Or, will be motivated to do a better job.
Maybe or maybe not, employees and motivation are not quantifiable nor are they predictable. Giving someone a raise based on merit can have positive or negative effects, a raise based on a have to, I would not mean a better worker, it is all based on attitude.
Economics are hard numbers and you either surivive or you don't. So, if you cannot afford to pay a wage, you either cut costs somewhere else or you raise prices to the consumer.
Labor and food costs for a restuatrant should be no more than 60%, if it goes over that, then decisions need to be made. Doubling or even a 30% increase in labor means cutbacks and decisions on how to get the cost back under the 60% level. Sometimes this is achieved in cutting maintenance to the building, trying to negotiate a new lease, raising prices. Cutting electric, gas, sewer, water is pretty much out. The fact is with increased costs, you are going to have to make cuts or you go out of business.