The purpose of my reply is to explain how there can be equilibrium and competition even in the face of a seeming monopoly. The critical thing is that threat of

The purpose of my reply is to explain how there can be equilibrium and competition even in the face of a seeming monopoly. The critical thing is that threat of competition is as effective as competition when there are low barriers to entry. "Undercut and then raise prices" is not a terribly creative strategy - no offense, but you are not the first to come up with it, nor will you be the last. Since it is an obvious strategy, it is always a hanging threat to any restaurant or food truck proprietor. Artificially high prices are not a stable long term equilibrium. If you are so certain that there is a neglected middle in the restaurant market, then open a restaurant and serve medium-quality food at prices a bit higher than medium-quality prices. It seems to me that if the world you posit that we live in exists, that there should be huge profit opportunity in such a market. Anecdotally, in my travels everywhere I have been has multiple food options. This spans from small towns of a few thousand to large cities. These options tend to span a price range that is reasonable based on income demographics of the locations they are in.