Restaurants that switch away from tips frequently switch back. There was a big push about 10 years ago, and most have closed or switched back.

Customers, as a whole, just see menu prices go up and go someplace else; the customers who actually understand the trade-off are too few for that model to work most of the time. Additionally, the best staff jump ship to restaurants where they can maintain their income.

Fine dining is really the only place you can get away with it regularly. The employers didn't really have a choice if they want to stay open. The system is what it is, every customer who doesn't tip is giving themselves a discount at the expense of the staff which is a reasonable thing to be upset about. The only way to change the system is through regulatory legislation.