Customers and other employees were allowed to leave the restaurant. The hostage told police the suspect had a gun.
The manager convinced the woman, identified as 48-year-old Noelle Schulze, to go outside and talk to police.
"I don't want to hurt anybody," Schulze told authorities. They pleaded with her to not hurt anyone. She said, "OK."
Police fired two rounds at Schulze after they said she raised her arm and pointed what appeared to be a gun. She was hospitalized in stable condition.
Police said no gun was found. The incident remains under investigation.