That would be ok for literally just a bedroom. If they pooled all other living and storage spaces and lived collectively, like in a military officers' mess perhaps, it could work.
While I’ve never lived in one, the few times I’ve seen inside, they’ve been in incredibly clean. People I know who’ve lived in these places generally have nothing but good things to say about them. They’re often not cheap, though. From what I’ve seen, they’re usually in central locations, and priced more than a similarly sized room with your own kitchen/bathroom out in the suburbs.
It's not that uncommon in the US to hire a cook to come cook meals at a college co-op house or fraternity/sorority. My dad's co-op at MIT did this in the 60s. The cost of a cook spread out across several dozen people is very low, and you end up saving lots of time spent individually cooking while getting quality food at much less than restaurant prices.
There's also the issue that, absent having a cook that cooks for everyone, you'd need much more combined kitchen space (whether that be a single giant kitchen or one per apartment) so that everyone could cook individually, and that in itself takes up more space and is more expensive.
And in not-dense cities, people tend not to live in buildings with enough units in them to even support this. That's why the university thing is kind of an edge case; it's people living in dense housing situations in not-dense places.