Denver Mayor Mike Johnston wants to add a 20% service charge to local restaurant tabs — and then tax it — to help restaurants cope with the city’s minimum wage and promote what he called pay equity among tipped and non-tipped employees.

On Monday, Johnston told City Cast Denver, a popular podcast, that he has already been discussing the idea with restaurant owners. He didn’t say whether they are on board. He also did not discuss if increasing people’s dinner costs would decrease restaurant visits.

Johnston has incurred the ire of some local restauranteurs, who this month penned a letter expressing their frustrations with the city for everything from public safety worries and negative perceptions of downtown to parking and infrastructure needs.

They pointed to a series of stabbings on the 16th Street Mall over a January weekend that left two dead and two more injured.

“You ran your entire campaign platform on restoring our Downtown Denver business districts,” Dave Query, owner of Jax Fish House & Oyster Bar, said in his letter to Johnston. “It has gotten worse since you took the position of Mayor, even though you have received $550M towards stewarding it in a different direction.”

He added: “This is the current vibe and energy on our downtown streets, and our long-time LoDo and Larimer guests are now driving to Cherry Creek and NorthField and Golden for dinner and entertainment.”

“We know it’s a challenge,” Johnston told City Cast Denver, noting that restaurant labor costs have increased by 200% over the past decade. “We’ve had 400 restaurants close in Denver over the last three or four years and we know that a big part of that is the increase in the minimum wage, and we want folks to make more money.”

The challenge, he said, is ensuring an equitable and livable wage, while allowing restaurants to thrive.

Johnston said a recent restaurant tour group told him that wage disparities exist across the industry, with tipped servers making as much as $120,000 in annual salary because they have both the city’s minimum wage, plus tips, compared to the back-of-the-house staffers, such as cooks and dishwashers, who, he said, make $40,000.

At the state level, efforts are afoot to institute a “tip offset” in jurisdictions that have adopted a minimum wage that is higher than the state’s threshold.

Under House Bill 1208, local governments with minimum wages above the state’s $11.79 per hour for tipped employees — currently Denver, Boulder, and Edgewater — would be required to impose “tip offsets” equal to $3.02, plus the difference between the local and the state’s minimum wage amounts.

In Denver, the bill would lower restaurant workers’ minimum wage by $4 an hour, according to a fiscal analysis.

While the bill allows local governments to adjust their tip offsets, they cannot reduce them by less than $3.02 or more than 50 cents per year or increase them by an amount that would result in an employee earning less than minimum wage, minus $3.02.

Sponsors said the bill aims to address the unintended consequences of a 2019 law that allowed local governments to establish minimum wages above the state threshold. Critics said it cuts wages at a time of soaring expenses for workers.

At the local level, Johnston suggested that collecting a 20% service charge would generate revenue that could be spread equally across all employees.

“But what’s interesting for us, as the city, is you could pool those service charges. You could share it with all the staff,” Johnston said on the podcast. “Interestingly for us, if you had a service charge that comes above the line in the bill, which means it’s also taxed — if you had a $100 tab and now you put a 20% service charge, you pay $120, and we tax $120.”

Johnston said the city could then share revenue from the “marginal new tax” back with the restaurants.

“We’ll take some small additional revenue, but we could support the restaurant’s institution,” he said. “At the same time, you’re supporting dollars back to the individuals.”

More than 200 restaurants closed across Colorado last year. Some 20,000 restaurant workers in Denver lost their jobs in the previous three years, as 22% of the city’s restaurants had shut down.

A spokesperson for the mayor’s office told The Denver Gazette that Johnston will continue to partner with businesses, restaurants and residents to ensure downtown is a safe and thriving part of the community.

“But I think the thing for us to wrestle with, as people who are progressives, is if we do nothing, you should not be surprised to keep seeing restaurant closures around the city going forward,” Johnston said.

Denver Gazette reporter Bernadette Berdychowski and Colorado Politics reporter Marissa Ventrelli contributed to this story.