Old-school automats had a kitchen behind the wall, and people feeding food into the coin-op slots. it wasn't just suburbs and fast food that doomed them, but technology. Refrigeration, preservation and automation.
If you want to grab a bite without dealing with a waiter/waitress, you can get a sandwich from a vending machine or convenience store and drop it in a microwave. They take a lot less money and labor to maintain.
According to its website, the food is made and added fresh throughout the day, so I'm guessing that this automat must have a kitchen behind it too.
Every vending machine "meal" I've ever had has not been very good at all. This on the other hand is a fresh-made meal to go without having to wait in line or talk to an annoying waitress.
As for the expense to run one, you're right that's it much more expensive than a vending machine, but the quality is so much better and it's still cheaper than running a restaurant.