Ha! I don't know if any of what you say is true, but I was in Munich a few months ago and had lunch in a traditional restaurant, where waiters and waitresses wear old Bavarian costumes, which only offers traditional food of sausage and such, etc.
At first glance I thought this was a restaurant for tourists, like there are in all major cities. But what surprised me a lot was that the restaurant was full of locals, who seemed to go there often, if not every day.
Bavarian restaurants are just one of many other options and they "only" offer traditional food, just like an Italian restaurant only offers Italian food, for example. It's quite delicious, too.
Waiters rarely wear costumes (certainly less than 10% of them).
At first glance I thought this was a restaurant for tourists, like there are in all major cities. But what surprised me a lot was that the restaurant was full of locals, who seemed to go there often, if not every day.
People do seem very conservative there.