The fundamental misunderstanding of economics here is this: The more competition in a market, the lower the profits. In perfect competition businesses operate

The fundamental misunderstanding of economics here is this: The more competition in a market, the lower the profits. In perfect competition businesses operate at marginal revenue = marginal cost, so the guy was never going to make any money. The only reason to run a restaurant in a market like this, then, is because you are batshit passionate about food, like Gordon Ramsay or possibly even more. This guy obviously wasn't so the result is expected.