A small cafe in Stillwater has thrown itself into the big battle over Minnesota's minimum wage increases, inundating the cafe with dozens of phone calls and online comments this week after it tacked on a 35-cent fee to meal tabs.

Oasis Cafe owner Craig Beemer said the fee is needed to offset the 75-cent wage hike that took effect Aug. 1, the first time Minnesota's minimum wage has increased in a decade. Even with only half a dozen servers, Beemer says it will cost him $10,000 more a year to pay servers $8 an hour instead of the federal rate of $7.25 an hour. Instead of adding it on to food prices, he added the "minimum wage fee" — the only restaurant known to do so in Minnesota so far.

It's set off a firestorm of debate on Facebook and in the east metro community, with one customer calling the cafe Wednesday to demand a refund and others taking to Facebook to encourage people to boycott the roadside cafe.

"We're shocked at what's going on," manager Colin Orcutt said of the public response. "We're all appalled at the response for just protecting his employees. We're just doing what we have to do."

It's not the only restaurant responding to the wage hike.

Blue Plate Co., which owns eight restaurants in the Twin Cities and has about 650 workers, says the wage increase and rising expenses because of the health care law will cost the company $1.25 million, prompting it to increase prices and add a fee to servers when a credit card is used to pay a tip.

Reaction to the new fee at the Oasis Cafe in Stillwater has ranged from outrage to support.

"We believe that the industry is overreacting," Wade Luneburg of the MN State Council of UNITE HERE Unions told the Star Tribune this week. "Putting [minimum wage] fees on tickets and passing the cost on to consumers directly is strange at best, and creates an 'us against them' mentality while ordering dinner."

At the Stillwater cafe, which sits at the edge of the downtown and near its historic caves, customers filed in Wednesday for the cafe's signature burgers or breakfast meals. Despite online boycott threats, business has actually increased so far this week, Orcutt said.

"[Beemer] wants people to be aware we're a small business and we're trying to stay open," he said, adding that the cafe considered running the restaurant without servers and more like a fast-food restaurant to make ends meet. "If you raise prices and don't tell anyone, that seems more backhanded to me."

Orcutt has worked in the industry for 10 years and said he supports a wage hike for people who don't make tips, such as fast-food servers. But, he said, it's different for the cafe's servers, who can make $25 to $30 in tips on top of $8 an hour in a weekend.

Earlier this year the Minnesota Restaurant Association proposed creating a two-tiered system to give non-tipped employees that higher wage, while tipped employees who earned at least $12 an hour with tips remained at $7.25 an hour. But the Legislature approved the hike for all minimum-wage employees.

Beemer, who lives in Wisconsin and has owned Oasis Cafe the past five years, wasn't available for comment Wednesday. But Orcutt said Beemer wrote a letter to the Legislature opposing the new law.

Most customers outside the cafe Wednesday supported his decision.

"I think he did the right thing," said customer Mike Stephan of Taylors Falls, who also owns a small business in Stillwater. "If nothing else, it's making a bold statement."

Kelly Smith • 612-673-4141

Twitter: @kellystrib