US restaurants ban tips and raise menu prices to pay staff higher wages

Cambridge restaurant reverted to tips after its 23% menu price increase failed

A small group of U.S. restaurants have stopped accepting gratuities and raised menu prices to pay service workers higher hourly wages. The shift has produced stable staff retention at some venues and outright reversion at others, with restaurant owners and a Cornell scholar pointing to the structural economics of menu pricing as the deciding factor.

At La Cigale in San Francisco, wine waiter Caroline Kraetzer earns $40 an hour — roughly double what most service staff in the city are paid. Customers pay a set price of $140 per person for a meal, and the establishment explicitly does not accept tips. A sign posted by the restaurant reads: “What you see is what you pay. We do not accept tips, your kind words and return visits will suffice.”

Kraetzer said the higher base pay removes the uncertainty of relying on tips. “You’re often there two hours before service, and again when you’re closing after the guests have left, so you are making minimum wage during that time,” she said.

Across the country in Lynn, Massachusetts, chef and owner Rachel Miller moved Nightshade Noodle Bar to a tip-free model five years ago, when the restaurant reopened after the Covid-19 pandemic. Miller said her motivation was to address disparities in pay between front-of-house and kitchen staff.

“The people breaking their backs and minds in the kitchen — often the least visible and the least celebrated — were taking home a fraction of what the front staff made on tips for the same hours,” Miller said.

Miller said she found the patterns of tip distribution “deeply unsettling.” “Tipping lets guests, consciously or not, pay people differently based on gender, race, or sexuality and I was not willing to let that decide my team’s income,” she said.

To fund higher wages, Miller raised menu prices. Tasting menus at the French-Vietnamese restaurant start at $102 for seven courses before 6 p.m. and $126 for nine courses afterward. “Our prices are higher than a comparable restaurant’s because they carry the full cost of paying people properly,” Miller said. “That is the trade, and I stand behind it.”

Not every restaurant that has gone tip-free has stayed that way. Talulla, a restaurant in Cambridge, Massachusetts, dropped tips in 2020 and raised menu prices 23 percent to pay staff more equitably, but reverted to accepting tips in September 2025.

“We tried to keep our non-tipping model simply by raising our menu prices 23%, but we were only able to sustain this through the winter months,” said Talulla co-owner Danielle Ayer. “Operating a non-tipped restaurant is more expensive overall.”

Ayer pointed to a structural reason for the difficulty: tips do not count as a restaurant’s revenue, but higher menu prices do. When a venue raises menu prices to pay staff more, its revenue rises accordingly, and so does its sales tax bill.

William Michael Lynn, a professor of food and beverage management at Cornell University and author of “The Psychology of Tipping,” said diners struggle to adjust to the math when tips are eliminated.

“Higher menu prices make dining out seem more expensive because people do not adequately take into account that they are no longer tipping,” Lynn said. “It leads to lower demand.”

In New York, the vegetarian restaurant Dirt Candy was among the earliest to ban tipping in 2015. Chef and owner Amanda Cohen said she made the change to make pay “more equal for everybody.” The restaurant pays staff about $30 an hour. Cohen said many customers “are pleasantly surprised when they realise they don’t have to tip 20% on top.”

Filmmaker Cassidy Van der Kamp made a YouTube documentary, “Tipless,” inspired by her own experience at an Oakland, California restaurant that went tip-free. Originally paid about $10 an hour plus tips, Van der Kamp said she earned $21 per hour after the change. “I had stability for the first time as I knew what I was earning… and I didn’t need to look at a low tip and think what did I do wrong?”

Despite what some have called “tipping fatigue” — diner frustration with mandatory or large gratuities — Lynn said he does not expect tipping to disappear on a wide scale anytime soon. “Despite tip-fatigue, I do not think tipping is going to be eliminated on widescale anytime soon because the economic disadvantages of eliminating tipping outweigh the advantages,” he said.

At Nightshade Noodle Bar, Miller said the clearest measure of the model’s success is staff retention. “Turnover in this industry is brutal, and we have people who have been here since we made the change,” she said. “It has proven to be highly valued by my guests and team.”