I usually agree with you, but on this one I can't. Any business relationship is a big deal. The band is gone, but if you have the relationship with the owner, then you should try to minimize the impact on him. You may need to call on him again for another band.Ha! I'm the polar opposite. It's a bar gig... not the end of the world. The bar owner will be fine. The audience will be fine. And you will be fine. Cancel the gigs and regroup (literally).
I will never understand how most of the crowd here thinks canceling a bar gig is a travesty. A little self importance, maybe? If you cancel, they will put someone else in your place. The crowd won't care or even notice.
I'm with @pcake on this. In one case, I was able to supply the venue with another band similar to mine.