[mauvehaus]

Supply and demand curve apply to labor too though, right? At some point (in the near future if the premise of the article holds), the labor won't be available at the current price. Restaurants that won't raise wages won't be able to offer good service to their customers, and ones that do raise wages will be able to offer good service. The competing classes of restaurants are no longer substitute goods.

(Not an economist, for the benefit of anybody who doesn't find that patently obvious ;-)

ETA: I don't see the reason for the downvotes on the parent. It seems like a pretty reasonable explanation as to why there would be a brutal race to the bottom in restaurant industry. But again, my economics background is limited. Maybe somebody could explain the flaw in the argument?