The decision by New York restaurateur Danny Meyer to move to a no-tip policy at his restaurants — and to charge customers higher base prices instead — is the subject of a New York Times news article. To me the fascinating part of it is how the decision was driven by state and federal laws and regulations. From the Times article:
The Modern will be the pilot restaurant, Mr. Meyer said, because its chef, Abram Bissell, has been agitating for higher pay to attract skilled cooks. The average hourly wage for kitchen employees at the restaurant is expected to rise to $15.25 from $11.75. Mr. Meyer said that restaurants such as his needed to stay competitive as the state moved to a $15 minimum wage for fast-food workers....
Under federal labor laws, pooled tips can be distributed only to customer service workers who typically receive gratuities, and cannot be shared with the kitchen staff or managers...
restaurants that pay servers a straight salary give up a sizable tax credit on tipped income. The Union Square Hospitality Group expects to lose from $1 million to $1.5 million — "real money," as Mr. Meyer puts it — on the tax credit alone.
Being successful in the restaurant business in New York, in other words, involves a lot more than just delivering great food and friendly, efficient service to customers. It also requires expertise at navigating complex tax and labor law. If these laws were fewer, restaurant owners could run their businesses on the basis of what is best for the owners, employees, and customers rather than on what is best for the owners, employees, and customers within the odd constraints of tax and labor law.