Some people don't like other congregating in front of their stores and not buying anything but the most vocal opponent are restaurants. They feel like by paying substantial money for a restaurant lease, they shouldn't be subject to competition that can operate with far lower costs / standards. Think about if you owned a nice Mexican restaurant and then a taco truck parked outside during your rush hour. They have almost none of the fixed costs that you do and could undercut you pretty easily.
I'm not convinced it's worth regulating their hours/locations, but I do sympathize a bit with the brutal economics of restaurants.
>they shouldn't be subject to competition that can operate with far lower costs / standards.
Of course they should. There is no assurances or guarantees that any business venture is going to be successful.
If you're running a mexican restaurant that goes out of business because of a taco truck, the answer isn't to outlaw taco trucks, it's to make your own restaurant better.
If you can't change your restaurant and you go out of business isn't it your fault for not adapting to customer tastes and preferences, not the taco trucks fault because it was able to satiate customer needs?
With your line of reasoning, I guess a rich person thinking of opening a restaurant could follow following strategy.
1. Get a few food trucks and park them in front of all potential competitor restaurants. Sell subsidized food.
2. Wait till these restaurants close because they can't compete with the subsidy.
3. Start their own restaurant selling really bad food at expensive prices.
4. Profit.
This is the same kind of strategy that tech giants often follow to push startups out of business. Obviously, my example strategy is extreme (and possibly illegal), but food trucks can easily drive good restaurants out of business resulting in a worse culinary scene in the city. The purpose of the regulation being discussed here is to eliminate such bad forms of competition that result in worse outcomes in the long term.
This situation is in no way unique to food trucks though. I could buy the property next to your restaurant and make it into an exact clone of your place and give away all my food for free until you're out of business.
And yet I don't see anyone out there arguing in favor of laws banning copycat restaurants.
If I can run a food truck and sell food at a lower cost to people who have to stand outside while they eat, and they prefer that over the experience you provide in your restaurant, the customer is not wrong. Good restaurants, by definition do not go out of business.
5. Since the strategy was so effective before, other competitors come in and do the same thing.
6. Now whenever there is an overpriced restaurant, I get delicious, below-cost food from the upstart food trucks.
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OR
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5. A new competitor, seeing the overpriced food, sees a profit opportunity and tries to execute the same strategy.
6. The same business from step (1), again does me a favor by providing me delicious food below my expected price.
What is so special about your hypothetical rich person that they become immune to competition or threat of competition upon reaching step 4?
An economy is a complex dynamic system. More importantly, it is continuous. We can certainly analyze fixed time periods and draw conclusions from these, but any conclusion must be drawn in the full understanding that there is a before and an after.
TL;DR Competition doesn't go away because one person did it well, once. Threat of competition can be as effective as actual competition.
The purpose of the example was to illustrate was that in the long term equilibrium, the only food options will be food trucks, cheap+bad restaurants and expensive restaurants. Medium price/quality restaurants die out. Also, food trucks usually only run during the day, leaving residents with the option of either cheap+bad restaurants or expensive restaurants in the evening. That is pretty bad situation that should be avoided.
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.
People's preferences are not wrong!
If people no longer want to give patronage to any kind of establishment that establishment is not entitled to continued business.
Under what circumstances should a restaurant go out of business if not these in your opinion?
The long term equilibrium will be that places to eat that attract people's business will continue to flourish.
The restaurant's argument would be that the food truck is unfair competition, because it's using public resources (street space to park, pavement for buyers, city cleaners to cleanup food remains), whereas they have to pay for private space, cleaning crews, etc.
I'm not convinced it's worth regulating their hours/locations, but I do sympathize a bit with the brutal economics of restaurants.