Keeping a restaurant open and profitable has never been more difficult. Rising food costs due to inflation, ongoing supply chain disruptions, and a highly competitive labor market have created significant hurdles for restaurant owners across Colorado. Recruiting and retaining both front-of-house staff and kitchen employees has become increasingly difficult, especially as wage expectations grow and operational costs continue to rise. In response to these pressures, restaurant operators and industry advocates are rallying behind House Bill 1208—commonly known as the Restaurant Relief Bill—which proposes to adjust wage structures for tipped employees.
Recent data from Denver’s Department of Excise and Licenses illustrates the severity of the issue. At the end of 2021, there were 2,166 licensed restaurants in the city. By the end of 2024, that number had dropped to 1,693—a staggering 22% decrease in just three years. Statewide, closures have also surged, with many independent restaurants unable to keep pace with rising costs and a challenging labor market.
Industry advocates warn that without legislative intervention, more closures could follow. The Colorado Restaurant Association (CRA) has been actively supporting House Bill 1208, which would allow restaurants to pay only a portion of tipped workers’ base wages, with tips making up the difference. The bill is particularly relevant in cities like Denver, where local minimum wages exceed the state-mandated minimum. “We want our restaurants and teams to thrive, but we have to stay open for that to happen,” Colorado Restaurant Association President and CEO Sonia Riggs noted. “Independent restaurants are closing every single day in Colorado. We need solutions that allow restaurants to continue operating while still ensuring fair wages for workers.”
House Bill 1208, officially titled “Local Governments Tip Offsets for Tipped Employees,” is designed to ease financial pressure on restaurants by providing a tip offset mechanism. Under this proposal, local governments with minimum wages higher than the state’s baseline would be required to implement a tip offset of $3.02 per hour, aligning with the amount specified in the state constitution.
The bill does not propose lowering the overall wages of tipped workers. Instead, it ensures that restaurant owners are not disproportionately burdened by higher local minimum wages, which can create unintended wage imbalances between tipped and non-tipped employees. “When we passed the minimum wage local government bill several years ago, we unintentionally failed to correct the ratio of tip credit to minimum wage,” explained Colorado State Rep. Alex Valdez, one of the bill’s sponsors. “We need to keep that ratio balanced because restaurants operate on very thin margins. Without this correction, small businesses struggle to survive.”
Supporters of House Bill 1208 argue that the measure would provide much-needed flexibility for restaurant owners, particularly in cities where rising local minimum wages have significantly increased costs. The Colorado Restaurant Association (CRA) emphasizes that allowing tip offsets would enable businesses to allocate more resources toward back-of-house workers, who do not benefit from tips yet are essential to restaurant operations.
“It’ll allow restaurant owners to be able to give more of their money to back-of-house workers, who continually get left behind every time we see a minimum wage increase,” detailed CRA President and CEO Sonia Riggs.
Data from the Colorado Chamber of Commerce underscores the financial strain on the industry, with 92% of restaurants having raised menu prices to offset wage hikes, 68% reducing staff hours or cutting positions entirely, and 80% of restaurant closures in early 2025 occurring in Denver, where the cost of doing business is among the highest in the state. Without financial relief, restaurant operators warn they will have no choice but to continue raising prices, cutting jobs, or shutting their doors entirely.
In addition to the Colorado Restaurant Association, the Colorado Chamber of Commerce has also thrown its support behind House Bill 1208. Many restaurant owners have publicly expressed their hope that the legislation will provide the breathing room necessary to keep their businesses afloat. The bill is currently scheduled for discussion in the Colorado House Business Affairs and Labor Committee. If it passes, it could offer a path forward for many struggling restaurants. However, industry advocates stress that this is just one step in addressing the broader economic challenges faced by food service businesses in the state.
The next step for HB 1208 is a hearing before the House Finance Committee, where members will evaluate its fiscal implications. If it passes this committee, the bill will proceed to the House floor for debate and voting. Subsequently, it would move to the Senate for a similar process. Upon approval by both chambers, the bill would be presented to Governor Jared Polis for signature into law.
