Up to one-in-10 restaurants could face closure in the coming months, Supermac’s founder Pat McDonagh has warned.

On Breakfast Business with Joe Lynam this morning, the Irish businessman said businesses are facing cost increases across the board – and feel abandoned by Government.

He said he has never received so many calls from people asking if he would be interested in buying their business as they try to sell up and move on.

Mr McDonagh rejected complaints from other business owners about plans to increase the minimum wage – but said there are a host of other costs crippling small businesses.

 

“I think the minimum wage, really, has to go up because the cost of living has increased and the cost of accommodation has increased so dramatically over the last number of years,” he said. “So I don't have any issue with that.”

“However, it's all these extra costs that are attached to business - whether it is, you know, sick pay or pensions or the reintroduction of VAT, of course, was a big one there in September and indeed, your increases in just overheads - increases in insurance, increases in rates etc.

“So I think it's going to be a tough couple of months over the next couple of months for business, especially small business and I would say that there will be a few casualties in that period – probably up to 10% casualties because a lot of businesses won't be able to sustain what's happening.”

Tax warehousing

Meanwhile, many businesses are facing into a May deadline for tax debt that was warehoused during the pandemic.

It is understood that nearly 60,000 businesses have debt warehoused with Revenue – adding up to a total of €1.8bn.

Moreover, around 85% of that debt is held by around 10% of those companies.

Companies with warehoused debt have until May 2024 to either pay the money or reach a Phased Payment Agreement with Revenue.

Closures

Mr McDonagh said the warehoused debt alongside increased costs is leaving many companies facing closure.

“I have never in my 45 years in business got as many calls to see are we interested in buying this or that or whatever – because a lot of people want to get out of business,” he said.

“Not just alone for that reason as well. The law and order issues and that and pilferage and small shops and drive-offs in forecourts etc. – all that is on the increase and you know, I think a lot of businesses feel a little bit abandoned because there doesn’t seem to be anyone concerned about what's happening out there.”

The latest PwC Insolvency Barometer shows that insolvencies rose by 32% last year – with 717 businesses closing their doors.

PwC expects the business failure rate to increase once again this year with overall insolvency levels projected to reach close to 1,000.

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