Restaurants across the Garden State have been busy getting ready for a reduced-capacity reopening for indoor dining on July 2 — but suddenly those plans have been dashed.

During his COVID-19 update on Monday, Gov. Phil Murphy said previously announced plans to let indoor restaurant service resume at 25% capacity have been put on hold indefinitely because coronavirus rates in other states have been spiking, and because some restaurants in New Jersey were not following social distance and face covering rules.

Murphy didn't name names, but NJ.com this weekend reported Donovan’s Reef Beach Bar in Sea Bright was packed with patrons, with few wearing masks and many shoulder-to-shoulder. "For the young crowd out at Donovan’s tonight, there’s no such thing as social distancing or coronavirus. It’s just a Saturday night party," reporter Josh Axelrod wrote on Twitter. He called the environment "pandemonium."

Marilou Halvorsen, president of the New Jersey Restaurant and Hospitality Association called the announcement upsetting.

Halvorsen said it’s understandable if Murphy was not happy with certain restaurants not following social distance rules, but said this blanket directive is unfair.

“Instead of going for enforcement and addressing those particular operators you’re taking a sledgehammer to a whole industry who have just spent tens of thousands of dollars to get ready to open in two days,” she said.

She said the governor should enforce his executive order's requirements for social distancing and limited gathering sizes "and leave the industry that is trying so hard, who is already following sanitation protocols, and let them operate.

"Don’t punish everybody for a few bad apples," Halvorsen said.

She said restaurant owners across the state have basically been put in a no-win situation.

“They just bought all of this food and now what are they going to do with it?” she said. “And this is money they didn’t have, so they’re putting it on their own personal credit cards.”

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Halvorsen said the governor may be concerned about a possible spike in COVID-19 cases, but New Jersey hospitalizations, new infection rates and deaths all continue to drop, even as retail stores have reopened, crowds have joined political demonstrations and people have gone down the shore in recent weeks.

“Why indoor dining at 25% is going to be the straw that broke the camel’s back, I just don’t buy it,” she said.

Halvorsen added “casinos can still open, we can still have shopping malls, we can still go to Lowes with 300 people but you can’t have dinner inside a restaurant with a couple of other people.”

Murphy, in his press conference, said the sedentary nature of dining — coupled with the necessity to remove an otherwise required mask — makes it different than other indoor activities.

“To say you’re going to open, have these people spend all this money to bring their employees back, to buy food, to buy liquor, to buy cleaning supplies and then to shut them down, and now the food is going to go to waste — you talk about insult to injury,” Halvorsen said.

She added “literally this will be the final straw for many of these people.”

You can contact reporter David Matthau at David.Matthau@townsquaremedia.com