In 2015, San Francisco restaurant Zazie declared that they were going tip free. This meant that tips from customers were no longer expected or required—a far cry from the usual tipping system that American diners and servers alike are so accustomed to.

Rather than swindle their own staff out of a much-needed source of income, Zazie hiked up their menu prices by 20 percent to provide their staff with more benefits and a living wage.

According to the restaurant’s website, Zazie offers “a living wage, revenue share, paid family leave, fully funded health & dental insurance, paid time off, and a 401(k) with employer match” for every employee.

What qualifies as a “living wage”? Zazie owner Jennifer Piallat told San Francisco Eater in an interview that their servers receive $15 to $20 an hour.

Zazie isn’t the first restaurant to ban tips. Nevertheless, their decision got a lot of attention on social media, sparking debates over whether these changes were helping servers. It’s a fair question, especially considering other restaurants have since followed suit.

Are tip-free businesses the future of the restaurant industry—and is that a good thing?

The Crazy U.S. Tipping System

In many parts of the world, tips are an added bonus for the lucky recipient, a financial reward for great service. Many countries, such as Australia, already pay their servers a fair wage, and tips are more of an infrequent but pleasant surprise. In Japan, leaving a tip will likely result in your server trying to give you back the money you “forgot.”

Tips work very differently in the U.S. In California, where Zazie is located, minimum wage is $10.50 per hour, or $10 per hour for smaller businesses. Considering San Francisco’s high cost of living makes it one of the most expensive cities in the country, ten bucks doesn’t stretch too far.

This is why so many Americans rely on tips to support themselves. When your paycheck makes you choose between buying groceries or paying rent, getting a gratuity from each customer isn’t a compliment. It’s a necessity.

And some states even enforce an exemption from minimum wage for servers who receive tips. This means they earn just a few dollars an hour, making their wage more of a formality than a source of dependable income.

This system has its advantages. Theoretically, a server who relies on tips would be mindful of delivering great service, thus fostering a closer connection between the customer and server and improving the diner’s experience.

Servers can also make very healthy sums of money off tips alone. Michelle* is one of these people. She works for an upscale New York City restaurant and can receive an impressive amount from tips alone each week.

“Even though the amount is never consistent, I do base my living expenses off what I would expect in a reasonable week,” she says. “So that means my rent, and how much money I have leftover after all my necessities are paid for. Sometimes I have great weeks where I can afford to go out quite often or be a little reckless with my spending.”

I’ve had customers who leave kind of depressing tips… Usually people who dine alone, because their friends aren’t there to judge them I guess.

Of course, there are the cons. The most obvious downside to relying on tips is the need to depend on customers to honor the system.

“I’ve had customers who leave kind of depressing tips,” Michelle says. “Usually people who dine alone, because their friends aren’t there to judge them I guess. It used to make me feel pretty bad at first. It doesn’t affect me so much anymore, but it can really affect my income for the week.”

Not to mention it’s a little demoralizing to look at your paycheck and see your hourly rate hovering just above two bucks an hour.

But the most illogical thing about tipping is the complexity of the system. Customers must factor in not only tax but a tip when they are ordering. This practice is a time-honored tradition for Americans.

But for people in other parts of the world, there’s no need to pull up the calculator app while your server patiently waits for you to flex your math skills.

And while it might encourage servers to go above and beyond, that incentive doesn’t count when every single server receives a tip, regardless of their service.

There’s also the inconsistency in the system. It’s hard to understand why people serving food in a café get tips while people working at fast food chains don’t. And yet their hourly wage is often exactly the same.

Employers are essentially passing off the burden of providing for their own employees on to the customer.

Unlike the rest of the world, the U.S. tipping system isn’t a way to compliment or incentivize a server. It’s a financial necessity prompted by a flawed and inadequate wage structure. It’s little wonder Zazie decided to distance themselves from it.

Does going tip free serve the servers?

You don’t have to be an accountant to see that the traditional tip-based system is more profitable for business owners. Even Zazie’s owner acknowledged in her interview with San Francisco Eater that she was taking a loss.

Nevertheless, she sticks with it, just like so many other tip-free restaurants. It’s effecting some serious change in the industry.

Does the system work for servers? It really depends, but so far there seem to be more positive experiences than negative.

Steve* works for a tip-free restaurant in San Francisco. He says he definitely prefers it over his past jobs where he was relying on tips to make ends meet.

Some of my friends work two jobs, so it’s nice to have stability.

“It’s good. It’s better than when I was relying on tips, because some weeks I’d think, ‘How am I going to afford rent?’ Some of my friends work two jobs, so it’s nice to have stability.”

Steve says that although his workplace is tip free, he is allowed to accept the occasional gratuity—but these are rare.

“I do still get tips every now and again,” he says. “But most people who come to the restaurant know they’re not expected to tip. Or they’re tourists who are there because they don’t understand tipping in the first place.”

Even with a living wage and the odd tip, Michelle doesn’t think she’d be able to make close to what she gets at her current job.

“I don’t think I could make as much as I do without tips,” says Michelle. “But I do get really big tips because of the kind of restaurant I work in, and quite frequently, too.”

What do the customers think?

Aside from the initial spate of questions, the public’s response to Zazie’s changeover has been mostly positive—which means more customers are willing to support this new model.

San Francisco isn’t exactly known for being affordable, especially when it comes to dining out. And considering the largely upbeat reviews on both TripAdvisor and Yelp, locals appear happy to pay the increase. The Instagram-worthy food probably doesn’t hurt either.

It’s becoming easier and easier to choose a tip-free restaurant when dining out, adding to the success of similar tip-free establishments. This goes to show that people really are willing to pay more for an alternative to a system that just isn’t ideal.

Consumers have been aching for change for a long time, especially since the current system doesn’t work too well with giving servers feedback. When tips are automatically included in the bill, the only way to reward great service is to tip an even higher amount, which may be unaffordable for the customer.

If the service is subpar? Choosing not to tip isn’t just a social faux pas. It can really affect someone’s income and quality of living.

Yes, tipping is the decent thing to do. Though for those who are struggling to make ends meet themselves, providing a decent tip can hurt.

But if you don’t provide a tip, you’re just passing that disadvantage on to your server.

People appreciate having control over their own tips, even if that does mean having to pay a couple of dollars more for their pancakes.

Is this the future of hospitality?

Dozens of restaurants have opted for a tip-free system, but some eateries haven’t been as successful as Zazie. For example, another San Francisco restaurant, Sous Beurre Kitchen, was forced to return to a tipping model after an increase in taxes made their higher wages unsustainable.

Paying a fair wage be an end goal, but it’s not going to work for everyone if current business regulations stay the same. It’s a step in the right direction, though it certainly doesn’t address every flaw in the system.

Nevertheless, the experiment has proved successful for other businesses, including Zazie.

Going tip free isn’t actually the death of tips but a shift in the way feedback is given and servers’ livelihoods are protected. The rest of the world has been operating under this fairer system for a long time. It’s time that America catches up.

*Names changed for privacy reasons