Colorado-Real-Estate-Journal_431466

Page 4 — Retail Properties Quarterly — November 2024 www.crej.com RESTAURANT MARKET The premiere retail brokerage rm in the Rocky Mountain Region 5750 DTC Parkway Suite 200 Greenwood Village, CO 80111 303.694.6082 www.dhlb.com 25908 GENESEE TRAIL RD GOLDEN, CO 8,420 SF Iconic restaurant building available for sale. The building is situated on 1.86 acres and has great mountain views! Iconic restaurant location on I-70 with its own exit. O ering stunning mountain and city views from just 30 minutes outside of Denver. ICONIC RESTAURANT BUILDING AVAILABLE FOR SALE Ken & Shawn 10180 GRANT ST THORNTON, CO Free-standing 5,356 SF restaurant building on 1.75 AC of land in Thornton. Average Household incomes over $100,000 and over 168,000 residents within 3-miles of the site. AVAILABLE FOR SALE OR LEASE Ken & Shawn 4500 LEETSDALE DR GLENDALE, CO 4,732 SF “Turn-Key” medical space available for lease (former Urgent Care). Centrally located just south of the Hilltop Neighborhood in Denver one block East of Colorado Blvd along S Leetsdale Dr. Ample parking with 30 parking stalls for customers and employees with monument signage available. Zander 2510 TENDERFOOT HILL COLORADO SPRINGS, CO 7,814 SF Restaurant available for lease. Property size 1.99 Acres. Zoning MX-M Mixed Use Medium Scale Colorado Springs. Property is well located on Lake Ave between I-25 and Highway 115. Robin & Phil FROM ALL OF US AT DAVID, HICKS & LAMPERT BROKERAGE WE WISH YOU A AVAILABLE FOR LEASE AVAILABLE FOR LEASE S ucceeding in Colorado’s res- taurant scene is like a giant Mexican or Chinese restau- rant menu with multiple columns of delicious choices. And whenever and wherever these combined options are available, they can lead to a fantastic, savory and sweet business journey. But sig- nificant business headwinds exist that can leave a bad taste in any restaurant operator’s mouth. These challenges include pandemic hang- over; high food expenses; increasing labor costs and regulations; a lack of steady business; delayed permit- ting; and what feels like endless construction impeding foot traffic in once-busy areas. To the extent that local and state governments can combine with industry participants to generate solutions, we hope that many can be implemented or strengthened as quickly as possible to enable eco- nomic relief. According to the Colorado Res- taurant Association, the industry provides significant impact. This business sector: • Employs 11% of the state’s work- force at more than 12,700 locations (the fifth highest nationally per capita); • Generates $20 billion in rev- enues, with every extra dollar spent contributing $2.21 to the state’s economy; and • Collects $426 million in state sales tax annually, alongside local taxes in more than 600 jurisdic- tions. n The struggle: Operators squeezed from all sides. Nationally, restau- rant chains and operators this year are on track to declare the most bankruptcies in decades outside of 2020’s pandemic impact, according to an analysis of BankruptcyData. com records. Also, same-store sales traffic at U.S. restaurants was down 3.3% year over year in October, according to Black Box Intelligence, while casual dining restaurants saw visits fall 4.5%, Bisnow reports. Here in Denver, restaurant own- ers just want to see some money left over when balancing operating costs with taxes, payroll, and price- sensitive customers, said Ben Sus- nick, who owns and operates Hoja, a breakfast/lunch place on South Pearl in Denver. Susnick believes there’s a mis- matched cultural component at work, too – a bridge that customer education can’t always cross suc- cessfully. “It started around 2015, grew during the pandemic and persists today. I call it New Denver. We want to keep customers happy with high quality food, but fewer people are interested in paying for it when they calculate the cost of breakfast burrito components, for example. Customers can’t taste payroll, food costs or tax increases. I’m certain our business model would work better in other cities, and I’ve fan- tasized about how much easier we could operate elsewhere. We love our employees and customers, and we love this business, but we’re really stuck.” We have several tenants currently who are leaving the city for the suburbs, and others who’ve closed because they struggled with profit- ability in this challenging business environment. Colorado Restaurant Association data frames sizing of the closures and lack of segment growth: The number of Denver restaurants fell from 4,130 in July-August 2023 to 3,947 in July-August 2024, a decrease of 183 restaurants (4.5%). Prior to 2020, the number of Denver restaurants usually grew by 3% to 5% per year. Sonia Riggs, president and CEO of the CRA, commended the signifi- cant resilience that the state’s res- tauranteurs have shown over time, including pandemic shutdowns. But she noted in a recent Denver Post interview that this resilience can set operators up for disappoint- ment when they look back to a time when profit margins were higher, operational costs were lower and there were fewer burdensome gov- ernment regulations. Some high-profile operators have found that Denver’s business environment has squelched their opportunity, and are expanding out of state. We find this sad and frustrating, and it works against the city and state’s consistent narrative as a pro-growth, desirable place to locate. n Minimum wage and tip credits. A cascading sequence of legal mea- sures in both Colorado and Denver have affected the minimum wage. In 2010, Colorado voters approved Initiative 100, which connects the state’s minimum wage adjustments to the Consumer Price Index. Nine years later, Gov. Jared Polis signed House Bill 19-2010, which enabled individual jurisdictions to set their own minimum wages. Denver City Council moved quickly to legislate the hourly rate and, for 2025, it will rise to $18.81. Denver is the nation’s 19th-largest city by population, but currently has the eighth-highest minimum wage, topping places like New York City and San Francisco. But res- taurant owners in Colorado have one advantage those cities do not: a $3.02 tip credit. This means the minimum wage for tipped workers in Denver is $15.27, and $11.40 in Colorado. Colorado’s tip credit can equal a $6,500 savings per worker per year, Westword reported. Some local operators think the tip credit should be more like New York City’s (at $5.35 per hour, making their tipped minimum wage $10.65 per hour). But this, too, gets compli- cated between tip credits, tip pools and job functions, and some restau- Combo plates: Restaurants struggle and succeed Jimmy Balafas Co-founder and managing partner, Kentro Group Please see Balafas, Page 19