Pat McDonagh went from school teacher to one of Ireland’s most successful and respected business leaders. His flagship enterprise, Supermac’s, currently has a turnover in excess of €83m and has over 2,500 employees in just under 100 branches. Today it serves an average of over 320,000 customers a week.
In the latest instalment of his exclusive JOE.ie column, Pat looks back on a week when Irish businesses took a hammering.
Last week wasn’t a good one for Irish business. It began with our credit rating being downgraded to AA- which means it is now going to cost banks more when they borrow from European financial institutions. When this additional expense is passed on, the cost of borrowing is going to go up by at least one per cent for the average business person. It’s difficult enough as it is to get money from the banks but this is going to make it even more difficult.
Next up was the Government’s ludicrous idea of an extra tax on commercial vehicles if they are going to be used for private use. It is initiatives like this which makes me wonder if the Government is in any way in touch with common people and how things work on the ground. The idea of adding on an extra tax because someone uses their vehicle at weekends to maybe go shopping is ridiculous. To expect the gardaà to implement something like that is an incredible suggestion.
And then we had the news of electricity price hikes. A charge from the ESB because of increased fuel costs would be one thing, but this has come about as a result of a decision made at a political level. It’s essentially a ‘green tax’ on energy, and at a time when we are the second most expensive country in the EU when it comes to energy costs.
This increase will impact on everyone equally, regardless of income. Everyone uses electricity and every day there are 30 people, members of the general public, being cut off because they are not able to pay their bills. Why would any sane person even think of introducing a five per cent surcharge on electricity at a time like this?
Five per cent is no inconsiderable increase. For us, right across the board of our franchise, we pay in excess of €2.5 million per year to the electricity and gas boards. Five per cent on top of that is another €125,000. It just doesn’t make sense at a time when everybody is trying to be as competitive as possible.
The silent majority will eventually say enough is enough.
We are heading nearer a revolution by the day because some of these suggestions are so far out of touch with the reality of what is happening on the ground that the silent majority, which has been accepting this type of thing for a long time now, will eventually say enough is enough.
I saw recently that the numbers through Dublin airport are down by 1.5 million – from 12 million to 10.5 million. You would have to assume that there are probably similar declines in every other airport and port of entry across the country. At the moment, we should be trying to bring tourists into the country but in order to grow our arrival rates we simply have to become more competitive. If you add surcharges like this five per cent hike in electricity, on top of various other ever-increasing rates, it’s going to be very hard for businesses to be as competitive as they need to be to attract tourists back in.
Luckily, ‘staycations’ have been pretty good this year which has somewhat compensated for the declining numbers coming from the US, the UK and from the Continent. But let’s be honest, we have gone from having a reputation as a friendly, good value destination to being regarded as over-expensive and even a rip-off for tourists.
We can see the impact this is having – some 40 to 50 hotels are expected to close over the next 12 months. Tourism is one of the key areas for the future. Ireland needs to regain its status as a value destination and get in extra revenue. After all, with the amount of money the Government is going to need to pay off the billions it is borrowing, every cent will count.
