Try to apply this logic to any other industry.

What would you say to the owner of a clothing store who says that costs (materials, rent, etc.) are just too high so she can't afford to pay her employees properly.

Most would say the store doesn't deserve to be open. Or it needs to be reconfigured (lower costs or increase prices). It's a business that just doesn't work. They wouldn't say that maybe customers should help out through optional charity.

But for some reason people look at the restaurant industry differently. In the restaurant industry, owners can get around this problem by pushing the salary burden onto the customers.

As someone mentioned above, non chain restaurants have no issue surviving in other countries. So there's nothing fundamentally different with this industry. It's just that the tipping system is engrained in us.

You say people won't want to pay higher prices. Do you have evidence of that? What's the difference between 20% higher prices (or service fee) vs a 20% tip?

Even if they won't, they'll eventually learn that this is how much it costs to eat out. Or the industry will disappear.