I disagree that customers are happier. People constantly complain about tipping. Those people are clearly not happy. Much of the world doesn’t do the tipping model, so it doesn’t seem like it is worthwhile for quality of service.
I do agree that staff are happier because they on average would make more (at least more than the paltry minimum wage most states have). But it comes at the cost of taking advantage of customers (basically trying to guilt trip them into paying more). I don’t support such business practices. Not to mention it’s not actually fair pay. You’re not actually being paid for quality of service. You’re paid for how much they like you, which leads to racial and gender pay disparities.
And the real winner? The business that gets to pay pennies to wait staff. They could incorporate the average tip into their prices and maintain the same pay. But they don’t want to. They want to advertise low prices so that they can get the full value from low tippers. They often even outright push mandatory tipping with auto gratuities, which is peak sleazeball behavior.