That does work if you go at it with the right attitude. Years ago, before I was married, I waited tables at a resort hotel that automatically included a 15 percent gratuity on everything; all food and beverage items. Guests checking in were made aware of this and told that they did not need to tip since it was "built in". If a guest left a tip we were required to inform (remind) them that the tip was already added to their bill.
The trouble with this system, from the servers point of view, was that the hotel set up a point system for breaking down that 15 percent. The hotel got a piece off the top (even though you, not "the hotel", waited on the customer), then the food and beverage manager (from all 3 restaurants on site), then your manager, and then you got a portion of that 15 percent. If I recall correctly, it worked out to you getting about 7 to 7.5 percent. Some might say that at least it helped even out for those who don't tip, but it didn't really offer incentive to "bust it" for the customer.
What worked for me and some others, was that the customer could still decide to leave you some cash anyway. If you made sure that they understood that the gratuity had already been added to the bill and they still wanted to leave you something, then that "side money" was all yours (no splitting required, but it never hurt to tip out to the busboys and dishdogs...they'll cover your back if you treat the well). Once I found this out, I made it my goal to provide more service than the customer expected. I worked in a burger and sandwich shop at the resort, so it wasn't like the other two high-end dining rooms, but I would do things just like the waiters who wore the tux's and my customers felt special. When you clear the paper plates and then discretely brush the crumbs into a linen napkin so the customer has a clean table to enjoy their after-dinner coffee and conversation, or other services like that, you can affect your income for the better. It's all about attitude. Nothing wrong with serving others.