How will omicron affect the restaurant industry?

Restaurants are back in business.
Restaurants are back in business.
Image: Reuters/ Dylan Martinez
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The covid-19 pandemic upturned the restaurant industry. But while restrictions on indoor dining have eased and customers have steadily returned, the new omicron variant threatens to stall or reverse that progress. The question now facing the industry is how the variant could affect the rules for restaurants and the confidence of consumers.

Overall, restaurants are some of the most regulated businesses when it comes to health and safety. And throughout the pandemic, which is now close to two years old, restaurants have made drastic changes—whether turning to delivery and takeout, investing in technology in response to the labor shortages, or implementing mask mandates—to adjust to the new normal.

The delta variant led to the introduction of vaccine mandates, via state and local legislation or restaurants themselves. “We’re miles ahead of that because we already have all these procedures in place and where we’ve been living with this pandemic now for this long,” says Caroline Styne, a co-founder of the Independent Restaurant Coalition and co-owner of the Lucques group, which includes restaurants like AOC and Larder Baking Company, in Los Angeles.

Restaurants have faced an uneven recovery

The pandemic had hit the industry hard. As of May, 90,000 restaurants have closed permanently or long term, according to the National Restaurant Association. Even big chains like McDonald’s and Chik-fil-A have closed up dining rooms due to hiring challenges and rising covid-19 cases.

The omicron variant could hurt restaurants that don’t have outdoor eating or who have been financially struggling. “And with this news on omicron, it started to push them over the edge, and anyone who is on the brink of survival, are probably recognizing that they won’t make it,” says Styne. “The minute your reservation drops off at all, there goes your revenue or your ability to pay rent.” In September, the coalition had called on Congress for a targeted relief package for restaurants.

Overall, many businesses are still in a wait-and-see approach. Styne says restaurants are currently talking about the potential to invest more in outdoor dining if people don’t want to sit inside or more in PPE.

So far, omicron hasn’t impacted reservations

Much is unclear about the effect of omicron, in regards to its severity and resistance to vaccines. As of Nov. 28, reservations at dine-in establishments have not declined, according to data from OpenTable, a restaurant reservation company. Overall, in the US, reservations on OpenTable are up 4%, and up 7% globally compared to the same day in 2019.

But the road to recovery is uneven in the biggest cities, and could be set back if return-to-office plans continue to be delayed. Reservations for seated diners declined 29% in New York City compared to the same day in 2019. For Los Angeles, it is 16%, and for Chicago, 26%. In those cities, as of last week, only about a third of workers had returned to their offices, according to data from Kastle, a property management company that tracks access-card swipes.

“In New York City there’s already a requirement to show proof of vaccination for indoor dining, so we’re hoping this new variant will not have a significant impact once we learn more about it,” said Andrew Rigie, an executive director at the NYC Hospitality Alliance, a nonprofit organization that advocates for restaurants in the city, in an email. “Restaurants are still facing a long road to recovery and it would be particularly devastating for small businesses and workers if people cancel reservations and companies cancel holiday parties they were counting on.”

Styne mentioned that one of her restaurants she recently opened in downtown LA would be open Monday through Friday but lunch hours are not as busy due to offices in the area not being filled. “People working out of their homes is going to have an effect on our industry for quite a long time,” says Styne.