That's exactly what it is, but the kids they employ don't know better.

The idea that there's a cabal of restaurant owners who get together to discuss in detail how they're breaking the law and maintain a blacklist is absurd when you stop to think about it.

But they're more than happy to let those kind of rumours keep doing the rounds to scare the naive young people into not sticking up for themselves.

I think there’s one way this might work. To get hired at the next place they might want you to have experience. So you put your prior employer on the application, the new restaurant checks your references and mysteriously decides to pass on you.

Yeah the closest your going to get to a restaurant cabal are owners gossiping at the local wholesaler while waiting for their purchase to be processed, and even then there's a 50/50 chance a member of them is lying in order to bait a competitor into making a bad hire

It might be funny, but in Mexico it's done differently.

There are Whatsapp groups of HRs working in a particular group (tech, construction, etc.) where they communicate. Obviously they don't discuss the names openly but they do ask if someone is willing to give feedback on a candidate that worked at XY.

right, can you imagine some low level restaurant manager going over a list of potential hires that are still in high school with some managers from a couple of other restaurants? How many even bother to perform reference checks? It is a empty threat from a impotent person

Yes, and in my experience the lore around both the vileness and power of the owner is fully invented by the staff.

In many cases it's just teenagers being dramatic and coming up with external reasons why they are dealing with suboptimal conditions and not asking the owner about it.

Wait until it's automated:

https://marshallbrain.com/manna

Are you willing to risk extended unemployment and potentially homelessness in order to call that bluff?