At midnight on September 30, the U.S. Government shut down after Congress failed to reach a deal on funding. The last government shutdown occurred in 2018 and lasted 35 days, the longest in history, continuing into January 2019. Only time will tell how long this shutdown will last, but it could have effects on the bar & restaurant industry the longer it stretches on.
Here's a roundup of the ways a government shutdown could affect the supply chain and consumer confidence.
A Not-So-Spirited Supply
According to the Distilled Spirits Council of the United States (DISCUS), the federal government shutdown will have a significant and detrimental impact on the Tax and Trade Bureau (TTB), the lead federal agency responsible for permitting, regulating, and collecting taxes on distilled spirits.
Distillers cannot legally operate in the United States without a TTB-approved permit, and no distilled spirits product can enter the marketplace without a TTB-approved label. Many spirits products must also have their formulas approved by TTB. Also, before a beverage alcohol product can be bottled and distributed across state lines, it must receive a Certificate of Label Approval (COLA), as required under the Federal Alcohol Administration Act. In 2023 alone, TTB received nearly 198,000 label applications and 27,000 formula submissions for beverage alcohol products.
Any disruption to these services will directly hinder distillers’ ability to bring new products to market, expand into new states, or make necessary label changes.
How could this affect bars and restaurants? By limiting the number of new or limited-time products entering the market during one of the busiest launch seasons of the year)—the holidays.) The shutdown will result in delayed product launches, missed market opportunities, and lasting harm to the wider hospitality industry.
Supply Chain Woes
Food and other ingredients are not exempt from the effects of a shutdown, either.
Government agencies like the Food and Drug Administration (FDA) and the U.S. Department of Agriculture (USDA) will continue critical activities, but routine tasks like inspections and regulatory and statistical reporting could be delayed or halted altogether. If the shutdown stretches on and these tasks are not completed, it could mean significant delays for imported food products, delayed payments and assistance to farmers, and a pause in the approval of labels for new meat and poultry products. All of these things could have serious effects on the supply chain, making it harder for restaurants and bars to get the products they need.
Loans
If a bar or restaurant has been in the process of trying to secure a loan for expansion, operating costs, or a new opening from the federal agency the Small Business Administration (SBA), they could experience delays in the process. This can lead to a trickle effect of delayed openings or expansions, and in the worst case scenario, closures for those restaurants who can't make ends meet without SBA funds.
Restaurant Traffic & Declining Consumer Confidence
In areas with a high concentration of federal workers who will be out of work during the shutdown, restaurant traffic can drop significantly. During the last shutdown, the Washington, D.C. area saw fine-dining traffic drop by 33%, and fast-food visits fall by 23%.
Even restaurants in areas outside of federal hubs could experience a drop in traffic as consumer confidence and spending declines. Consumer spending had already taken a hit thanks to an economy marked by inflation and rising prices, so this government shutdown could exacerbate that existing issue.
Staffing & Hiring Issues
During previous shutdowns, the E-Verify system and related services were taken offline. E-Verify is a system operated by U.S. Citizenship and Immigration Services (USCIS) and the Social Security Administration (SSA) that provides employers with an automated electronic link to government records to confirm new hires' employment eligibility. The service will most likely be unavailable again during this shutdown, which means employers will be unable to enroll in E-Verify, verify employment eligibility, view or take action on any cases, terminate an account, or perform other administrative actions.
If the E-Verify system is down, employers must still submit the Form I-9, which is a federal legal requirement for all new hires in the U.S.
Are you registered for our Crave and Crave on the Menu newsletters? Sign up today!
Plan to Attend or Participate in Our Events:
- Register Now for the 2025 Bar & Restaurant Expo Colorado, October 26-28, 2025, Denver, Colorado
- 2026 Bar & Restaurant Expo, March 23-25, 2026, Las Vegas, Nevada.
To book your sponsorship or exhibit space at our events, fill out our form.
Also, be sure to follow Bar & Restaurant on Facebook and Instagram for all the latest industry news and trends.