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There’s significant overlap between counter service and sit down restaurant prices. The front of house labor is not a massive proportion of restaurant cost.

This is not generally true in my experience. You can buy cheap take-out/counter-service food, or expensive take-out/counter-service food.

Pretty much every place I've eaten at will do takeout. Back when I lived in SF, I ordered a $60 takeout steak dinner once or twice.

I usually still tip for these because it's tying up the kitchen for the in-restaurant diners which might slow down the service for the staff. But not the full 20%.

And so should the tips. It makes no sense to tip someone who just hands you something from behind a counter.

That's my point: as the price declines, so too does the amount you pay in tips.

I also think the proportion of the tip should decline. They are doing a lot less work to give you the food, disproportionate with the small decrease in cost.

It's not clear to me why the proportion should decline alongside the price, since the decline in price also reduces compensation to the server, and a single prevailing tip rate is more convenient to consumers than a floating rate, but I don't care enough to make a stink about it.