We document two new findings about the industry-level response to minimum wage hikes. First, restaurant exit and entry both rise following a hike. Second, there is no change in employment among continuing restaurants. We develop a model of industry dynamics based on putty-clay technology that is consistent with these findings. In the model, continuing restaurants cannot change employment, and thus industry-level adjustment occurs gradually through exit of labor-intensive restaurants and entry of capital-intensive restaurants. We also show that the putty-clay model matches many other findings in the empirical minimum wage literature, including a small short run disemployment effect of the minimum wage and complete price pass-through. Interestingly, however, the putty-clay model produces a larger long run disemployment effect of the minimum wage.