Denver’s restaurant scene is in crisis.

So much so that the city, VisitDenver and Austin, Texas-based restaurant financing company InKind commissioned a report to detail the industry.

Denver’s rising tipped minimum wage, which has more than doubled since 2019 and sits at $16.27 an hour, was the biggest complaint of local restaurateurs. But the 67-page document outlined a host of other problems creating an unfavorable environment for operators in the city.

“The energy of the city used to flow through our dining rooms,” a longtime, independent full-service operator said, according to the report. “Now it feels like people go out less often, spend more cautiously, and are more likely to stay home or order in.”

The report was written by Adam Schlegel, who co-founded Snooze A.M. Eatery and Chook Charcoal Chicken, and Dana Faulk Query, the co-owner of Big Red F Restaurant Group. To compile it, they surveyed over 150 establishments, conducted interviews with operators and brokers and analyzed profit and loss statements along with publicly available datasets.

Here are five takeaways:

Denver lost thousands of restaurant jobs between 2020 and 2025

Bureau of Labor Statistics data indicates that Denver had 6% fewer restaurant sector workers in 2025 than at the beginning of 2020. That’s largely due to a 15% decline in the full-service restaurant category, according to the report. 

Before the start of the pandemic, restaurant employment in Denver was growing at a 2.3% annual rate. If it had continued at that rate, there would be 10,000 to 15,000 more workers today than there actually are, according to the report.

Restaurants employ 7.9% of Denver’s total workers, down 8.7% from 2019, and account for 13% of the city’s tax revenue, the report said.

Restaurants would have needed 40% sales growth to offset rising expenses

According to the report, from 2019 through 2024, hourly labor costs increased 50% to 55%, rent increased 23% and cost of goods sold rose 22%. Profits, on the other hand, declined 20%.

Sales increased by 5%, but an analysis by the report’s authors determined that number would need to be in the 36% to 40% range to offset the aforementioned hikes.

The number of guests coming through restaurant doors is also decreasing, the report said. And Denver reported the sharpest decrease of major metros in restaurant spending this past fall.

“This mismatch has left many operators with limited options beyond reducing labor hours, eliminating positions, delaying hiring, or closing altogether,” the report said.

Denver’s costs and prices are on par with New York and L.A.’s

The report said Denver’s dining scene looks less like a middle-America growth market and more like a “high-cost coastal city” without the population size to support it. Though it acknowledged that Denver’s rising wages have closed the cost of living gap compared with before the pandemic, it’s paid the price with lost jobs and other rising costs.

According to the Washington Hospitality Association’s 2025 Cost of Dining Report, Colorado’s menu prices are 5.1% above the national average and Denver’s are about 2.7% above the average for the 20 largest U.S. cities. That puts it firmly in the high-cost tier of American dining markets.

But rather than garnering the growth and attention that “tier one” cities like New York and Los Angeles get, Denver is in the category of “high-wage, tight-labor” cities like San Francisco, Portland and Seattle.

“Establishments grew, but employment is up only modestly versus 2013 and down from 2019 in key categories, signaling staffing strain rather than robust job growth,” the report details.

Denver’s scene is lagging compared with the rest of the state

While dining out across Colorado has taken a hit since the start of the pandemic, the report shows that the changes are most pronounced in Denver. The industry hasn’t bounced back on par with the rest of the state, the report says.

With full-service restaurants in particular, employment and the number of establishments has dropped significantly more than the category across the state. Employment across the entire sector dropped 4.3% in Denver from 2019 to 2024 while seeing a 3.3% decline everywhere else in Colorado.

“Collectively, these findings indicate that Denver’s restaurant workforce challenges are not the result of poor management or short-term disruptions, but of sustained cost pressures that increasingly limit employers’ ability to maintain staffing levels, create new jobs, and invest in long-term workforce development,” the report says.

Despite improvements, city bureaucracy still a challenge

Architects, general contractors and operators said that while each individual city department is helpful in a vacuum, the process is fragmented and disjointed. Based on interviews with restaurant owners, those delays can cost up to $70,000 a month between operating expenses and lost revenue, the report said.

That’s despite improvements made to the permitting process by Mayor Mike Johnston, including the launch of Denver’s Permitting Office in May and programs like around downtown express permitting.