A survey failed to find a single firm that will commit to cutting prices after the budget Vat reduction kicks in next summer.
The survey included McDonald’s, Supermac’s, KFC, Burger King, Starbucks, Costa Coffee as well as business including The Shelbourne and Westbury hotels.
McDonald’s was the only firm to reply to queries yesterday. In a short statement, it called the budget Vat cut “a welcome step for our 95 restaurants across the Republic of Ireland, each owned and operated by Irish franchisees – independent small and medium-sized business owners who live in the communities they serve and, together, directly employ over 7,000 people locally”.
The company did not specifically comment on whether it would pass on the Vat reduction to customers.
The cut, announced as part of Budget 2026, will reduce the Vat rate for food-led hospitality, catering businesses and hairdressing services from 13.5pc to 9pc, taking effect from next July 1.
It is up to owners to decide ‘what price they charge, what profit level they have’
Vat is charged on top of the price of a meal and is a consumption tax. In theory, a tax cut will reduce prices for consumers unless operators in effect raise their prices to keep the cost to customers the same.
However, Government ministers have described the change as an attempt to safeguard employment rather than to lower consumer prices.
The measure is expected to cost the Exchequer €232m in 2026 and €681m over a full year. It will not apply to hotel accommodation.
Minister for Enterprise, Tourism and Employment Peter Burke said the purpose was to “inject viability” into a sector where many businesses remain under strain.
He added that it is up to owners to decide “what price they charge, what profit level they have”.
He also noted that under EU law, the State cannot apply different Vat rates to large or small businesses, meaning global chains cannot be excluded.
While the measure has been broadly welcomed, industry figures have questioned whether it will have any direct benefit for consumers.
Business groups said the Vat reduction “won’t save the sector”, warning that continuing increases in labour, energy, insurance and supply costs will absorb much of the gain.
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