Pat McDonagh is not a small man in stature. When he walks into a room he has an immediate effect on all of those around him. When he speaks, with 40 years of considerable experience behind him as a successful businessman and fast food restaurateur, most people tend to listen fairly carefully too.
McDonagh founded his famous Supermac’s brand in Ballinasloe in County Galway in 1978. It’s still open there, of course. Since then, he has expanded the franchise to over a hundred more shops across the country. Nowadays, Supermac’s is not the only business that McDonagh and his wife Una are involved with. He owns Claddagh Irish Pubs, a food chain in the US, and in 2006 he bought the franchise rights for Papa John’s Pizza stores – with 63 of those restaurants now open right across the country – many of them next to his beloved Supermac’s stores.
The face of his ‘chip shops’ has changed, of course, from your traditional small store with a juke box in the corner to a very modern and very busy roadside filling station-type operation such as the infamous Barack Obama Plaza in Moneygall, the N6 Galway Plaza, and the new one in Kinnegad which he opened in recent years. And then there’s the hotels. McDonagh owns the Athlone Springs here in County Roscommon, the Killeshin Hotel in Portlaoise, the Lough Rea Hotel & Spa, and the Charleville Park Hotel, Cork. They are all really impressive operations.
It’s against the backdrop of this undoubtedly fine business acumen that I asked McDonagh a question on the state of the Irish economy and rural Ireland at a conference in Athlone last Friday.
The Supermac’s man was in the Sheraton Hotel to help mark the 30th anniversary of the Irish Rural Link organisation with the Minister for Rural and Community Affairs Heather Humphreys. While he cast his eyes back on the last three decades for a while, it was his brutally frank comments on the future and the next few years in particular that made one or two hairs stand on heads in the venue.
“We’re heading for a world food shortage” McDonagh told the audience, bluntly, adding “probably before the end of this year – and there will be repercussions for us all when this happens”.
The Ukraine war is the event that seems to be at the centre of most of Pat McDonagh’s concerns, with the knock-on effect on the international sale of wheat and barley up there at the top of the list of issues. When I spoke to him after the conference had ended, he also had a sobering message about our own economy here in Ireland.
“It has all the hallmarks of a recession coming our way” the entrepreneur told me. “The construction inflation followed by the shortage of labour and now the spiralling cost of living are all going to point us in the direction of a recession – and it’s all coming down the line now”.
I asked McDonagh whether or not he intends to proceed with a plan he proposed a couple of years back to build a new hotel on the bypass of Longford town. The same set of economic considerations surfaced to haunt the conversation.
“Not at the present time…with the price of construction” he candidly admitted.
We talked briefly about a major housing development in Athlone – which has also been effectively shut down in recent weeks due to construction inflation. He predicted that many, many more infrastructural projects around the country would also be put on hold in the coming weeks. It was sobering stuff.
Before the day was out, part of Pat McDonagh’s prophecies were coming into being with news that hundreds of thousands of mortgage holders could face a hike of up to €300 a month in their repayments as interest rates begin to rise from the summer. We learned that the European Central Bank is preparing to increase interest rates for the first time in more than a decade. The first hike of 0.25% could come as early as this July.
This outlook has huge implications for us all and would see a rise in monthly repayments for about 722,000 family homes and 88,000 buy-to-let mortgage holders here who are already feeling the squeeze from soaring electricity and gas costs every month. The so-called financial experts are already warning that the expected hike of 0.25% in July will be followed by another 0.25% increase before the end of the year, piling more pressure on homeowners. By 2024, it is predicted by some that rates could rise by at least 2.5%, so we are being told now to brace ourselves for tougher times ahead.
The dire food shortage prediction is firmly based on economics too. Pat McDonagh’s view is shared by AIB chief economist Oliver Mangan. He recently said that prices of goods and services in this country are on the brink of surging by nearly 10 per cent as a result of Vladimir Putin’s invasion of Ukraine. Mr Mangan predicted that people can expect a damaging hit to their disposable income “before too long”, as wage increases will not match the unexpected inflation hikes, which he says could “lash consumers” over the next three years.
“It is not just oil and gas,” says Mr Mangan, “but a broad range of commodity prices, particularly wheat, but also things like nickel (used extensively by the car industry). Commodity prices are on fire. Who would have thought the Irish government would have had farmers pleading with them to plant crops a few weeks ago, as we could be short of wheat?”
Mr Mangan says it is a “strange time to say the least” for the Irish economy. Having coped with the fall-out of Brexit, then the Covid pandemic, the Russian onslaught on Ukraine has created “a lot of economic uncertainty” for the near future, he says.
Another person on the floor of our conference summed up that growing sense of unease by asking one of our economists on the panel on Friday if he had any suggestions by way of a master plan to help us save money in the country for the ‘rainy day’ fund we are definitely going to need if a recession hits next year.
Pat Mangan explained in a recent TV interview how the two issues coming together can give us all a ‘double whammy’.
“The bottom line here is how that impacts economic activity. One is that higher inflation depresses real disposable incomes,” he says. “Wage growth is not going to keep track with the spike in inflation. That is going to depress economic activity. The uncertainty this brings as well will impact on investment activity and rising prices will spread out over the economy”.
All very sober analysis which makes for a tough 12 months ahead for our economy, that’s if these experts are right.
Pat McDonagh earned the nickname ‘Supermac’ whilst playing Gaelic football for the Carmelite College in Moate in Westmeath during his time in secondary school there. The former teacher with all those hotels and businesses to run will now be hoping he can use his own ‘super’ business skills to ride out the next storm and emerge in good shape on the other side after the predicted next recession. Good luck to him – and to us all.