Waitress wearing face protective mask bringing ordered pizza to guests.
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Perhaps one of the greatest impacts of the new federal mandate is on the already troubling labor shortage

How Will Biden’s Vaccine Mandate Affect Restaurants?

As always with COVID obstacles, there are far more questions than answers.

Navigating the past 18 months of COVID-19 restrictions has been a whirlwind experience for restaurants. With unpredictable new guidelines emerging left and right, they had to adapt and survive, and do so again. 

On September 9, President Joe Biden announced yet another fresh rule, calling for restaurants and businesses with 100 or more workers to mandate vaccines or test unvaccinated employees weekly.

As of Thursday, the attorneys general of 24 states wrote to Biden that they will fight the mandate and pursue legal action. The states (Alabama, Alaska, Arizona, Arkansas, Florida, Georgia, Indiana, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, New Hampshire, North Dakota, Ohio, Oklahoma, South Carolina, South Dakota, Texas, Utah, West Virginia and Wyoming) said the mandate will drive more Americans out of the job market, damaging the labor market even more. 

The letter called Biden’s plan “disastrous and counterproductive” and questioned if the Occupational Safety and Health Administration has the authority to enforce the mandate. The White House has not responded to the letter.

Alongside the pushback, this isn’t the first vaccine mandate affecting restaurants. New York City Mayor Bill de Blasio announced in mid-August the city would require proof of vaccination against COVID-19 for those dining indoors. Shortly after, San Francisco and New Orleans outlined similar plans.

The vaccine mandates and overall concern over the Delta variant might have contributed to decreased foot traffic in restaurants over the summer, according to data from GroundTruth. From July to August, New York City restaurants saw a 6 percent decrease; San Francisco was down 10 percent; and New Orleans 15 percent, although Hurricanes Henri and Ida may have played a role in those latter numbers. In September thus far, these cities’ restaurants saw between a 13–36 percent decline in foot traffic.

READ MORE: Forces Collide as Restaurants Start Asking for Vaccination Proof

The federal requirement continues the seemingly hurdles restaurants have faced since March 2020, says Michael Krueger, a lawyer at Newmeyer Dillion who regularly advises operators in the Bay area. There’s already a thin pool of employees as a result of a labor shortage sparked by the pandemic. The Bureau of Labor Statistics August jobs report showed restaurant and bar employment fell 41,500, the first downturn in eight months. Restaurant and bar employment is remains 966,300 below pre-pandemic levels

“The restaurants have been playing a game of pinball here,” Krueger says. “They've got one regulation over here and another one over there, and there's just so many things they have to go through even to continue operating.”

The greater obstacle in the federal vaccine mandate for these 100-plus employee restaurants may actually be in the other option: testing unvaccinated workers weekly. This opens up the question of who foots the bill? The employee or employer?

Bo Peabody, co-owner of Mezze Restaurant, a board member for the Boqueria Restaurant Group and the co-founder of restaurant tech company Seated, said the expense should not prove too much to handle for the larger restaurant groups the federal law targets. These restaurants tend to have several locations, high revenue, and the funds to meet this added expense. Granted, it’s not yet clear if the 100-employee rule is per venue or overall. Smaller mom-and-pop restaurants would have a more difficult challenge.

“The 100 employees threshold is pretty thoughtful,” Peabody says. “That's the reason, is that if you have a business with 25 people and seven of them are unvaccinated, being able to test those people all the time is quite a burden for an organization.”

There are also unknown specifics on which testing will be approved, among other questions.

“What kind of penalties does a restaurant have?” Krueger says. “What happens if the employees get these fake vaccine cards? ... Does that fall on the restaurants? There's a lot of uncertainty as to how it's going to be.”

Legally, Krueger predicts the consequences of fake vaccine cards would come down to a reasonable standard protocol. This means that restaurants would not be held liable if they believed a legitimate looking vaccine card was real, similar to I-9 employment eligibility verification. 

“I see this as costly to the restaurant owners if they're forced to do the testing,” Krueger says. “If they're not forced to pay for the testing, then I don't think this mandate alone will have any impact on the restaurant.”

Some restaurants may elect to only hire employees who are vaccinated if paying for regular testing proves too costly or difficult.

“It's definitely teeing everything up for employment lawsuits and litigation, but at the end of the day, you got to figure out what's going to be the best for the business and how is this business going to survive,” Krueger says.

Peabody, with numerous restaurants in New York City, acknowledges there is a small number of people no longer able to dine with the city’s new rule, which affects a restaurant’s bottom line. Outdoor dining has prevailed in the city, but with colder weather coming, operators are getting more nervous about the Delta variant’s impact.

“The real concern about going out and the safety is that their kids can't get vaccinated,” Krueger says. “Once that does happen, I think you're going to see a much larger return to going out to restaurants with kids.”

The No. 1 mandate concern for Peabody’s restaurants was the potential stress of having staff check patrons’ vaccination cards. So far it hasn’t been difficult, and customers are understanding of restaurants following the law. But there are rare exceptions, like what occurred at a Carmine’s restaurant in New York City when a hostess was attacked for asking guests to show proof of vaccination.

Clearly, customer sentiment will vary greatly depending on the customer’s individual view on vaccines. Those against mandates may not support restaurants, while those in favor could feel more confident with in-person dining, Krueger says.

“They know that if they have to show the proof of the vaccine to get into a restaurant, and they still go to that restaurant, they're just looking for a fight,” Krueger says. “But I think what this does is for the vast majority of the population who don't oppose vaccines, I think it is going to give them reassurance.”

Perhaps one of the greatest impacts of the new federal mandate is on the already troubling labor shortage. Peabody says there is a larger intersection between restaurant workers and the unvaccinated than the general public. While he believes higher wages are necessary to get through the shortage overall, the mandate creates another barrier.

READ MORE: Will the Holiday Season Ease Restaurants’ Hiring Woes?

“The labor issue is just going to continue to be a problem,” Peabody says. “The more things you put in the way of people working at restaurants, the harder it's going to be for restaurants to expand and for new ones to open.”

One restaurant, The Player’s Retreat in Raleigh, North Carolina, took matters into its own hands long before any vaccine mandate. The Player’s Retreat was one of the first restaurants in the country to require proof of vaccination to dine indoors, starting in mid-June, for the safety of employees and guests. The decision worked for The Player’s Retreat, which is at 100 percent staffing, and saw more than 10,000 people sign up to be a part of the “PR: I’m Vaxxed!” program. Customers who are vaccinated and show proof get a badge from the restaurant.

Overall, those who still do not feel safe will likely not change their dining habits.

“There's a natural equilibrium among diners,” Peabody says. “I think that if you aren't comfortable going out, you're just not going to go out.”

In light of looming challenges, restaurants are embracing new technology in ways they never did before, Peabody says. One way restaurants can incorporate tech into how they handle new vaccine mandates is by making sure customers who make reservations know the rule prior to showing up to the host stand.

“That is the No. 1 thing that we can all do, is just make sure that there's no one that shows up to that restaurant that doesn't have proof of vaccinations because that's the worst,” Peabody says. “We call it a host stand issue. You don't want a confrontation at the host stand.”

For one subset of the unvaccinated population, going out to eat is important enough to them that they will choose to become vaccinated because of the city mandates, Peabody says.

The pandemic, and its restrictions, demanded restaurants shift models to favor off-premises orders, outdoor dining, and virtual offerings. Even before COVID, Chick-fil-A was one chain that came out with plans to open units without indoor dining space, something Krueger predicts will have a role in the future of the restaurant industry.

The true pivotal moment nationwide for larger groups returning to in-person dining with kids may depend on the day when children can receive vaccines, Krueger says. He thinks this might also be when Americans see less of a push for adults to get the vaccine. In Black Box Intelligence’s recent weekly update, casual dining was the only segment that didn’t improve week-over-week and family dining was the weakest segment based on sales growth.

“The real concern about going out and the safety is that their kids can't get vaccinated,” Krueger says. “Once that does happen, I think you're going to see a much larger return to going out to restaurants with kids.”