James Barron at the NY Times has the story on what exactly happened to the cheddar cheese at Sardi's:

Attention, bar-hoppers: The cheddar cheese in the communal pot is still gone at Sardi’s. But New York City’s health department says it is not to blame.

That is not how Sardi’s tells it.

The cheese used to be a staple on the bars at Sardi’s, the theater district restaurant where the walls are lined with portraits of celebrity performers. There was a knife and crackers so the cheese could be spread. The cheese was free. So were the crackers. And the knife.

The cheese — and the crackers, and also peanuts and pretzels — disappeared after a recent health department inspection.