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The custom of voluntarily tipping for services rendered has gone in and outof fashion in America since its introduction in the 19th century. Restaurantowners that ban tipping in their establishments often claim that social justicedrives their decisions, but we show that rational profit-maximization may alsojustify the decisions. Here, we propose a conceptual model of restaurantcompetition for staff and customers, and we show that there exists a criticalconventional tip rate at which restaurant owners should eliminate tipping tomaximize profit. Because the conventional tip rate has been increasing steadilyfor the last several decades, our model suggests that restaurant owners mayabandon tipping en masse when that critical tip rate is reached.

The tipping point: a mathematical model for the profit-driven abandonment of restaurant tipping