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Omicron forces crippling closures for small businesses

While some small businesses are thriving amid a robust economy, "it’s still three steps forward, one step back,” said one expert.
New York City Celebrates Holiday Season
People walk past a 99-cent pizza place in the West Village on Christmas Day, in N.Y., on Dec. 25, 2021.Alexi Rosenfeld / Getty Images file

Small businesses have taken hit after hit since the start of the pandemic. They’ve dealt with forced closures during lockdown, Covid-related restrictions on capacity, unruly customers and worker shortages. Now, as the omicron variant spreads and Covid cases again rise, businesses are dealing with a crippling shortage of staff.

Of the 31.7 million small businesses in the U.S., about 90 percent have fewer than 20 employees, and roughly 80 percent have fewer than 10 employees, according to the Small Business Administration. That means that when they lose an employee due to absence, the impact is significant. 

“In many cases it means that that business owner is doing that job themselves or relying on friends and family,” said Kathryn Petralia, co-founder of Kabbage, a financial company that provides funding to small businesses. “I had a follow-up appointment at a doctor’s office and his wife was the receptionist. She said everybody had Covid so she was filling in.”

But what happens when the business owner is the one to test positive? 

Sarah Carlock, owner of Amor y Queso, a charcuterie board shop in Dallas, experienced that struggle first hand. 

“Over the Christmas holiday, I tested positive,” she told NBC News. “Obviously, being in a customer-facing, food-preparing capacity, it would have been irresponsible for me to go to work. But, since I’m the primary artist and food preparer, I couldn’t put the work off on anybody else and had to close for 10 days.”

For Carlock, whose business launched during the pandemic and quickly expanded to include a few other employees, the closure was difficult — and not just because she lost thousands in canceled New Year’s orders.

“Now I have overhead and utilities and people who depend on me,” she said. “Having to close for any amount of time is really scary.”

I have overhead and utilities and people who depend on me. Having to close for any amount of time is really scary.

The immediate outlook is concerning. 

According to data from the Centers for Disease Control and Prevention, since Dec. 27, there have consistently been over 400,000 new Covid-19 cases a day. There was one exception: On Jan. 1, there were just over 273,000 new cases. However, that dip was temporary. Cases began to rise again and on Jan. 3, there were more than 956,000 new cases.

An increasing number of businesses have had to cut hours or close temporarily either in response to positive cases among employees or as a preventative measure. While most of these changes are temporary, they’re still unusual steps that these businesses rarely resorted to before the pandemic.

Katalina’s, a cafe in Columbus, Ohio, had to open later than usual because of staffing shortages. In San Francisco, the Sunset Reservoir Brewing Company had to close for an entire day for the same reason. 

The Marine Room restaurant in San Diego was forced to temporarily halt all operations and close its doors due to “the latest development with the omicron variant and current staffing challenges.” In a note on its website, the restaurant said it was tentatively planning to reopen on Jan. 12. 

Tsubaki, a Japanese restaurant in Los Angeles, lost about nine full days of sales after having to close because of a positive case among its staff, according to owner Courtney Kaplan. 

“It’s spreading so quickly. Things had just started to feel a little more secure and now it’s tense again,” she said. “The hardest thing is having to close and reopen. There’s no planning for anything and that makes it really hard to run a business.”

Gjelina Group, a hospitality group in Los Angeles, limited hours at its restaurant and then closed for a day because of positive cases among employees. As of Wednesday, the company had 24 confirmed employees with Covid based on data of active outbreaks from the Los Angeles County Department of Public Health. The group said on Instagram that all team members must test negative in order to work a shift.

Gjelina Group isn’t alone. From Dec. 27 to Jan. 2, more businesses (11.1 percent) reported that they were requiring employees to test negative for Covid-19 before physically reporting to work, according to the latest Small Business Pulse Survey from the U.S. Census Bureau. That number hadn’t risen above 10 percent since Feb. 2021.

More businesses are requiring employees test negative for Covid-19 before physically reporting to work.

More businesses are also requiring employees to show proof of Covid-19 vaccination before coming to work, according to the survey. During the week of Dec. 27, 13.1 percent of businesses reported doing so.  

The new variant and concerns about positive cases come as businesses were already struggling with a worker shortage. 

Kabbage’s most recent “Small Business Recovery Report,” published in September, showed that 32 percent of small businesses reported it is “very” or “somewhat” difficult to fill open roles. That was up from 28 percent just one month prior. Of respondents, 29 percent said this was caused by people not feeling safe to return to work.

Among the business owners and experts NBC News spoke with, there are glimmers of hope that omicron's impact might be less severe than the blow dealt by prior strains, because this new variant appears to result in more mild symptoms for vaccinated individuals. However, there's still so much that remains unknown about this new variant and that uncertainty is concerning.

“Some small businesses are doing much better than we thought, because the economy has stayed positive and because consumers have cared more about and frequented small businesses," Petralia said. “There’s also a much more optimistic view that ‘We’ve seen this before and have a little bit of a playbook.’ But it’s still three steps forward, one step back.”