I kind of understand the automatic gratuity placed on groups of (blank) or more, but still, if the service was that bad, she needs to be addressing the manager and not trying to passively show her displeasure through her tip (or lack thereof).

On the one hand, I think you should always leave a tip (buffets I occasionally don't if the waiter is particularly unattentive), and having been a pizza delivery man for 4 years, it annoys me to no end when I get stiffed, but it's all the worse when you are paid well below minimum wage, and all your income is from tips. Perhaps, given that outlook, you'd think the waiter/waitresses would take a more proactive approach to earning their tips, but nowadays, everyone just wants everything handed to them.

I suppose the problem could stem from the waiting staff, and if so, the management definitely needs to address the issues that are obviously present, given the customers' complaints. Obviously, something was drawing the attention of the waiting staff, which in this case it was extremely busy, according to the owner. However, if that is the case then it is a management problem, because they did not have enough waiters to meet the anticipated demand for the night. I remember that from ~5-7PM where I used to work, they'd have about 10-12 drivers on a Friday night. After around 6:30 or so, they start letting drivers (who want to go home) go home until they have enough to easily control the flow of orders.

In the end, I'd have to side with the customers. Such bad service obviously is coming from a problem somewhere on the restaurant's side, and so the problems either should have been addressed earlier, or the meal should have been comp'ed (which the owner said they offered, but the customer's deny occurred), and THEN immediately addressed upon the first opportunity. Gratuity should not be absolutely "required" just because of those special situations such as this, but I do believe if there is any effort put forth by the waiting staff, then at least a 15%, and for me I always do a min of 20%, should be left. Just my two cents.