Denver’s restaurant industry is in turmoil. While much of the rest of the country’s restaurant markets have bounced back from the pandemic, a new report from the Denver Restaurant Liaison Project found that Denver’s eateries continue to face “structural contraction, not recovery.”

The city’s economic development department, Visit Denver and inKind created the project to research issues impacting the local food-service industry.

As The Denver Gazette reports, the “2025 State of Denver Restaurants: Challenges Facing the Sector” report identifies local issues, not national trends, as the prime driver of the industry’s malaise.

While restaurant employment is higher throughout the country than before the pandemic, Denver’s has dropped by 6% overall and 15% for full-service jobs. Pre-pandemic restaurant job growth was at 2.3% — meaning the city is missing 10,000 to 15,000 restaurant jobs it should otherwise now have. 

It’s no wonder: Labor costs are up 50-55% overall and 95% for tipped-wage positions — driven by the city’s astronomical, mandated minimum wage hikes.

Denver’s minimum wage surged 69% from $11.10 in 2019 to $18.81, while its minimum wage for tipped staff skyrocketed 95% from $8.08 to $15.79 — both with automatic increases programmed annually.

We’ve warned about the consequences of minimum wage hikes on job creation and retention. The report provides further evidence, noting the increases are “far outpacing sales growth and effectively eliminating profit margins.”

Add in higher food input costs (28%), property taxes and insurance (30%), rent (23%), utilities, and costs associated with state-mandated programs like the Family and Medical Leave Insurance program — and the cost of doing business is increasingly prohibitive.

Denver’s permitting system for restaurants is dysfunctional, generating review timelines of three to nine months that can cost operators $70,000 a month.

The city’s Energize Denver mandates — pushing buildings to go all-electric and to install other costly conservation features — drive up landlord costs, which get passed to their tenants, including restaurants.

Denver restaurants have tried raising prices to compensate for surging costs. Colorado’s menu prices now rank among the nation’s highest, and Denver’s prices sit 2.7% above the average of the 20 largest U.S. cities. 

Menu prices are up 28%, yet earnings are down 20%. You can only raise prices so high before you start losing customers.

OpenTable data for Denver shows reservations trailing the national average in 85% of weeks since 2022. Toast data showed stagnant or declining transaction counts while they’re rising nationally.

“The overarching finding is clear: restoring Denver’s restaurant sector to a stable, job-producing, revenue-generating position will require coordinated, cross-agency attention at the scale of a citywide economic development priority,” the report said.

As Colorado Restaurant Association CEO Sonia Riggs told The Denver Gazette, the report “clearly defined” the issues facing restaurant owners with “real-time, independent data.” But the report isn’t so strong on what to do about it.

It recommends a citywide service charge, which the CRA previously rejected, alongside rent stabilization tools, gap financing subsidies and expanding a credit for tipped wages — heavily leaning on government intervention to remedy the harm, ironically, that was caused by government policies in the first place.

Perhaps that’s because the city commissioned the project. So, the recommendations run counter to the report’s own data.

Here’s arguably the clincher: When comparing Denver restaurants to non-Denver counterparts run by the same operators — with identical brands, menus and supply chains — the report found non-Denver locations to be profitable while Denver’s are in the red.

Which means it’s Denver’s own policies that are at root of restaurants’ woes. 

The solution isn’t more intervention from City Hall. It’s less.