I guess they would rather the five people sit at five different tables using the time of five different waiters and not tipping a penny.
Good thinking.
I’ll tell you exactly what’s going on. One of my friends had a daughter who used to wait tables. A certain portion of the public will not leave tips. Turns out they quite often come in groups - birthday parties, anniversary parties, convention groups, etc.
By law, restaurants do not have to pay minimum wage, and the wait staff depend on tips to make a decent living. So they set these group limits because one or two waiters have to be dedicated to the “party”, and spend an hour, sometimes TWO, of their 6 to 8 hour shift serving only theses people. If they don’t leave a tip (and they won’t) the waiter/waitress makes probably $10 to $15.
Well, sometimes they leave a tip - writing on a napkin, “Tip: Always be honest.” or some such insulting thing, or maybe leave a dollar.
Anyway - good wait staff will not be stiffed too many times before leaving your restaurant for one who has a group minimum policy. If you want to keep good staff, you better take care of them...
I belong to a group who go often to a few restaurants who have such a policy. The waiters NEVER invoke the group policy, because they know us, and know we tip better than that minimum.