When Gov. Jared Polis ordered Colorado restaurants to stop all indoor dining on March 17, 2020, Annette was hitting its stride.
Opened in 2016, the Aurora restaurant was building a name with its wood-fired dishes and use of local produce. Three years later, owner and chef Caroline Glover landed on Food & Wine magazine’s list of best new chefs in the country.
“When the pandemic hit, obviously everything stopped,” said Glover.
Two weeks prior to the governor’s order, Glover had consulted a chef friend in Seattle, where the pandemic was well underway. A few days later, Stanley Marketplace, where Annette is located, closed their doors.
By then, Glover had devised a game plan. The day Polis’ order came, she was ready to reopen. Takeout only.
Like every other restaurateur, Glover was faced with a choice: adapt or die. Her staff furloughed, she and her other managers switched to taking orders online and by phone. She added a burger to the menu and other dishes that were easy to take home. Cars started lining up on the curb, so she assigned a team to run orders out and leave them on hoods.
“It really just felt like day one of Annette all over again,” she said in a recent interview with The Denver Post. “We had to learn a new system.”
Nearly two-thirds of all positions at full-service restaurants nationwide were gone by April, according to a Denver Post analysis of national data from the U.S. Bureau of Labor Statistics.
Restaurants nationwide trudged through the following years, quickly having to switch their revenue models and familiarize themselves with shifting rules on patio seating, social distancing, sanitization, alcohol sales and the uneasy return of indoor dining.
Annette survived the first months of the pandemic. The government lifted restrictions and Glover brought most of her employees back to work. The pandemic ebbed, and the global emergency subsided.
But things are not how they used to be.
Five years later, the business of running a restaurant has grown ever more complex. COVID-19 exacerbated a shift away from personal interactions in restaurants for convenient yet stilted options like takeout, delivery apps and tablet ordering. It led to the prevalence of patio dining and the ability to take home a case of beer or bottle of wine with an order.
The pandemic presaged larger, deeper changes to the restaurant industry, too. The effects of inflation, overseas wars and local minimum-wage statutes have all slimmed margins for owners in recent years. The landscape is physically different in Denver, where active retail licenses for full-service restaurants last year were down 22% from 2021, according to numbers provided by the city’s Department of Excise and Licenses.
The fate of the state’s restaurant industry is at a tipping point, one that has landed loudly at the Colorado State Capitol, where legislators have been debating a bill aimed at providing restaurant owners with relief. The biggest issues these days, the restaurant owners say, are:
- Rising labor costs, especially in Denver, where the minimum wage has gone up by 65% in six years
- A state credit for workers who make tips that hasn’t risen since 2017
- High prices for common ingredients such as milk, flour and eggs, along with poultry and electricity
- The cost of state programs to ensure paid family, medical and sick leave
Glover said 2024 was her restaurant’s worst year in operation. She served 2,000 fewer customers than in 2023, and revenue dropped by 14%.
A James Beard Award winner in 2022, she now questions whether running a sit-down restaurant is the right choice for her. “Is full service and this type of establishment what we want to be?” she asked. “I’m not so sure.”
Losing connection to diners
Matt Dulin was a sous chef at Uncle, a popular ramen restaurant with two Denver locations, when the pandemic hit. He kept his job because Uncle — like Annette and hundreds of other restaurants across the state — got a loan through the U.S. Small Business Administration’s Paycheck Protection Program to stay afloat.
Treading an ocean of plastic containers and pickup orders, though, Dulin lost his purpose. “The personal aspect of cooking was removed,” he said.
He left Uncle, started a plant nursery and reconsidered an earlier passion for baking. He began selling loaves of bread from his home, at farmers’ markets and finally at GetRight’s, 6985 W. 38th Ave. in Wheat Ridge, which he opened in 2023.
Today, the restaurant benefits from two measures state and city officials took in the days and weeks following Polis’ initial order that made it easier to serve customers outdoors and sell alcohol with takeout orders. The two revenue streams have become “lifelines” for restaurants, said Colorado Restaurant Association spokesperson Denise Mickelsen.
At Annette, Glover and a score of volunteers built nine scaled-down greenhouses where diners could sit privately year round. At Barolo Grill, a fine-dining Italian restaurant at 3030 E. 6th Ave. in Denver, owner Ryan Fletter erected small shelters with heating and air conditioning, or “Barolo bungalows.”
“We built an entire outdoor community,” he said. He also started taking reservations at the bar, for a time one of the only ways dining was allowed indoors.
Polis signed a temporary order days after he shut down dining rooms allowing restaurants to sell and deliver alcohol to-go. The state legislature extended his order and made it permanent last year. Dulin got GetRight’s liquor license this year and expects to sell beer and wine once his permit is granted.
The market also helped restaurants adapt. Glover switched to using Toast as Annette’s point-of-sale system since it made it easier for full-service restaurants to track takeout orders, she said. Physical menus turned into QR codes that had to be used with smartphones, an ongoing development Glover said is popular despite her own distaste for the black, pixelated squares.
Takeout naturally warrants less time and interaction between restaurants and customers. Delivery apps such as Uber Eats, DoorDash and Grubhub have added another layer of remove.
At the other end, many customers are eating out less and saving restaurant visits for special occasions, according to a survey of chefs and restaurant owners released earlier this year by the James Beard Foundation. Glover said she has noticed the trend at Annette, as more diners are listing birthdays or anniversaries as their reason for dining.
And at a time when full-service restaurants have struggled to retain the labor force they once had, employment at limited-service restaurants such as coffee shops, drive-throughs and counters offering carryout only — known as “ghost kitchens” — has shown steadier growth since 2020, according to BLS data. Social media has become a responsibility for a growing number of owners, too, even if followers don’t always translate to customers, according to the James Beard Foundation report.
In an extended period of recovery and perhaps enlightenment for the industry, Dulin said he is focused on bringing back the personal aspect that went away when restaurants closed their dining rooms five years ago.
“I feel like some places are missing that right now,” he said.
Deeper problems
Jeff Osaka, a James Beard-nominated chef, said he wanted Osaka Ramen to go out on top. He opened the ramen restaurant ten years ago in a basement-level slice of a red-brick building in RiNo, at a time when there was little competition.
Osaka Ramen’s classic and original recipes stayed on the minds of Denver diners. Last year, Denver Post readers crowned it their favorite place to get ramen in the city.
When the pandemic hit, Osaka had to dig into his financial reserves to help support Osaka Ramen and Sushi-Rama, his casual sushi chain. Despite some temporary closures, by 2022 he had five Sushi-Rama locations up and running in metro Denver.
His struggles continued, however, as the pandemic waned. Growing labor costs made it difficult to rebound, Osaka said. So did the surge in price for items like eggs and meat, which go into a bowl of ramen.
He raised his prices. Clientele dropped. “Nobody wants to pay $25 for a bowl of ramen,” he said.
The costs became unsustainable last year, when Osaka shuttered all but the original location of Sushi-Rama. He stopped serving lunch weekdays at Osaka Ramen. Finally, he closed the doors of his eponymous restaurant in February.
Osaka said one issue his restaurants faced after COVID was a consumer shift away from “more casual places” like his. He isn’t the only longtime or decorated restaurateur to back away from the business years after the pandemic.
Chefs Alex Seidel and Jennifer Jasinski both consolidated their businesses and closed well-known concepts: Fruition for the former and Stoic & Genuine for the latter. Dozens of other well-known Denver-area restaurants have closed as well in the last year, many saying the current financial environment is untenable.
Osaka and other restaurateurs say their money woes have compounded as the minimum wage has risen in Denver. It is now $18.81, up from $11.10 in 2019.
Restaurant owners can pay their tipped employees $3.02 below the hourly minimum wage under state law. The credit has remained unchanged since it was first introduced in 2017, which Osaka said left him paying out of pocket for cost-of-living increases for his employees.
A bill introduced this winter in the state legislature would adjust the credit and allow restaurant employees to pay a lower hourly rate in Colorado cities like Denver and Boulder where the minimum wage is higher. The recalculation would immediately drop labor costs for restaurant owners and lessen the impact of future wage increases. Industry groups such as the Colorado Restaurant Association and Hispanic Restaurant Association are sponsoring the bill.
But after gaining widespread support from restaurants, both large and small, some restaurant workers, led by a local union, pushed back sharply — even crudely, according to some elected officials — insulting supporters, promoting restaurant boycotts and posting bad online reviews. The bill was amended Friday to give municipalities more control over what their tip credit should be.
Fletter at Barolo Grill said wage issues date back to the early months of the pandemic before the Paycheck Protection Program (PPP) was introduced. Congress had passed a $2.2 trillion stimulus bill known as the CARES Act that expanded benefits for people filing for unemployment due to the pandemic. The $600 a week that Colorado paid in benefits was better than what many restaurant owners were paying their servers, he said.
As a result, when it came to bringing people back to restaurants through PPP loans, some chose unemployment over severance, Fletter said. By the time the curve flattened, he said, the pay scale had “shifted dramatically.”
The “joy” of restaurants
Other factors for closing have little to do with salaries but with declining foot traffic. Sales at businesses downtown have struggled to keep up with other cities since COVID, with many restaurant operators citing the homeless population and overall security as reasons for closing.
Employees working from home have also been a factor. The Downtown Denver Partnership told The Denver Post in February that 60,000 people come downtown for work per day, a number that is significantly less than the 100,000 people who visited daily before the pandemic.
Tinkering with the minimum wage won’t fix the restaurant industry, said Dr. H.G. Parsa, a professor at the Fritz Knoebel School of Hospitality Management at the University of Denver. More substantial support for employees, he said, could come in the form of incentives to take college classes or providing daycare.
“The restaurant industry is a bridge to somewhere,” Parsa said about minimum-wage industry jobs. “It shouldn’t be a way to pay the bills. It’s a transition to something better.”
Parsa has noted the industry’s changes since 2005, and while dining rooms are shrinking and insurance rates rising, restaurants remain one of the largest employers in the U.S., he added.
“They’re asking for a little relief,” he said. “They deserve that.”
Other forms of relief could include tougher regulations on automatic credit-card swipe fees, said Annette’s Glover. Industry groups have long criticized the high fees set by processing companies as cashless payment has become the norm since COVID. A bill aimed at reining in those companies is also on the docket this Colorado legislative session.
Fletter is optimistic about the future given Barolo Grill’s performance during the pandemic. Restaurants were able to provide “certainty in front of all the uncertainty” of COVID, something that required innovation, agility, and an emphasis on hospitality. That paid off for him. Last year was Barolo Grill’s best in its three decades in Cherry Creek, he said.
Glover added that it’s the community aspect of having a restaurant that drew many neighbors and regulars to support their local spots through the pandemic.
“Those who are in [the industry] know how hard it is,” she said. But “it provides a lot of joy. That alone keeps many of us going.”