Officials want to stop huge crowds disregarding capacity limits, social distancing and face coverings seen last weekend.
Businesses in violation could see fines of up to $10,000. Investigators can also immediately close businesses in the case of "egregious violations," the city said.
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Indoor capacity must be limited to 25-percent capped at 50 people. Citizens can call 311 to submit complaints.
Mayor Lori Lightfoot spoke at a press conference Thursday afternoon and said large crowds at bars and restaurants that occurred last weekend can't happen.
"Most alarming, I have seen a few cases of packed bars. They are acting like we are not in a crisis, we will be out there and we will be taking action," Mayor Lightfoot said.
"This is a make-or-break weekend for you," she added. "Your financial fate is in your hands. Abide by the rules or unfortunately, you are going to suffer the consequences and we are not playing with this."
At Garage Restaurant and Sandwiches, seating is set up outside for customers waiting to get in.
"We all have a responsibility as restaurant and bar owners for the safety of everybody, including the external community," said Lisa Kennedy, manager.
Kennedy said she's grateful to be able to welcome guests back, and is closely following the rules which require masks, social distancing and limited capacity. She said she was on an earlier call with the mayor and others.
"Her message was loud and clear: comply or we will shut you down," she said.
At the Original Pancake House off Rush street indoor dining is limited and spaced apart and the outdoor dining set-up also follows the six feet rule, and so far so good.
"Our carry out business is continued to be very good and our outdoor seating has been pretty much full all day and the indoor seating has been busy as well," said Craig Arrigoni, general manager of the Original Pancake House.
Several city streets are shut down on the weekends to allow for more outdoor dining, which has been a big help to restaurants trying to make up for lost profits since march.
"We are taking every precaution," Arrigoni said. "We are sanitizing menus, we are sanitizing condiments we are rolling up the silverware we are making sure that everybody is six feet apart, so whether you want to sit outside or whether sit inside we are practicing the social distancing rule so there is nothing to worry about."
The Chicago Department of Business Affairs and Consumer Protection has received 764 complaints since Phase Three of reopening began on June 3. The city has issued 59 warnings and cited nine businesses.