“We have gone through boom and bust on many occasions, but this is different,” the co-founder of Dublin restaurant group Kinara, Seán Collender, said.
“We went through the dot-com bubble and the financial crisis from 2007 to 2011, but the big difference then was, you could see the light at the end of the tunnel.”
Unlike those crises, the challenge facing the hospitality sector now is coming from increases to input costs “from every angle” in the aftermath of Covid-19, the war in Ukraine and escalating labour costs.
Collender is not a newcomer to the industry, he has seen its fortunes come and go, but is particularly concerned now.
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He first worked in hospitality in his teens – in Adare Manor and Bunratty Castle – glamorous jobs, he said, but “I did work in a few burger joints as well”.
However, it was in a gap year in Australia during his early career in business and accountancy that he found his love for the sector. “For pretty much the whole year I worked in hospitality, from table waiting to sandwich making to pot washing ... It was the pot washing that pushed me more to the front of house side!”
Returning to Ireland, Collender had his heart set on opening a cafe with an Aussie-inspired approach in mind – “They were doing good quality food at reasonable prices in a casual environment.”
Collender looked around the nicely upholstered upper floor of his Clontarf restaurant with its linen tablecloths and laughed – perhaps not quite the casual dining he had first imagined.
[ ‘Economic vandalism’: Unions condemn plan to cut VAT for hospitality sectorOpens in new window ]
The plan changed when Collender met his long-term partner and friend, Shoaib Yunus. Originally from Karachi in Pakistan, Yunus was the manager of the Khyber Tandoori restaurant in Dublin and the two struck up a friendship which led to the opening of the Kinara restaurant in Clontarf.
The property came up for sale after previous occupiers, a French restaurant, closed and Kinara was opened shortly after in 2001 by “some local sports guy” named Brian O’Driscoll. “Little did we know at the time that Brian guy was going to be extremely successful.”
Founded in the middle of the dot-com bubble, Collender noted they “opened at a tricky time” but through consistency in the food and an emphasis on service, they found their place in the local community.
A staple on the North Dublin coastline for more than 25 years , the duo first expanded to open Kajjal Malahide in 2007, with further expansion leading the company to Ranelagh and soon after, Killester.
The Kinara brand has become a fixture at festivals, as the company sought to find alternative revenue streams amid the challenging conditions facing the sector. The success of that streamlined and more casual style of eating has led to the group planning to open a small cafe grill in line with Collender’s original dream. “Eventually I got there,” he said.
It is a sign of the construction inflation that has been constant in recent years, however, that the cost of fitting out the new cafe grill, to be named Khoka, is set to cost the business an “astronomical” €600,000 for just a 1,000 square metre unit.
“A lot of that money, and this is the sad part, the customer won’t even see,” he said, explaining that regulatory, planning and construction costs have risen significantly to a level that is jeopardising the risk-reward for those planning to open new restaurants. “Would I do it if this was my first one? I don’t think I would.”
A lot of businesses are under severe pressure, huge pressure. A lot of businesses still have warehoused debt from Covid
The project has been in the works for years, with the disruption of the Covid-19 pandemic having an impact on the company’s plans, “Everything was put on hold.”
During the pandemic, the restaurants had to “pivot ... no I hate that word, change our model” to a takeaway service in part as a bid to retain the long-standing chefs. He praised the Government assistance with the wage subsidy scheme, which he said was “crucial to everyone surviving” the pandemic.
During that crisis, the Government stepped in with temporary measures on a short-term basis, but now Collender is echoing calls for a reduction in the VAT rate to 9 per cent in a permanent measure to aid the viability of the industry.
In the hospitality sector, he said, “a lot of businesses are under severe pressure, huge pressure. A lot of businesses still have warehoused debt from Covid.”
Collender points to a series of “high-profile businesses” in the sector which are facing financial woes or have filed for examinership despite being “good businesses with good, steady business models”, as a result of the cost pressures in the sector.
It isn’t Collender’s first time speaking about the issue. Less than two weeks ago he appeared in front of the Oireachtas committee on enterprise, trade and employment in his role as president of the Restaurants Association of Ireland.
[ Government likely to delay VAT reduction for hospitality sector until mid-2026Opens in new window ]
In the appearance he alluded to the impact of rising costs on his own business.
“We had to take the unfortunate step of closing on Mondays and Tuesdays for all three restaurants post-Covid, it was just getting too difficult,” he told The Irish Times. “The concern around costs, even at that point, was a real issue. It is a shame we had to do that because, obviously, we had to reduce our staffing as well.” Despite those initial cuts, recent increases to the minimum wage have left restaurants on “an extremely fine line”.
Traditionally, Collender explains, labour cost in the group’s restaurants sits at a ratio of around 33 per cent of net turnover. “Now we are struggling to maintain it around the 43 per cent,” he said, with one of their locations seeing the ratio reach “as high as 50 per cent”.
He said “nobody is against” the attempts to increase the minimum wage to a living wage but that increases have left restaurateurs wondering, “How do you run a business? How do you make a margin? How do you look after locals? Because everyone has a price point where they go, ‘That’s enough.’”
The pressure isn’t just coming from labour – costs across the board are rising. Kinara’s electricity bill normally stood at around €3,000 per month, but external pressures led to that increasing to €12,000 a month for just one of their spaces in recent years; the gas costs rose from around €1,800 for the same period to €5,500.
“These are huge, huge costs – and we don’t sell gold bars, we sell food.”
Amid all of these costs, Kinara has felt forced to make “three small increases” to its prices in the past year, “Because we would have been in serious trouble if we didn’t. Even with those, we are looking at it and saying, if the VAT rate doesn’t go back to 9 per cent then we have an issue.”
