Volume of business makes up for it, if there is sufficient volume. Grocery stores average only 1 percent.
The real problem is that restaurants are precarious, in a way. They rise and fall on trends.
Also their food cost is 33% of your bill. That’s why they are willing to give you a different entree and break even, but if you don’t pay at all for some reason, they suffer a loss.
People buy restaurants without doing their homework OR they are too starry-eyed to READ reality.
Often it starts with someone in the family who is a fabulous cook and listens to their "Oh! You should start your own restaurant!!!"
In a town of, say, 4000 restaurants HALF close after a year. Official, unpredictable health inspectors close down another group. Not being nasty but half of THOSE close-downs are Chinese, if there are Chinese restaurants. Cleanliness COSTS and the thinking is "Why clean EVERY day? It'll get just as dirty tomorrow."
I was told by a Chinese friendly acquaintance that when eating at a Chinese restaurant one should always sit in the center of the restaurant as sitting by walls one will see the cockroaches climbing up the walls.
Some bribery might keep some places open longer than others, but those bribed officials eventually get their own.
Complaints from folks who get sick from restaurant food ARE listened to. I guess the threat of "suits" suing is huge.