The minimum wage increase announced in Budget 2024 will just make it “more and more expensive to eat out”, according to Galway restaurateur JP McMahon.
As part of the package announced on Tuesday, the minimum wage is to rise by over 12%, from €11.30 per hour to €12.70 per hour.
The change will kick in from next year.
Advocacy groups like Social Justice Ireland have said the move is welcome but does not go far enough and have called for it to be matched to the Living Wage.
Others have warned that it will further inflate prices in the economy – with restaurant owner JP McMahon tweeting that it is “going to make everything more expensive”.
On Newstalk Breakfast this morning, he said restaurants have no choice but to add the increases to the bill.
“I suppose I was just trying to draw attention to the fact that the restaurant model is very labour-intensive,” he said.
“About 30% or 40% of your overall turnover is wages.
“If the minimum wage keeps on going up, it's just going to get more and more expensive to eat out.”
He said people often complain about how expensive Ireland is compared to European countries like Spain – but warned that Ireland’s minimum wage is now nearly 50% higher than Spain’s.
“Spain has a completely different model and we have so many Spanish chefs working in Ireland because the wages are so much better – and French chefs and Italian chefs,” he said.
“I don't know what the Government’s overall plan is, but if we keep going and the minimum wage gets to €15 …
“People forget that when the minimum wage goes up and that person on the minimum wage gets a rise … the problem is, every single person wants a rise then. You end up, over the course of a year, everybody gets a rise.”
Mr McMahon said people will see the price increase in coffee first before they spread to other parts of hospitality.
He said restaurants will either increase prices or cut back on quality.
“When labour gets very, very expensive, a lot of restaurants turn towards really cheap food to try and make their money,” he said.
“It just creates a load of … fast food restaurants because people still want to go out but they just don't have the money, so I think sometimes it actually is counterintuitive and it lowers the quality of food.”
Responding to the Budget yesterday, Social Justice Ireland spokesperson Colette Bennett said the minimum wage should be increased further.
“It is one of the highest increases we have seen; however, we are still lagging €2.10 behind the Living Wage,” she said.
“That is based on the actual costs of living, so we are not talking luxuries here, we are talking about your basics.
The Living Wage is the average gross salary that would enable a full-time employed adult with no children to afford a socially acceptable standard of living.
She said some businesses will struggle with the increases and said SJI has recommended a Temporary Wage Subsidy-style scheme to help struggling businesses.
You can listen back to JP McMahon here: