New restaurant report builds case for Denver to take on tipped wages

Restaurant industry advocates working with Denver city officials released a new report Friday morning that uses data from local eateries to show their economic struggles and recommend ways the city might provide relief.

It’s an early sign that one of the most contentious fights in recent Colorado politics is likely coming to Denver soon, as the industry lays the groundwork for a potential change in the tipped wage.

Last year, state lawmakers debated changes in the minimum wage law that sets how much of a tipped worker’s minimum income should come from the owner of a restaurant, versus from the tips they collect. Restaurants are already allowed to pay a rate that’s a few dollars less than the general minimum wage.

Restaurateurs said the tipped-wage policy needed to change for them to be able to afford to keep operating full-service businesses. But labor unions vehemently opposed the idea because it would effectively cut workers’ take-home pay.

After a so-called “death by a thousand amendments,” House Bill 1208 left the decision to a few major cities — and Gov. Jared Polis pressured them to act.

Now, it’s Denver’s turn to take it on.

City Councilman Darrell Watson confirmed to JS that he plans to propose a change to the city’s tipped-wage policy to his fellow council members before the end of March. He didn’t provide specifics on what those changes might be.

“I will be leading a process to focus on the tipped credit that’s a balanced approach,” he said.

Denver businesses that employ tipped workers, like coffee shops and restaurants, can now offset those wages by up to $3.02 per hour, meaning the employers must pay their tipped workers at least $16.27 as of January under the city’s inflation-adjusted minimum wage. If those workers don’t earn at least as much as the offset in tips — bringing them to Denver’s full minimum wage of $19.29 per hour — the employer must make up that difference.

That means if officials were to decrease the required tipped wage, those workers would still make at least the minimum wage, but more of that pay would come from the tips they collect. That would ultimately decrease their take-home pay.

New report sets out options for wage changes

The report released Friday is based on scores of interviews and surveys of local restaurants, plus analysis of financial statements and federal labor statistics. It provides dozens of data points on the industry.

The report delves deeply into three main causes of strain among restaurant owners: labor costs, regulatory barriers and public safety.

The authors, Adam Schlegel and Dana Faulk Query, both restaurateurs, found that labor costs were the “most frequently cited challenge among operators” and “the most destabilizing factor” for full-service restaurants. Last summer, the two were chosen to be the city’s new restaurant liaisons.

According to their analysis of federal labor statistics, Denver had 15% fewer full-service restaurant jobs in 2025 than it did at the beginning of 2020, before the pandemic. During that same period, the industry’s overall workforce declined about 6%.

“The entire industry is shrinking in employment in Denver, but the fact that full-service restaurants are over double in the amount of contraction of the overall amount is incredibly significant,” said Query, the co-owner of Big Red F Restaurant Group.

That’s happening as more and more restaurants reduce their wait staff, cut servers’ hours and introduce kiosk ordering stations.

The city’s Department of Economic Development and Opportunity commissioned the report in collaboration with Visit Denver, a nonprofit trade group that serves as the city’s tourism sales and marketing agency, and the company inKind.

DEDO executive director Adeeb Khan said he believes there is an appetite among city policymakers for some kind of change to the city’s tipped wage.

“I think about it from a workforce perspective,” he said. “When restaurants are closing down because they can’t afford to stay open, that is detrimental to that workforce.”

The report makes recommendations for how the city could address labor costs. One is to decrease the required tipped minimum wage to the state’s level, which is now $12.14. (That’s $3.02 less than the state’s overall $15.16 minimum wage — and it’s more than $4 less per hour than Denver servers must be paid now under the city’s minimum wage ordinance.)

“We know that is very drastic,” Query said. “We can still provide significant relief to restaurants, even if the City Council doesn’t go that far.”

The second recommendation is to establish a “middle-tier” minimum wage — at 85% of the full city minimum wage, equating to $16.40 currently — for restaurants with whole-house tip-sharing systems. Watson said he liked that suggestion.

“What we really hope … is that this report will be taken seriously,” Query said. “We want to make sure that policy makers have our recommendations in front of them, and really it’s up to them to find the best way to respond.”

Policy changes still unclear

It’s unlikely the council would approve a policy based on the first recommendation to lower the tipped wage to the state’s level — Watson said he didn’t think it was the right concept. He said he would be looking for a “more balanced approach.”

“I want to make sure we have a mixture of process that allows for some level of adjustment around our tip credit, (along) with protecting workers’ minimum wages,” he said.

And there may still be political battles ahead.

While Mayor Mike Johnston’s administration supported the initial version of the bill at the state legislature, which originally would have reduced the tipped wage to $11.79, several members of Denver’s council testified against it.