If you assume labor is 50% of the cost of a coffeeshop, and maybe only 30-40% of the cost when you factor out management, prices would have to go up only 6-7%.

If you assume labor is 50% of the cost of a coffeeshop, and maybe only 30-40% of the cost when you factor out management, prices would have to go up only 6-7%. And remember, you are assuming a zero-net-revenue change. Maybe your former non-tipping customers would see that 6-7% increase and leave, but your former tipping customers (who may be price sensitive, but tipped because they believe in it) would see a decrease in pricing, from a 20% gratuity reduced to a 6-7% price overhead. And some of them would probably still tip anyway.