This NEVER happens from a economic incentive standpoint.
Restaurant owners NEVER say "Oh look, expectation for tipping in the general public is up 5% this year, let's cut down our menu prices to balance this out."
I don't know what logic is behind your statement - could you please elaborate?
> Restaurant owners NEVER say "Oh look, expectation for tipping in the general public is up 5% this year, let's cut down our menu prices to balance this out."
What they do is take advantage of their ability to cut server pay instead of increasing menu prices, when that is possible. And higher tips make more of that possible.
Are you saying that restaurant owners are charging the same amount that they would if tips were 10% lower? Because I'm pretty sure margins are low enough to make that impossible.
Waiters take home ~$20/hr. If tipping culture changed such that waiters made $25/hr the restaurant can't reduce prices to compensate because the are already being paid the minimum wage of 2.15. They can't legally cut server pay.
Likewise if tipping culture changes such that waiters made 15/hr they wouldn't get a $5/hr raise, because servers are already overpaid relative to equivalent untipped jobs.
There are some people who are well paid but they’re generally in expensive areas and there aren’t very many of them. It’s like looking at Waymo engineers and making a general statement about software developer income country-wide.
The other problem is that where you say “can’t” is often “shouldn’t but do anyway”. It’s not hard to find people complaining about owners illegally taking some portion tip income, shifting expenses to workers, or otherwise lowering the effective income for what is already not an easy job.
I've known plenty of waiters, and none of them made $10/hr. The cities were Austin, Dallas, Houston, and Galveston. They all reported making 15-20/hr.
I usually trust the BLS numbers, but in this instance I think they might be off. They collects numbers from corporations, who can usually just report salary. But with heavily tipped positions they don't know how much the waiters earn except how much they declare for tax purposes as the end of their shift. And all my waiter friends who were making 15-20/hr were reporting $10/hr.(Almost all credit card tips).
This is similar to being a delivery driver, everyone was making $20/hr but the ledgers all said we were making 10.
Restaurant owners definitely track how much their customers are paying for meals and correlate it to how much business they're doing, both in terms of number of customers and in terms of revenue per customer.
They know that their customers judge the night based on total cost, which includes tips and taxes. That's why restaurant owners tend to be so militant about local meals taxes.
Restaurant owners do not ignore tips when setting prices, or when setting wages. It's kind of nuts to think that they would.
They don't lower the prices; they just fail to raise them. I.e., the costs of paying their employees would have gone up, and thereby forced them to raise (visible) prices; but since what went up instead is the societally-expected tip, their employees have already had their compensation adjusted to match inflation, and so the employees are not costing the employer any more than previously, and so the employer doesn't need to raise the base price of the good.
And if an owner has to raise the prices because of an increase of the rent, or because of a spike in the cost of coffee, why are the waiters going to get a cut out of that?
Restaurant owners NEVER say "Oh look, expectation for tipping in the general public is up 5% this year, let's cut down our menu prices to balance this out."
I don't know what logic is behind your statement - could you please elaborate?