The employer should not have to pay the wait staff minimum wage. (Hell, there should even be a minimum wage, but...).
If the food is bad but the service is good the server still gets my usual 20%+ tip, but I explain to the server that the food was bad and thus I might not be back.
Also, I’m pretty sure that most servers only report a fraction of what they get in tips as income.
Pay tab & small tip with CC; tip server separately with cash on QT.