Minimum Wage Insanity

I eat often at a breakfast spot in Arizona I like very much. They employ about ten people. Most of them make minimum wage (plus tips).  This year they may face an increased cost of close to $40,000 in their labor costs. I doubt if this restaurant clears more than $100,000 in net profit. What do you think they will do in the face of a 25% increase in labor costs? How do the people who impose these costs by legislation expect small businesses to manage? This is pure insanity.