Why doesn't this reach a better equilibrium though? Consider store A who brags about disinfecting everything every half hour, and store B down the street who does the bare minimum to pass government regulations.

Shouldn't store B then be spending less money on "sanitary theatre" and can theoretically provide a marginally better service in ways that matter?

The federal government can spend however many billions of dollars for new TSA staffing and equipment, but that's because they're a monopoly in airline security. Not sure why in a free-market we'd have obviously sub-optimal outcomes like this.

(Sorry if this is naive, feel free to weigh in with harsh realities about how the real world works :) )

you nailed it. It is virtue signaling. A theater to display to everyone that you are on the right side of the debate and that you are taking covid seriously.

I would even bet that most people issuing the cleaning guidance know that it is almost useless, but we live in a world in which it is more important for your actions to make you perceived the way you want rather than being effective.