Covid-19’s Omicron variant is starting to take its toll on companies

Chris Fuselier, owner of the Blake Street Tavern in downtown Denver, said his business has declined since the Omicron variant began to be discovered in the area and the city introduced new Covid-19-related restrictions last month. “We have had a huge decline in the last three weeks,” he said.

Mr. Fuselier said one of his employees also caught the virus in recent days. He closed the bar and restaurant’s lunch service on weekdays last week. “We hoped the downtown workers would return to their offices by the new year,”[ads1]; he said. “Now companies are asking workers to stay home because of Omicron.”

For the week ending November 28, the number of seats in US restaurants was down 4% from 2019 levels, according to data from the website of the reservation service OpenTable. One week later, they were down 9% with the same calculations. The following week, which ended on December 12, the number of seats decreased by 12%, according to the company.

“The last 72 hours are really where things seem to be escalating,” said New York restaurant owner Gabriel Stulman Saturday night, after about nine employees at his four restaurants tested positive for Covid-19. Others struggled to get tests, he said.

As a result, Mr. Stulman’s Joseph Leonard restaurant in Manhattan did not have enough staff to open for brunch on Saturday. He had hoped the restaurant could still open for dinner because Saturday is one of the busiest days, accounting for about 25% of the week’s revenue. Then a new positive test came in and he closed the restaurant until Monday. Mr. Stulman’s restaurants are among those seeking more help from Congress.

Businesses of all kinds have struggled with pandemic-related setbacks for almost two years, from supply chain problems and labor shortages to higher costs and changing government regulations. Many businesses closed. But thanks in part to countless forms of government stimulus and sustained consumer demand, many have so far navigated the pandemic and even boosted profits. The fast-spreading Omicron variant presents the latest test.

Lance Lappin, owner of an anonymous hair salon in downtown Manhattan for about 37 years, said that in recent days, three or four customers have canceled appointments and said they had been close to someone who had tested positive for Covid-19.

Mr. Lappin said that his customer base for years has included many people who worked in offices. But expectations of the return of workers are constantly being shattered. Now, “there is no anchor to hold on to,” he said. “It’s frustrating and exhausting.”

Network President Jeff Zucker cites a wave of Covid-19 cases at CNN on Saturday to employees that it is closing its New York City office with the exception of those who need to be there to do their jobs. The network, which had used its full-scale studios for its shows, will return to using smaller “flash studios” that can be remotely controlled by fewer people, according to a person familiar with the matter.

NBC’s “Saturday Night Live” decided not to have a studio audience on this weekend’s show, and several cast and crew were put on the sidelines with Covid-19. “Tonight everyone on ‘Saturday Night Live’ was planning to do our big Christmas show … but Covid came early this year,” said guest Tom Hanks during the opening of the show.

In Germany, LMC Caravan GmbH stopped production of its recreational vehicles on Wednesday night after an Omicron outbreak at the company’s factory in the state of North Rhine-Westphalia. Around 47 employees tested positive for the new variant, said LMC. Dozens of others have tested positive for coronavirus in rapid tests and are awaiting confirmation via a PCR test. The company plans to resume production on 4 January.

The outbreak frightened LMC’s management because the factory had a vaccination rate of about 75% and a mask mandate, and everyone who was unvaccinated had to be tested daily. “We were shocked,” said Rene Ricken, LMC’s CEO, in a written statement.

“People everywhere are finding it difficult to gather energy for a new chapter in history,” wrote McKinsey & Co. in a blog post for customers on Wednesday.

The consulting firm’s analysis found in a baseline scenario of the latest evidence that Omicron could succeed Delta as the dominant US variant over the next few months and lead to a higher peak disease burden than the US experienced in the second half of 2021.

Some evidence suggests that consumers are faltering again. Shoppers have been fewer in physical stores in the weeks leading up to Christmas. Pedestrian traffic to stores was 23% lower for the week ending December 18, compared to the same week in 2019, according to Sensormatic Solutions, which tracks footprints with cameras placed in stores. This is a slowdown from the two previous weeks, when traffic was 18% and 14% lower than the corresponding weeks in 2019.

It is unclear whether the decline is due to concerns about the Omicron variant or other factors, such as the fact that many consumers choose to start holiday shopping earlier this year.

John Smith, CEO of Wood-Mizer LLC, said the Indianapolis-based wood processing company this month moved its first personal board meeting to virtual at the last minute because of Omicron-related travel policies that could affect its European-based executives.

“We were afraid they might come here and be stuck for a long time,” he said.

The Boston-based Ropes & Gray LLP canceled its 200-person law firm partner lunch on December 15, just before the annual meeting, due to security concerns and Omicron’s proliferation, said Julie Jones, the firm’s 3,000 board chair.

Several people did not panic.

Ryan Gilbert, head of Mysterious Bookshop in lower Manhattan, said Saturday that the store was as busy with customers as it is traditionally at this time of year. Geppetto’s Toy Box in Oak Park, Ill., Was also busy Saturday before Christmas. Eric Masoncup, owner of the upscale toy store in the Chicago suburb, said concern over the latest variant has not deterred buyers so far this season because people are eager to leave their homes.

Costco Wholesale Corp.

COST -0.91%

do not experience new buying patterns in their stores, said CFO Richard Galanti on Saturday. The warehouse retailer has not changed business practices in stores or offices because of Omicron, he said, but “there was more discussion this week than there was last Friday” about it, and the situation is fluid, Galanti said.

Michael McKelvy, CEO of the construction company Gilbane Building Co., said on Sunday that it is business as usual for the company’s offices and construction sites, where it has encouraged vaccination, testing and face coverage. He said that although the company has been following closely the guidance and updates from the Centers for Disease Control and Prevention, he is hopeful “we can manage the Omicron variant in the same way we have worked through the Delta variant.”

Industrial real estate company Prologis Inc.

PLD -1.27%

plans to continue reopening its headquarters in San Francisco on January 10, although employees may work remotely, said CEO Hamid Moghadam. Mr Moghadam said the company had already changed the opening date of the office several times and that he was reluctant to postpone it again. He added that it is unlikely there will be a clear end date for the pandemic when “we’ll say, ‘OK, the day after anyway, everything’s going to be fine.’ ”

LendingTree Inc.

THREE 4.55%

So far, CEO Doug Lebda has not changed any Covid-19 protocols for Charlotte, NC-based company employees due to Omicron, he said.

Mr Lebda plans to return to LendingTree’s offices, where vaccinations are required, during the first week of January, with the exception of a significant change in infection rates, he said. “I will come back unless this gets much worse and then we will adjust and tell people to stay home,” he said.

Brad Karp, chairman of the law firm Paul, Weiss, Rifkind, Wharton & Garrison LLP, said the firm had encouraged vaccinated employees to spend most of their time in the office, but in recent weeks decided to oppose this requirement in the last two weeks of the year. . “The transmissibility of Omicron and the increase in infections in the evening before the holidays make our decision quite obvious,” he said.

Fidelity Investments said last week that they stopped a voluntary return-to-office pilot program at some of their locations. Necessary workers, such as those working in the company’s construction team or in some operational roles, will still come into offices, a company spokesman said, adding that Fidelity had not set a broad date for returning to the office. “Our return to offices is more focused on ‘how’ as opposed to ‘when,'” he said.

The LCD Soundsystems Brooklyn show scheduled for Sunday through Tuesday was canceled, with fans of the electronic dance-rock band receiving automatic reimbursement, according to a statement from the organizer on Sunday afternoon. The last-minute cancellations were a reversal of the group’s Friday announcements, which said the shows would continue despite an increase in Covid-19 cases in New York City. “We were encouraged to see so many more masks on the last show,” the band said in a statement on social media. “But it will have to wait, again, until we find out what this new wave means to all of us.”

—Chip Cutter, Joe Flint, Heather Haddon, Jamie Heller, Georgi Kantchev, Suzanne Kapner, Dana Mattioli, Sarah Nassauer, Jesse Newman, Anne Steele, and Jeffrey A. Trachtenberg contributed to this article.

Write to Benjamin Mullin at Benjamin.Mullin@wsj.com, Emily Glazer at emily.glazer@wsj.com and Meghan Bobrowsky at Meghan.Bobrowsky@wsj.com