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I mean, yeah. Obviously. But to the other businesses or potential business owners that want to try a tipless model, that see these businesses failing, that's not very encouraging or helping to figure out what the underlying issue is. If people are trying to do a good thing but can't quite figure out how to make it work, should we just say, "guess you're not very good at this" and continue giving business to the places asking for tips, or should we try to look into what's going on?
What you do is you legally mandate a minimum wage, require businesses to respect that or else get shut down by the labor board, and then if you still can't make a profit then yeah, sucks. Should have planned better.
The underlying issue is that companies are allowed and encouraged to pay well below the minimum wage because tips make up the difference. This was a stupid idea from the very beginning, and was born shortly after the Civil War when the FLSA ruled that companies could do this so that they didn't have to pay newly-freed slaves a fair wage. Remove that and you remove the problem. American tip/gratuity law spits directly in the face of our own fair labor standards.
The problem you're describing comes from trying to do this piecemeal and let the free market push the demand, but the free market isn't going to do that when cheaper options are available. Even if those cheaper options are built on exploitation. So trying to eliminate tips in your restaurant when the restaurant next door is still on tipped wages is asking for disaster. But if everyone were forced to change at the same time due to change in legislation then you don't have this problem.
The price of eating out at restaurants will increase, but of course it will, you aren't going to dodge that no matter how we address this problem.
Thank you for giving a thought out response to my question. I wholeheartedly agree that tip culture, as it is, is garbage. ~~I think being able to tip is very appropriate in certain scenarios, like at a bar where the bartender is very friendly and charismatic (and is bringing in repeat customers) they should be able to receive tips. But I guess at the same time,~~
I actually changed my mindset halfway writing this comment. No; I, the customer, should not be paying the bartender more for giving me a more pleasant experience than the bartender next door. The bar owner should be reinvesting the additional profits brought in by the better bartender into said bartender's salary and increase their wage that way. Tipping the better bartender gives them a raise at no cost to the establishment, which is ok for the bartender, great for the bar, bad for the consumer.
I'm not sure what you think my stance is or what point you're trying to make.