Will restaurants survive without selling alcohol?

At the Walnut Grille restaurant chain, it seemed like the worst of the COVID-19 business shutdown might be behind them. The reopening of dine-in service had brought customers back to the ample outdoor patio spaces, and revenue was pushing 80% of pre-COVID-19 sales. The chain had already hired back 65% of its staff and was actively recruiting new hires.

Then came the Sunday afternoon order from Allegheny County to stop selling alcohol — a response to surging cases of COVID-19 traced to area bars.

“It’s going to have an immediate impact,” said Kirk Vogel, president of Walnut Grille Holdings, noting he expects revenue to plummet about 40%. “It’s already been challenging enough. With this reduction, it’s just going to be more so.”

At many restaurants, alcohol isn’t just one component of the dining experience — it’s a huge profit generator. County restaurants that have been hanging on through the shutdown — and only were able to open for dine-in services on June 5 — worry for their futures without being able to sell alcohol.

“For a place with a liquor license, that profit from alcohol sales is built into your financial model,” said John Graf, president and CEO of the Priory Hospitality Group, which operates bars at the Priory Hotel in Deustchtown and the Mansions on Fifth in Shadyside.

“If you take that leg of your operations away, it probably doesn’t make financial sense to stay open. What you’re doing is you are taking away the most profitable part of the operation.”

Even at restaurants where alcohol doesn’t make up a huge percentage of sales, it likely makes up a disproportionate share of profits.

Food requires more extensive ingredients, some of which spoil, and specialized employees to cook and serve it.

“A typical full-service restaurant runs a percentage of alcohol sales that is 15% to 20% of their total sales,” said John Longstreet, president and CEO of the Pennsylvania Restaurant & Lodging Association. “It’s not the lion’s share of their total revenue, but it’s a higher profit margin than food. It’s a pretty significant part of their profits.”

Restaurants are not only concerned with the revenue they lose on the alcohol itself, said Mr. Longstreet, but also if restaurants can’t serve alcohol, customers will just stay home. “It’s not only the drink, the glass of wine, but the entire dinner,” he said. “It’s huge.”

Mr. Graf estimates gross profit for a restaurant might typically be about 30% on a meal and 75% on liquor.

Eliminating alcohol sales — in restaurants that are already operating at a maximum of 50% capacity due to state rules for the green phase — might tip the scales toward temporary or permanent closure.

Mr. Graf had planned to open his two bars on Wednesday but decided to keep them closed after the county’s order. Other breweries and restaurants have made similar decisions.

Penn Brewery, which had been open for dine-in, curbside and delivery service, announced Monday on its Facebook page it would close until further notice.

“We have taken great pains to implement proper social distancing, wearing of masks, and other sanitation efforts to keep both staff and guests safe, and we greatly appreciate the support of all of you who came to Penn, followed the guidelines, and had a great time. But Penn is a brewery, and if we cannot serve beer here, our identity is lost.”

Joe Talarico, co-owner of Piazza Talarico and Papa Joe’s Wine Cellar in the Strip District, plans to stay open but expects a dramatic drop in business.

“We do Italian food, and Italian wines go great with Italian food,” he said, estimating at least 80% of customers have wine or beer with their meals. “This is going to be a pretty big hit to us.”

In addition to owning a restaurant, Dr. Talarico is also an anesthesiologist. While he has been tracking the rise in cases over the past week, and he has been personally concerned by employees at restaurants and other businesses not wearing masks inside, he wasn’t prepared for a ban on alcohol sales.

“It really caught me by surprise,” he said in a phone interview from St. Margaret’s Hospital of UPMC, where he was in between patients. “I’ve been very supportive of the state and their response even though it’s hurt us a lot personally. I don’t want to remain in business if people have to die for us to remain in business.”

But he thinks aggressive mask enforcement would be more effective than halting alcohol sales.

He and the other restaurant owners are hoping the order might be modified in ways to allow them to do more business but still protect people from congregating and spreading COVID-19.

If the county allowed alcohol to be served only at tables, Mr. Graf said, he could likely open his bars.

Mr. Vogel is hoping for the same, which might help keep his happy hour business afloat. “I get what they’re trying to do. They’re trying to mitigate the risk of spread, which is great. We’re all trying to,” he said. “But you’re allowing people to still come down and dine. Whether they’re ordering a chicken dish or a glass of wine, I don’t see more or less mitigation of spread.”

Because Walnut Grille also operates four locations in the St. Louis area, Mr. Vogel is also dealing with Missouri rules, county by county. Currently, three of his restaurants there can only open at 25% capacity, while one will soon be moved to 100% capacity.

“It’s been a little bit of a pingpong match,” he said. “We take it day by day.”