As Denver’s minimum wage increases, restaurateur confidence lowers

When Joel Appel bought Zaidy’s Deli & Bakery, he didn’t expect it to be this hard.

At the time he reopened the Jewish joint’s doors in 2022, Denver’s minimum wage was $15.87.

On Jan. 1, that number will be $18.81.

According to a survey from The Colorado Restaurant Association, the hike will cost Denver restaurants an average of over $51,000 next year.

“It just makes it very, very difficult,” Appel said, who took over Zaidy’s after it closed in 2020. “Any business that’s getting the job done and showing a small profit has to worry about when things happen in the world because they just have zero cushion.”

Though the raise — up 65 percent from 2019 — has been an issue for most Denver eateries, the real issue comes down to tipped workers, Appel said. Their hourly minimum will be $15.79 with the $3.02 “tip credit,” as it is commonly called. In New York City, for comparison, tipped workers earn a minimum wage of $5.35.

That brings the average front-of-house staffer to about $37 an hour with tips, according to Colorado Restaurant Association President Sonia Riggs. That is a stark difference from the roughly $23 to $25 per hour that untipped, back-of-house employees make, she said.

From 2019 to 2022, Denver raised the minimum wage from $11.10 per hour to $15.87 to “catch up” to the modern cost of living. Since then, the number has been adjusted each year based on a variant of the Consumer Price Index, a commonly used measure of inflation.

“We all support the idea of people earning more and people earning a living wage, but I don’t think people understand who (the city) is giving the raise too. They’re aiming for A and hitting B,” Appel said.

Appel said he is exploring ways to get kitchen staff added to the tip pool, like having them man the register at the counter-service side of Zaidy’s. But finding a legal way to do it has been challenging, he said, so he is still weighing his options.

He also has pondered substantially raising prices, but “that seems terrible and people would stop coming,” he said.

“We’re trying to raise living standards, but it’s a complicated issue. One-size-fits all is always dangerous, especially in times like this,” he said. “This is the only thing that’s not driven by the market. When the price of food goes up, there are three other vendors waiting to slip in and compete. There’s not that when the city is telling us to pay our front staff more.”

Appel and his father founded cleaning product titan Orange Glo International, the parent company of Oxiclean, Kaboom and Orange Glo. They sold the business in 2006 for $365 million, and Appel has since been an angel investor in several companies, helping bring cleaning, ed-tech and food products to market.

Because of his other job and the nearly 40-year reputation of the deli, Zaidy’s will stick it out, he said. But other restaurants who are toeing the line of profitability may not be as fortunate.

“You just have no margin for the world to happen,” he said. “Most restaurant operators that are tight can’t afford any of those things to happen, and consumers have been staying away this year, like a high-single-digits downtick of customers. If that continues or gets worse, it’s gonna be bad news for Denver.”

For all these reasons, Appel isn’t looking to open another Mile High location anytime soon.

“I don’t know that I want to say never, but there would have to be 100 factors lined up that look perfect,” he said. “Right now, why on earth would I do that?”