"Death by a thousand cuts": Colorado's restaurant industry in crisis
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Colorado restaurants have faced immense challenges since the start of the pandemic and have yet to bounce back. Photo: AAron Ontiveroz/The Denver Post via Getty Images
New Denver restaurant openings — like Mario's Speakeasy Pizza in LoDo, Odie B's in RiNo and Bamboo Sushi in Congress Park — are increasingly the exception, not the norm.
The big picture: The food industry in Denver and across Colorado has been battered over the past five years — and it's adding up.
- Rising costs for food, rent and property taxes combined with shrinking profit margins, growing regulatory pressures and budget-conscious diners are all pushing restaurants to the brink, industry experts tell us.
By the numbers: More than 200 restaurants closed statewide in 2024, per the Colorado Sun. Denver alone accounted for 82% of those losses, according to the Colorado Restaurant Association (CRA).
- In the past three years, the city has lost 22% of its restaurants, the Denver Post reports. Some of the most recent closures include longstanding institutions like Fruition, Lao Wang Noodle House and Melita's.
What they're saying: "We're in this kind of perfect storm moment," CRA spokesperson Denise Mickelsen tells us. "It's death by a thousand cuts."
Zoom in: One major pain point is Denver's increased tipped minimum wage, which is creating ripple effects industrywide. Local restaurant consultant John Imbergamo says it disproportionately affects back-of-house staff and forces price hikes that turn diners off.
- The most recent wage hike on Jan. 1 added an average $82,412 in costs per restaurant, according to a new CRA survey of 135 operators first shared with Axios Denver.
- "That's a huge cost jump," Mickelsen says, especially for businesses already striving to hit slim 3%-5% annual profit margins.
State of play: The CRA is bracing for what it predicts to be a brutal legislative session, with proposed bills on the horizon that could:
- Make it easier for unions to organize by removing a requirement that calls for a second vote to agree on certain union rules.
- Tackle service, or "junk," fees that diners dislike but many restaurants use to pay back-of-house staff.
- Crack down on wage theft, allowing employees to sue even after back pay is issued.
What to watch: The CRA and other industry leaders are pushing their own legislative agenda to offer restaurants relief, including:
- Removing state sales taxes and gratuities from credit card swipe fees.
- Reforming tipped minimum wage laws to raise back-of-house pay.
The bottom line: "We have to do something to help restaurants right now, or we're just going to keep losing them," Mickelsen warns.