Denver's Independent Restaurants Face Over 200 Closures Amid Soaring Operational Costs

Denver, Colorado – Independent restaurants across Denver are grappling with unprecedented financial pressures, leading to a significant wave of closures. This challenging environment is primarily driven by escalating operational costs, including a high minimum wage, low tip credit, and rising expenses for rent, utilities, and food supplies, as highlighted in a recent report by Halina Bennet. The Bureau of Labor Statistics documented approximately 200 restaurant closures in the city, reflecting an industry under immense strain.

The city's minimum wage, which reached $18.81 per hour with a tipped wage of $15.79 in 2022, has seen increases of about 70% and 95% respectively since 2019. Restaurateurs argue that Denver's low tip credit, which allows employers to count only $3.02 per hour towards the standard wage, disproportionately impacts full-service establishments. Alex Seidel, James Beard Award-winning chef and owner of the now-closed Fruition, stated that rising costs and policy changes made operating the restaurant unmanageable, remarking, "Never," when asked if he would open something new in Denver.

Delores Tronco, co-founder of Work & Class and owner of The Greenwich, noted a dramatic shift in Denver's restaurant scene, observing that new openings are largely corporate, while independent, "mom-and-pop" establishments are most vulnerable. She expressed frustration, stating, "It's a net loss to our community when we lose small restaurants: the ones that are unique... the ones that tourists want to visit." Sales for her restaurant are down an average of 10% this year, forcing her to raise menu prices every six months and cut staff.

The financial strain extends beyond labor. The Colorado Restaurant Association (C.R.A.) reported Colorado had the highest menu-price inflation in the U.S. in 2023, with one operator seeing costs up 39% while menu prices only rose 15%. This has led to a 24% drop in active food licenses in Denver over the past three years. Recent closures include long-standing institutions like Cap City Tavern, which stated on Instagram, "The increase in minimum wage, cost of food, and the taxes and fees that the city of Denver is imposing on restaurants has become too much to bear."

Despite these challenges, some operators are exploring alternative models. Juan Padró of Culinary Creative Group implemented a service charge to pay all employees, including back-of-house staff, fairly, stating, "It's very important for me to take care of my most vulnerable." While House Bill 1208, signed in June, allows municipalities to expand the tip credit, industry figures like Ms. Tronco believe it offers only "a tiny bit of protection from things getting worse," emphasizing the urgent need for comprehensive solutions to prevent further closures of Denver's unique culinary landscape.