There are warnings some restaurants will not be able to survive increased costs coming on stream this year.
The Restaurants Association of Ireland says the increase in Vat, wage increases and other rising costs are creating a perfect storm for the sector.
It insists the Government's decision to raise the Vat rate in the budget will harm the industry.
Adrian Cummins, CEO of the RAI says the move is unsustainable.
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"It will have a huge impact on competitiveness, it will have a huge impact on profitability for restaurants and many restaurants won't survive this increase," he said.
"We've said to the Government that a 50% increase from 9% to 13.5% is unsustainable for our industry."