severe financial strain facing publicans, particularly in rural communities.

“These figures are clear evidence of the pressure pubs are under,” he said.

“Publicans are being forced to reduce staffing levels simply to keep their doors open. For many smaller and rural pubs, the current cost environment has become completely unsustainable and poses an existential threat to future viability.”

The organization’s survey also found that 65% of publicans believe rising business costs are having an unsustainable impact on their operations, while 41% reported that trading conditions are worse than they were a year ago.

Business confidence is also weakening. Almost 42% of respondents said they lack confidence in the long-term sustainability of their businesses.

The VFI will tell the committee that the challenges facing the sector extend beyond hospitality, warning that continued pub closures would have broader social and economic consequences for communities across the country.

More than 2,200 pubs have closed in Ireland since 2005, according to the federation, representing a decline of over 25% in the total number of licensed premises.

The rate of closures has accelerated in recent years, averaging 128 pubs annually.

While welcoming the restoration of the 9% VAT rate for food-led hospitality businesses, the VFI argued that the measure offers limited support to many rural pubs, noting that 64% do not serve hot food.

As part of its Budget 2027 proposals, the federation is calling for the introduction of an On-Trade Sustainability Scheme.

The proposed initiative would provide a targeted tax credit linked to verified draught product purchases, with support capped at €20,000 per premises.

* This article was originally published on BusinessPlus.ie.