@NikoBaltimore covered most of this with the quoted reasoning, but I thought I'd go a step further in that vein. Let's use your Denny's example. If you're eating a Denny's, are you ordering an appetizer before your meal? Dessert? It's certainly possible and available, but I think for most in a fast casual type establishment like that you're ordering a Grand Slam breakfast or a sandwich and fries and that's it. You're also ordering a cup of coffee or a Coke or something of that ilk, things the server will refill on their own. How many trips to your table is the server at Denny's making? Initial greeting and drink order, bring the drinks take your food order, deliver food, check on food/refill drink, drop off check. That's five trips on average, give or take a trip or two if you're a regular/in hurry or you're talking after finishing your meal and having an extra cup of coffee, etc. In the upscale restaurant(and yes, the "refined steakhouse experience" is going to qualify as upscale, it's not top tier or anything but a clear step up from Outback and Texas Roadhouse I'd be willing to bet) example you've ordered appetizers and desserts, and if drinks means mixed drinks or beer and anyone had more than one we're talking multiple trips to table, POS system, bar, and back to the table for each round, plus extra trips is anyone had coffee with their dessert/after dinner(or maybe a second cup?). You've easily doubled the number of trips your server is making to the table and in most restaurants of that level the server is at minimum tipping out a bartender but quite possibly also a bar back and a busser(or multiples of each of those positions, though the rate would probably be a bit lower then). A server at Denny's isn't tipping anyone out most likely, what they get goes in their pocket...unless they are required to report some or all of their tips as income and get taxed on them, but that's another issue. So even if the quality of the service was equal at Denny's and the steakhouse, your server at the steakhouse probably made twice as many trips to your table and had to tip out a bartender and possibly more people, so they do deserve more of a tip to begin with. The percentage based system might not be perfect but it's easy to figure and be consistent with. The only other thing I'd say is that having a range of just 15% to 18% doesn't allow much room for above average or better service. Even on a $300 tab, a 3% increase in tip is only $9 so if a server goes above and beyond and delivers excellent service you're not allowing yourself much wiggle room if you're sticking to that range.