All Intensive Purposes

I don't see it quite at the level of incompetence. The first party lied and all the other tables were reserved. Confronting the liars might reasonably have seemed likely to create a scene, or maybe if the liars had ordered by the time the manager got involved, then the kitchen workings would have been thrown into disorder, delaying meals for everybody in the restaurant. It looks to me like a no-win situation for which the management would have deserved a medal or at least a gold star had it solved it instead of royally screwing it. Many in the place of the party victimized by the liars would have accepted their victimhood, and this likelihood no doubt figured in calculations for the safest course to chart through the stormy waters. Harm from the lying was going to fall somewhere, and visiting injustice on an easy going party is going to be the most prudent harm-minimizing course in many situations. This is a utilitarian and not individual-rights perspective, but getting seated at the time you've reserved is not a human right, a constitutional right, nor even an enforceable contractual right I bet. The big screw up seems to have been refusing them drinks. Even that mistake would be mitigated by jerky behavior by the injured parties, and we only heard their side.
 

They didn't need to confront the liars, but they did need to come up with another table, pronto. A reservation is not a property right to a particular table. Obviously, this was within their power, since they sat the folks down. And then the business at the end was simply out of control.

OTOH, anyone who refers to a $100 bill as a "C-Note" and who pulls one out to make a point is surely a jerk.