Pat McDonagh warns 10% of small catering businesses could close

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Galway Daily business Pat McDonagh warns 10% of small catering businesses could close
Supermac's founder and CEO warns that many small businesses will not be able to absorb rising costs in multiple areas

Supermac’s founder Pat McDonagh has predicted that it’s going to be a tough winter for businesses in the food and hospitality industry, with the chance that up to 10% might close in the coming months.

The Galway man said that small businesses in particular will be hard hit by the energy crisis, predicting that by Christmas, electricity prices will have gone up by 200% compared with last December.

McDonagh is the owner of the Supermac’s fast food chain, along with several motorway plazas and hotels in Ireland.

In a video posted to Supermac’s LinkedIn account, he said that the energy crisis will be one of Ireland’s biggest challenges in the next 12 months.

“What I would be afraid of is that anyone that’s using a lot of electricity in their business, whether it’s in catering or manufacturing or whatever, it’s going to have a major impact.”

“I would foresee that 10% of smaller businesses on the catering side of things, whether it’s coffee shops or takeaways, or whatever, cannot afford and will not be able to afford to continue with that huge increase.”

He noted that they have already seen their energy bills go up by 154% this year, and predicted that this will hit 200% by Christmas.

“Whereas we were paying 14.9c per unit last December, that went in January to 38c a unit, then it went back to 26c a unit, and now it’s gone up to 38c again, with the expectation that it’s going to go close to 50c before Christmas.”

It’s not just rising electricity costs that are causing the problem, McDonagh said, but a “perfect storm” of rising energy and food costs, rising interest rates, and disposable income becoming scarcer.

As many as 10% of businesses in the sector, smaller businesses in particular, would close down as a result, he predicted.

“People will not be able to afford to pay all the increase in charges, whether it’s electricity, food costs, labour costs, interest costs or whatever. I think you’ll have a pretty tough next six months.”

Electricity

Pat McDonagh also called for the reopening of the Derrybrien Wind Farm, and said that the government should considering reopening the Lanesborough and Shannonbridge peat fired power stations.

“From where we’re sitting at the moment there’s 71 wind turbines that can produce enough electricity for 40,000 households, yet they’re lying idle.”

“We’re in a crisis situation, and in a crisis situation sometimes decisions have to be made. It’s green energy, it can be turned on in the morning, and why not do that?”

The ESB announced back in March that it would be decommissioning the Derrybrien Wind Farm in south Galway, after failing to secure substitute consent for the development.

In 2019, the wind farm was found to be in breach of environmental regulations by the EU Court of Justice, related to a 2003 landslide that occurred while it was still under construction.

The best way to deal with the energy crisis is to, he added, is to, “turn on whatever power you have.”

“If they can possibly reopen Lanesborough and Shannonbridge, I think those power stations that have been closed should be looked at to reopen.”

McDonagh lastly said that improvements need to be made to the planning process, to allow wind and solar developments as a matter of urgency.