Maybe on average the price didn't change, but in the "no-tipping" case, customers can no longer self-select into their various price points. What businesses ac

Maybe on average the price didn't change, but in the "no-tipping" case, customers can no longer self-select into their various price points. What businesses actually want out of their pricing model is to have a bunch of people pay the maximum amount they'd be willing to pay for a uniform set of products, even though that maximum varies across the customer population. Having a single price for each of your products necessarily constricts your customer base, and it's actually pretty rare -- even your corner drug store publishes coupons in the shoppers' weekly to help bring the cheapskates in the door. Eliminating tipping puts this restaurant into the "single price point" game, forcing them to pick a number that balances not only revenue per customer against customer volume, but also some intangibles -- having a big waiting list catches people's attention and makes your place seem more desirable, for instance, and lets some people pay with time instead of money, broadening your customer base. Plus the marginal efficiency of the kitchen is pretty high if its going full-bore all the time, and it likely makes better use of perishable supplies that are already paid for. My guess is that what they have learned is that there's no single number you can pick that's "the same" as in the tipping scheme. The article talks about "high-energy millenials" who were put off by the high prices. This suggests a price-sensitive group, so probably not especially high tippers, but with some other feature that makes them valuable -- maybe they buy low cost but high-markup items, or maybe they help create an atmosphere that brings in some high rollers, or maybe they marginally increase the volume in the off-peak, allowing the kitchen to make better use of those already-mentioned already-paid-for, perishable ingredients. Tl;dr a cost distribution is not fully characterized by its average, the shape also matters.