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Comment by MichaelDickens | Hacker News Reader

Based on the empirical evidence from OP, this seems correct. But there's a theoretical argument for why "good location" and "actually good" should be positively correlated:

1. Good locations are more expensive.

2. People are willing to pay more for better food.

3. Therefore (all else equal), better restaurants earn more revenue.

4. Therefore, better restaurants have a higher willingness-to-pay on rent.

5. Therefore, better restaurants will outbid worse restaurants for good locations.

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Your logic works in a world with only restaurants. In reality, every other type of business has better margins than restaurants and also competes for the best real estate. So the good restaurant in a good location is soon having their rent hiked and closing down, or has to follow the beaten path: Decrease quality and increase prices.

Sure, there's always exceptions, especially in older cities where the restaurant was established in a great spot a long time ago and is owned by a family. But generally, restaurants have far too low profit margins to remain for long in a top location. And I think all of us know this from experience.

This falls apart a bit if providing better food costs more. Restaurants with better food may earn more revenue all else being equal but their costs may be higher. People are willing to pay more for the same quality of food in a better location. It makes sense for a the restaurant with worse food to outbid a restaurant with better food because the location is more important to them and they are allocating more money towards towards rent rather than food quality so they have more to spend.

> People are willing to pay more for the same quality of food in a better location

If they know. West Coast bagels have been almost consistently garbage until very, very recently because the people willing to pay up for a great bagel weren't able to pick out those that were freshly boiled. Combine that with the economics of bagels prohibiting boiling and baking to order (hmm...) and you wind up with the necessity of toasting old (but not stale) bagels.

This addresses supply (cost) but not demand. There won't be enough demand for known bad food, unless it's a tourist trap.

This is how I think of it too. In a popular location, the restaurants won't necessarily be the best, but they'll be better on average.

Also, compare any big city to its adjacent areas. Like everyone knows LA has better food than San Bernardino.

I’d posit that closer proximity to drinking establishments would mean increased foot traffic with a less discerning clientele.

Every kebob is a good kebob when you’re a few drinks in.

You lost me at point 4. Why would more revenue mean a higher willingness to pay rent unless it made them more profit?

A restaurant that has more money can afford more rent. A restaurant that doesn't have more money can't afford it. So, everything else being equal, better restaurants, making more money, are more likely to rent places that cost more since. Seems pretty straight forward.

it's no different than saying people with higher income, overall, rent/buy housing that costs more.

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