220+ restaurants closed in Denver last year, expect more closures and higher dining costs this year
As inflation remains high and restaurants continue to struggle with labor shortages and rising costs, it's expected that more restaurants in the Denver metro area will close their doors for good this year.
Colin Larson is the Director of Government Affairs with the Colorado Restaurant Association. He said Denver usually sees a 5% growth in the number of new restaurants every year. But last year there was a 13% decline, which is more than 220 restaurants that closed in Denver alone. Larson believes this trend will continue in the new year.
"It's going to be a tough year, and you're going to see a lot of restaurants struggling," said Larson.
Larson said last year, Colorado restaurants and customers also experienced the highest inflation compared to the rest of the country.
He added that labor and staffing shortages will continue to be a concern for restaurants in 2024. That's despite new state laws that have also raised the minimum wage by almost a dollar.
"It's a really tight labor market right now. Restaurants are really struggling to hire people, even though they're paying more than they ever have, particularly the back-of-the-house and skilled workers," said Larson.
Larson also said full-service restaurants were impacted the most during the pandemic because they require more labor and money. The full-service restaurant experience includes customers getting seated and waited on, staff in the back cooking, and perhaps a bartender making drinks.
Larson added that many businesses are shifting to a quick service model experience.
"If you can reduce those labor costs, and maybe have one person working a counter versus two or three waiters out front, it's just a way to cut back on labor and it's a great business model." said Larson.
For customers, Larson said expect to see price increases on the menu or small services charges added to your receipt. You'll also see restaurants with fewer staff and limited or changed hours of operation.
On a positive note, Larson mentioned there is improved public awareness of the difficulties restaurants are facing and have been facing since the pandemic. That includes educating customers on the cost of labor, minimum wage increases, etc.
Plus, new legislation is in the works to keep alcohol to go.
"This would be great to help restaurants and their bottom line. Restaurants that have been using it, have cited that it's a great way for them to bring that little extra bit of profit margin," said Larson. "It's the difference between them being profitable, and then operating at a loss."
The Colorado Restaurant Association has also worked on apprenticeship programs in recent years, teaching high school students through culinary prep school. The association hopes to expand that program this year.
