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 its 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 inside restaurants are not how they used to be.

Five years later, the business of running a restaurant has grown 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 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

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. Sixth 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 in March 2020 allowing restaurants to sell and deliver alcohol to go. The 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 because 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 codes.

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 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.

Deeper problems

Jeff Osaka, a James Beard-nominated chef, said he wanted Osaka Ramen to go out on top. He opened the ramen restaurant 10 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.

During the height of the pandemic, however, 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 even as the public health emergency waned. The adjusted local minimum wage and the state’s static tip credit made it difficult to rebound, Osaka said. So did the surge in price for eggs and meat and dairy.

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 ended lunch service during weekdays at Osaka Ramen. Finally, he closed the doors of his eponymous restaurant in February. 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 introduced in 2017, which Osaka said left him paying out of pocket for cost-of-living adjustments for his employees.

A bill introduced this winter in the legislature would significantly adjust the credit and allow restaurant employees to pay a much lower hourly rate in Colorado cities such as Denver and Boulder, where the minimum wage is higher.

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 is in limbo as the legislature’s Democratic leadership debates its future.