To me and many others one of the great paradoxes of business is the common sight of three restaurants on a block that are empty or nearly empty and a fourth one that has a line out the door. This disparity can go on for years.
The obvious question many people ask is 'why don't the empty restaurants copy some of the things the full one does?'
To understand my explanation you need to know two things. First this happens only in the trade form of commerce (individual restaurants are in the trade category). Commerce includes two other forms: industrial and clientric. Industrial commerce is driven by forces aiming for the lowest costs (think a chain restaurant). Clientric commerce is driven by the desire for a lifetime relations with the client (think personal chef).
In the trade form of commerce, individual restaurants, there is only one criteria: each sale is final and the mark-up must include enough money to keep the trader in business. Traders already know that their business works. Their mark-up on food costs are 5 to 1. If they own the building or have a very long term cheap lease, have their family in the kitchen or doing all the work, they see all of that mark-up as being good business (maybe they even wash and iron their table clothes if they have any). So 50 customers a week at $15 per customer average (minus food cost) is $600 gross margin per week. Unless, there is a profitable demand for their space, as long as they pay little or no taxes...they continue doing what they are doing for the $600 a week.
The second
reason they don't change is equally common and complimentary to the
main reason: there is a non-business reason to stay open. Examples:
the business is a cover for money laundering (restaurants have plenty
of reason to take cash and the IRS doesn't know how many customers came
in), drug dealing, a spouse-cousin-son-in-law needs a respectable job,
the owner is too old to change, the business is the center piece in a
family legal battle or the jobs are good cover for immigration related
issues.
That is why you can have three nearly empty restaurants and one bursting at the seams.