Irish budget 2025: what it means for restaurants
The Irish Budget 2025 has been revealed, presenting both new opportunities and significant challenges for the restaurant industry. While the government has introduced several measures aimed at supporting small businesses and addressing the rising cost of living, the restaurant sector remains in a precarious position. Industry leaders, including Adrian Cummins, CEO of the Restaurant Association of Ireland (RAI), have voiced concerns, particularly about the lack of comprehensive relief for hospitality businesses still grappling with rising costs.
1. VAT Rate Maintained at 13.5%
The VAT rate for hospitality, which was raised to 13.5% in 2024, remains unchanged in 2025. This decision has once again drawn criticism from industry stakeholders. Adrian Cummins, speaking on behalf of the RAI, expressed disappointment, saying, “Keeping the VAT rate at 13.5% is a missed opportunity for the government to support a sector that is vital to the Irish economy. Many restaurants are still struggling with post-pandemic recovery, inflation, and rising operational costs, and this will only increase the financial burden.”For restaurant owners, the maintained VAT rate means continued pressure on already tight margins. Many businesses may be forced to pass these costs onto consumers, risking a decline in customer spending, or absorb the increased expenses, which could reduce profitability.
2. Minimum Wage Increased to €13.50 per Hour
In a continued effort to support workers amidst the cost-of-living crisis, the government has increased the national minimum wage to €13.50 per hour, up from €12.70 in 2024. While this will be welcomed by employees, restaurant owners face a growing challenge. Labor costs typically account for 30-40% of a restaurant’s total expenses, and the wage increase further strains an industry already dealing with thin margins. Cummins noted, “The wage increase is necessary for workers, but without additional relief for businesses, it will be difficult for many restaurants to maintain current staffing levels or keep prices affordable for customers. We need targeted supports that help offset these rising costs.”
3. Power Up Grants
A €4,000 Power Up Grant aimed at supporting businesses in the hospitality and retail sectors that operate from commercially rateable premises was also introduced. This grant is designed to help businesses offset rising operational costs and invest in improvements or energy efficiency measures.
4. New Digitalisation and Sustainability Grants
One of the more promising aspects of the 2025 budget is the introduction of Sustainability Grants for small and medium-sized businesses, including restaurants. These grants aim to help businesses invest in energy-efficient technologies and reduce their environmental footprint. Restaurants can apply for funding to upgrade kitchen equipment, install solar panels, or enhance waste management systems, all of which can help reduce operational costs over time. Additionally, Digitalisation Grants, first introduced in 2024, have been expanded, offering more support for restaurants looking to invest in new technologies, such as digital point-of-sale (POS) systems, online ordering platforms, and data-driven marketing tools. For restaurants looking to modernise and streamline their operations, these grants can be a lifeline. Flipdish are well-positioned to help restaurants take advantage of these opportunities, allowing them to enhance customer experience and improve efficiency. Learn how to apply for a Digitalisation Grant for your restaurant here.
5. Alcohol and Excise Duties Remain Steady
Similar to 2024, excise duties on alcohol remain unchanged in 2025. This decision has been welcomed by the restaurant and hospitality sector, as alcohol sales often represent a significant portion of revenue. However, industry leaders emphasise that while this helps, it does not offset the challenges posed by increased VAT and labor costs.
Opportunities and Challenges Ahead
While Budget 2025 offers some positive steps, particularly in terms of energy and sustainability support, it’s clear that the restaurant industry continues to face substantial hurdles. The lack of VAT relief is a particular sticking point for many business owners who feel the government has not fully addressed the pressures they face.Cummins and the RAI are pushing for additional measures to help the sector, particularly more targeted VAT relief or a reintroduction of the lower 9% rate for hospitality. “The government needs to take a more nuanced approach to support restaurants. We’ve been a pillar of local economies and tourism, and without further assistance, many small businesses will not survive the year,” Cummins stated.
What Can Restaurants Do?
To navigate the challenges ahead, restaurant owners will need to focus on strategies to maintain profitability while managing rising costs. This might include:
- Price Adjustments: Considering whether to pass on VAT and wage increases to customers without deterring footfall.
- Efficiency Improvements: Investing in digital tools and more sustainable energy solutions to cut costs in the long term.
- Staffing Adjustments: Managing labor costs through strategic scheduling, cross-training staff, and improving operational efficiency.
Daniel Cozzo, the owner of Farina Pizza, has turned to Flipdish self-service kiosk technology to help with staffing issues, saying that: “The kiosk works really great for us. It’s absolutely fantastic. We’re so so busy. Whenever there is a queue here, it frees up a member of staff to get on with different things that need to be done”. Read more about how Daniel is navigating rising costs here.
“Our small coffee shop was loosing money and I was about to close it down when we discovered Flipdish. The coffee shop is now 100% self service using Flipdish 15” Kiosk and is back in the black. Customer service and setup was second to none.” says Beanos Coffee Emporium owner, Marcus Wallace.
In Numbers:
- VAT Rate: Remains at 13.5% in 2025, no relief for hospitality.
- Minimum Wage Increase: €13.50 per hour (up from €12.70 in 2024).
- Power Up Grants: €4,000 Power Up Grant to help offset rising energy costs.
- Sustainability Grants: Available to help restaurants reduce their environmental impact and long-term operational costs.
- Digitalisation Grants: Expanded support for investing in digital tools and improving efficiency.
Flipdish is committed to supporting the Irish hospitality industry and restaurant businesses by providing cutting-edge digital solutions that empower operators to thrive in an increasingly competitive market. As a trusted partner, Flipdish helps restaurants streamline their operations, enhance customer engagement, and boost revenue through advanced technology such as online ordering websites and apps, point-of-sale, and integrated marketing tools. By simplifying processes and enabling data-driven decision-making, Flipdish enables restaurant owners to focus on what matters most—delivering exceptional service and food to their customers. With a deep understanding of the unique challenges faced by the hospitality sector, Flipdish remains dedicated to helping Irish restaurants adapt, grow, and succeed in the digital age.
