Following three long lockdowns, Ireland is now thankfully in the recovery phase of its response to the pandemic.
Last January we saw the removal of almost all remaining restrictions which allowed the hospitality industry to revert to normalised trading patterns. City centre footfall and overseas tourism are still not back to pre-pandemic levels but by last summer, both were about 90% of the way there according to relevant data. Throughout 2022, customers could finally enjoy their time in bars and restaurants with pandemic-related restrictions seeming like a thing of the past.
While it was widely expected that the pandemic would see a host of hospitality businesses closing following the pandemic, government subsidies ensured that businesses could keep trading and the closures to date have been quite minimal. Trade during 2022 has been good for many in the industry as customers made up for two years of very restricted socialising, assisted greatly by the fact that tourists also returned. Central Bank data show spending in restaurants to have increased by 19% or €78 million in the year to September 2022, while CSO retail sales index figures indicate spending in bars rose by 13.9% during the same period. It is worth noting that some restrictions were still in place and affecting trade last year but still it is good news for bar and restaurant owners who were hit hard by the lockdowns.
A significant and unforeseen challenge emerging during 2022 was the sharp rise in inflation. Rising energy costs in particular are having a significant impact on the hospitality sector and while the government has offered some supports, this is often not enough. Reducing opening hours seems to be a common reaction among bars and restaurants, along with increased prices, and some have unfortunately made the tough decision to close. Staff shortages have also caused significant issues and while this appears to be easing somewhat, the cost and availability of accommodation remains a major concern which has a direct impact on the entire sector.
Notwithstanding challenging headwinds, demand for well-located and configured opportunities remains strong and 2022 was an active year which saw many new entrants and new openings. Jamie Oliver’s Chequer Lane opened on Exchequer Street having entered into a lease in 2019. Richard Corrigan returned to the Dublin scene with The Park Café in Ballsbridge. Hawksmoor will be opening its first Irish restaurant in the former Abercrombie & Fitch premises on College Green and The Ivy Asia is due to open on Dawson Street next to their very successful Ivy Cafe. Pret a Manger opened its first Irish outlet on Dawson Street with a second opening on Hatch Street before the end of the year.
The success of The Ivy Café and arrival of Hawksmoor have resulted in other large international restaurant groups looking at Dublin and we expect to see a number of these committing to Dublin in 2023. We are aware of at least 25 food & beverage (F&B) brands with active requirements for over 90,000 sq. ft. of retail space across Ireland. While demand is expected to remain strong and good opportunities will be leased up quickly, fitout costs will play an important part in decision making due to rising construction costs. Premises that are fully fitted or partially fitted will be most sought after as it is likely these will already have key elements in situ such as kitchen extractor and air handling systems which make up a significant part of any fitout. ESG is also becoming a significant consideration, particularly among larger operators seeking to manage rising energy costs and we see this as a growing trend. The hospitality industry is always changing and 2023 will be no different as we will see an interesting mix of new entrants along with some operators unfortunately deciding to call time and close.