Reduced VAT rate will give hospitality sector 'breathing space' says former Limerick restaurant owner

A FORMER co-owner of a County Limerick restaurant has welcomed the reduced VAT rate for the hospitality sector, saying it will give small businesses a “confidence boost and security that it is coming.”

Jose Philpott co-owned Molly’s of Kilfinane for 23 years, along with her husband Paul Philpott, who everyone knew as Phil, and her sister Marie.

They called time on the enterprise in early September, having run a successful small business through a recession, pandemic and Brexit.

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Speaking about deciding to sell after more than two decades of trading in the heart of Kilfinane, Ms Philpott said that they have served their time, they loved every minute, but it was the right time to move on and let someone else into Molly’s, to make it their own.

Speaking to the Limerick Leader, Ms Philpott said that when the VAT rate is high, it is felt very keenly, but when it goes down, while the reduction is welcome, it doesn’t have as big an impact.

Budget 2026 will see the hospitality VAT rate decrease from 13.5% to 9%, but the reduction will not come into force until July of next year.

“It’s not as visible a difference when the rate comes down, but for me, it’s like small businesses being heard, especially in Ireland with so many sectors screaming out for supports, this will mean that people in hospitality can breathe,” Ms Philpott said.

While there might be boosts when tourists visit, they weren’t a seasonally-based business with really high footfall summers and very quiet winters, where as she said, “the busy time offsets the quiet time.”

“Small businesses like what we had, have a base clientele who are consistent throughout the year, the regular footfall of locals - that was our core business. That was our whole ethos, we ran our business with love and we put so much into it, there was always that personal touch. We had people coming in four or five times a week and if our price point was a fracture higher, that could have been the difference with those people coming in every couple of weeks instead.”

She stressed that from her experience, they learned as owners that you need to get the price point right to survive different economic cycles.

“A big part of hospitality is going over and above what is required, you are giving hospitality, you have to make money at the same time, but there won’t be any millionaire made. Having compassion is our nugget of gold.”

She finished by saying that for someone who is struggling to keep the doors open, or who is on the fence about closing up shop, this VAT rate coming next July might just give them hope.

“It might let them hold their position and I’d urge anyone who is unsure not to let this close them down, just wait and hold,” she advised.