Proprietors in Denver’s food scene took regulatory agencies to task in a new industry report that says the costly, monthslong process of opening a restaurant is driving small businesses to the suburbs and keeping national brands from entering the city.
The 68-page report, released last week in collaboration with Denver’s opportunity“>Economic Development and Opportunity office, draws on survey responses and direct feedback from scores of restaurant owners and real-estate brokers.
The survey and report, commissioned last year by the city, tourism board Visit Denver and Austin-based restaurant financier inKind, were the product of a months-long study led by industry professionals Dana Query and Adam Schlegel. The report refers to the local food scene as being at a “critical inflection point” with costs rising faster than revenue.
Many of those surveyed said homelessness, loitering, drug use and public nuisances, along with protracted and intensive municipal construction projects, deter customers from visiting establishments. Restaurants have resorted to reducing the number of days they’re open for lunch or winding down earlier at night, according to the report.
The report’s findings also addressed the costs of labor due to the rising minimum wage, and called for the city to match the state’s base wage for tipped workers — a conversation now underway at Denver City Hall.
Denver’s minimum wage is $19.29 an hour, or $16.27 if that employee is tipped. Colorado’s minimum wage — if no local minimum applies — is $15.16 an hour, or $12.14 with tips.
Hourly labor costs in Denver increased by 50% to 55% between 2019 and 2024, the survey found. The report attributed that increase to the local minimum wage rising during that period and outpacing the state’s minimum wage, as well as state credit given to restaurants with tipping that has remained the same.
The survey found a 23% increase in the median commercial rental rate since 2019. The cost of goods, insurance and utilities rose by about a fifth, according to the report. Restaurant owners reported their earnings dropping by approximately the same amount in that period.
“The data make clear that Denver’s restaurants are facing an environment in which overhead and labor costs, demand, employment and operating conditions are misaligned in ways that cannot self-correct without intervention,” the report’s conclusion says.
The report gives a small audit of each department involved in the process of opening a restaurant in Denver. The city’s excise and public health departments were well-rated for their professionalism, communication and turnaround times.
Other parts of the process, including acquiring permits for zoning and from the fire department, were critiqued for their inconsistent turnaround times. A majority of survey respondents said Community Planning and Development had a poor plan review process. Operators also had mixed opinions on the overarching enforcement of inspectors at Public Health and Environment.
The city’s Department of Transportation and Infrastructure, or DOTI, was seen as most deficient among operators and brokers. The report’s authors described the department as lacking in consistency. They mentioned procedures to receive right-of-way, sewer use and drainage permits as being the most difficult to grasp.
National brands interested in opening in Denver walked away from projects because of the long permitting period, according to brokers surveyed for the report. The report does not identify the brokers and restaurant operators, nor their businesses.
The report’s authors presented their findings to several agencies last month, Schlegel said.
“Nobody necessarily likes to be called out,” he said of local regulatory officials. “This is a group of people who see the opportunity, who see that there are ways there can be improvement and… equally want to be heard.”
The transportation and infrastructure office accepted the report’s comments Monday.
“This report provides clear-eyed feedback to ensure we’re meeting the needs of local businesses, and we have already gotten to work launching many of the improvements called for here,” DOTI spokesperson Nancy Kuhn said in a statement. “The report also provides a fair assessment of the challenges being experienced by the restaurant industry today and how we, as a city and a department, can support.
“It’s clear there is more to be done to ensure support for our restaurants, and we’ll continue to work on the recommendations the report contains.”
Restaurant operators acknowledged their own faults for lengthening the permit process, including by providing incorrect or incomplete information, according to the report. “Many explained that the complexity of starting a business or navigating construction requirements exceeds their expertise, making mistakes inevitable,” it says.
The report commends the steps that Mayor Mike Johnston and the city have taken to reduce homelessness and bolster tourism downtown.
“It’s a really good nod from the mayor’s office that they were willing to do this,” Schlegel said of the survey. “It’s really good that they wanted to actually bring people with true restaurant experience to have these discussions.”
Restaurant associations in Denver reaffirmed the concerns shared in the report last week.
“We’re grateful for everything the city is already doing to make it easier for restaurants to successfully navigate the permitting process, but there’s a lot more work to be done,” Sonia Riggs, president and CEO of the Colorado Restaurant Association, said in a statement. “There are simply too many regulations and too much red tape in Colorado for businesses to thrive, and we’d like to collaborate with city leaders to help streamline agency processes wherever possible.”
Representatives for about 160 restaurants were surveyed for the report, according to its executive summary. About the same number participated in roundtable discussions. Query and Schlegel held 50 interviews as part of their study.
One comment resonated with Schlegel from one of his first interviews for the project. The operator, he said, referred to Denver as the “city of ‘No.’”
“Do we want to be and can we be a city of ‘Yes?’” Schlegel asked.
