I think your anecdote isn't necessarily reflective of all restaurant owners: (1) not everyone leases, some family businesses own the land and has significantly

I think your anecdote isn't necessarily reflective of all restaurant owners: (1) not everyone leases, some family businesses own the land and has significantly better margins at the trade-off of opportunity cost on the real estate, (2) some businesses are explicitly there to fulfil visa or immigration obligations, so profitability isn't a priority, (3) in less dense areas, the general laws of competition don't apply as much pressure as SF or NYC. Don't forget lifestyle businesses. I actually know multiple high-income people (lawyers, doctors) who just let their partners run businesses for the sake of doing something during the day; they lose money every year which offsets the joint income, and is better than having their partner sit around at home and spending money on something else.