Restaurant says that survival is now the goal with rising costs
A RESTAURANT “wants to keep feeding” its loyal customers, however with rising energy and production costs, “survival is now the goal” in what is described as an “extremely precarious time”.
Peachtree East, which employs 25 people who all live locally, has seen its energy bills and the costs associated with providing good quality produce increasing at a rapid pace in recent months.
“Every week, I’m getting emails or letters attached with dockets on deliveries saying increase, increase, increase,” Paul Phillips, owner of Peachtree East, tells The Echo.
“The business model that we had pre-Covid is not sustainable now, the business model is broken.
“Everybody knows about the war and how it is driving energy bills through the roof, but we’re also seeing our food costs and packaging bills increasing as well.
“Our energy and gas have more than doubled. There has been an increase in costs for our suppliers.
“Everyone who gets into the restaurant industry or the hospitality sector wants to provide good quality produce at good value.
“We’re seeing 30 percent price rises in our base foundation ingredients, your flour, eggs, milk, and those things.
“We can absorb so much but we have to pass some of the costs onto our price, but we can only really increase our prices by four/five percent on our dishes.
“There is only so much we can increase our own prices before it becomes laughable.
“The narrative out there at the moment is that restaurants are either closing or increasing their prices.
“What’s happening is we’re being pushed into a situation where regardless of what decision we make, it’s a bad decision and it’s not sustainable – it’s an extremely precarious situation.”
Since May, Electric Ireland has increased electricity and gas bills three times.
Pat Fenlon of Electric Ireland recently told the Joint Oireachtas Committee on Environment and Climate Action about how increases in wholesale energy costs are being passed on to customers.
Energy costs have increased substantially since the start of the year, with “unprecedented rises in wholesale gas prices in excess of 700 percent in the last 12 months”, Mr Fenlon said.
It was pointed out by Mr Fenlon that Electric Ireland’s annual wholesale energy costs were €300m two years ago, and they are now expected to hit €2 billion.
These sentiments are echoed by multiple energy providers in Ireland with customers being hit with price hikes in their energy bills month on month.
For Mr Phillips of Peachtree East, he sees survival as the goal for a lot of small and medium enterprises (SMEs) and those working in the hospitality industry.
With the country in the throws of dealing with a cost of living crises, on top of the energy crises, Peachtree East has tried to diversify to cater for a wider array of customer.
“We’ve tried to diversify as much as possible, we’re like a hotel without the bedrooms,” Mr Phillips said.
“So, we have the corporate side and the outdoor, as well as our lunch and dinner trade, and we’d hope that would be enough to see us through.
“I would imagine for a lot of SMEs, and a lot of businesses in the hospitality industry, that survival is now the goal, and we can only hope to see it through the next few months because it’s going to be very difficult.
“We have a great team here, they’re all local and everyone is trying their best.
“But when all your costs are increasing, and you’re pushed into a corner, you have to try not become a loss making entity.
“We want to keep feeding the people of Tallaght – and we can only hope that people will keep coming, because we are so grateful for the support.”
Peachtree East is promoting local employment through their 25 staff members.
Paul feels that Budget 2022 was a “big let-down” in how it deals with the hospital industry, which is being “squeezed from every angle” as it tries to balance the energy crisis and cost of living crisis.
With further price hikes coming down the tracks in the future, Paul believes that the “hospitality sector needs to be subsidised by the Government”.
VAT is set to increase from 9 percent to 13.5 percent in March 2023 – another thing for businesses to contend with amid rising energy and production costs.