Also, as Maine restaurateur Stadler already pointed out, you lose the federal tax credits the government gives restaurants with tipped wage employees. "That's a huge expense," said Hoffman. In 2013, Comal received $30,000 back because of that tax credit. Now, however, "we just have to eat it."
And because most restaurants (though they're loath to admit it on the record) don't report all tips, when they switch to no tipping and their payroll is all accounted for, expenses around worker compensation, matching payroll taxes, vacation time, and sick pay all go up. Hoffman said the last two are particularly huge because, for a Comal server, they both get paid out at their full hourly wage (on average, around $35 hour), as opposed to the minimum wage.