The folk club needs a venue. The restaurant needs to make profits in order to continue providing the venue. It seems like $3 is reasonable, but I wouldn't pay a total of $8 for an open mic, although $5 for food isn't that much unless the prices are through the roof if people want to eat.

If someone allows the use of their establishment, they get to call the shots, and that includes seating those with reservations first and having a minimum order.

I wonder why the restaurant instituted the minimum charge if people were already paying that willingly, as your newsletter stated. Of course, there could be something else going on. They could be trying to guarantee a certain amount of money, or they may just want more money than they already make. In any case, it's their option.

As far as musicians playing for free and listening to all the others for free, it's also their option to make that rule. What many fail to realise (and this may not apply to your situation) is that music organizations that support them also require their support. If most of the folks involved in these organizations are musicians, and if musicians don't feel like they ever have to pay or volunteer to help, the organization isn't going to last very long. It's a bit like the Little Red Hen, where everybody is willing to eat the bread, but no one wants to help make it.

It sounds like your club simply needs to fine a volunteer venue that doesn't need to make as much profit as the restaurant.