  The custom of voluntarily tipping for services rendered has gone in and out
of fashion in America since its introduction in the 19th century. Restaurant
owners that ban tipping in their establishments often claim that social justice
drives their decisions, but we show that rational profit-maximization may also
justify the decisions. Here, we propose a conceptual model of restaurant
competition for staff and customers, and we show that there exists a critical
conventional tip rate at which restaurant owners should eliminate tipping to
maximize profit. Because the conventional tip rate has been increasing steadily
for the last several decades, our model suggests that restaurant owners may
abandon tipping en masse when that critical tip rate is reached.
