I served in restaurants for 12 years. I come from a restaurant family - once added up to over 300 years of combined restaurant experience.
Tipping is a horrible practice. It brings out the worst in people - customers & servers alike. Study after study shows tipping is a bigoted practice (younger Caucasian women get tipped the most, Male servers of colour tipped the least, etc). Customers become very judgemental, complaining about the smallest thing. Servers treat customers differently based on perception of what a customer will tip.
I can't remember how many times I got tipped in pennies, or a customer put a stack of ones on the table and made a show of taking one away if s/he was unhappy. I told a customer to keep their tip more than once - "you need more than I do".
Unfortunately, it will be hard to do away with. Every time I read about a restaurant trying to stop the practice, they ended the experiment less than a year later.
As noted in this article about Earl's in CGY, there is more to it than just "pay a living wage and charge more".
Imagine stadium prices everywhere. A burger at Kelsey's averages about $16. Are you prepared to pay $20 for that same burger if you don't have to tip? Would you eat out more or less if the average cost (in a casual restaurant) was $35 per person? Would you pay $10 for a bottle of domestic beer? $10 for a pint?
I've no idea how to change this culture. I really recommend googling the TEDTalks on tipping.
(And, sure enough, after 4 restaurants and selling out of the family chain, now all my family (with 2 exceptions) are out of the restaurant business.)