Can anyone explain grammar of sign “no food allowed”? I got the meaning but confused about grammar. Why not “no food is allowed” ?
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You are right. In signs and headlines, some words may be dropped.
As you have correctly guessed, is is dropped in this case.
However, it still works because you "got the meaning." That is the purpose of a sign -- to use the fewest words and still get across the meaning.
In this case, it is still grammatical. Sometimes signs may not be entirely grammatical.
Signs are often simplified and most are not grammatically correct. This one sometimes gets a chuckle from native speakers, but we all know what it means.