Profit margin is the amount left for the owner after all expenses are paid. Googling shows restaurants in general have single digit profit margins, so there isn’t much room for pay increases, especially if the owner wants to save for capital improvements like renovations, equipment, or new restaurants.

"Single digit profit margins" is in terms of percentages. I'm talking absolutes: However low the profit margin is as a percentage, as long as it's positive and the owner makes more than enough to live on, it could be made lower by a pay increase.