Christmas pints have been cancelled and thousands of jobs are on the line as the Government confirmed pubs and restaurants will not reopen fully this year.
Bars and restaurants will remain at Level 3 of the Government's Living with Covid plan when the current lockdown ends.
In a conference call with business leaders on Monday night, Tánaiste Leo Varadkar told those in the hospitality sector it is unlikely they will reopen before Christmas.
"He basically said he didn't see the country getting to Level 2 the way things are at the moment and that he couldn't see pubs and restaurants opening properly before the end of the year," the source said.
A spokesperson for the Department of Business, Enterprise and Innovation said the Tánaiste understands "how difficult this news is for business owners and their staff".
"The Tánaiste convened a virtual meeting of business leaders following on from the decision to move to Level 5.
"The Level 5 restrictions are being brought in to slow the spread of the virus and protect lives. The current trajectory would suggest that Level 3 is a realistic ambition for early December.
"However, the situation will be kept under review throughout Level 5, and we have a clear exit strategy in place based on the reproductive rate of the virus and the overall trend in case numbers."
Finance Minister Paschal Donohoe told a press conference yesterday that pubs will not be allowed to reopen fully in the run-up to Christmas.
Level 5 restrictions are due to end on December 1 and it is likely the country will remain at Level 3 until the New Year, he said.
"That is why we brought in a VAT rate of 9pc and it's why we will maintain the Employment Wage Subsidy Scheme up to the 31st of March," Mr Donohoe said.
The announcement will come as a devastating blow to thousands of businesses. In Dublin, so-called 'wet pubs' have been closed since March 15.
Under Level 5 restrictions, which will be in place for the next six weeks, bars, starting from midnight tonight, restaurants and cafes are only allowed to provide takeaway service.
If the country moves to Level 3 when this lockdown is lifted, restrictions will see indoor service in bars and restaurants prohibited, with customers served outdoors.
However, Adrian Cummins, CEO of the Restaurants Association of Ireland, said: "Level 3 outdoor dining doesn't work in December."