There's nothing specific to tech about this. In any place where rents increase more than 60% in a few years, whether that increase is caused by tech or anything else, lots of restaurants aren't going to make it. The same is true for many other small businesses with small profit margins, such as indie bookstores, for example.
On the other hand, I pass through downtown Palo Alto every weekday, and I see plenty of open restaurants. Many are able to succeed. It's not like the area is a wasteland of tech offices with private cafeterias. There are more people in downtown Palo Alto eating and drinking now than at any time in the past.
I've wondered the same thing about some of the tiny shops in the center of town here. They sell cheap phone covers and whatnots that I can't imagine bring much profit.
Could it be that these places have existed for a long time and rent protection keeps the rent down?
The only other explanation I can think of when it comes to some of these shops/food joints is that they're used for money laundering or something like that.
However, high margins does not necessary means high profit.
We have plenty of these setups in our weekend markets, and I don't really see them selling these in high numbers. Actually, most of the time, the shops are empty but they are there, every weekend selling the same items.
Tokyo rent is actually not very expensive compared to rent in other major cities. It is a result of permissive building policies. Other major cities that struggle to control housing costs should look to Tokyo as an example of how to do things right.
On the other hand, I pass through downtown Palo Alto every weekday, and I see plenty of open restaurants. Many are able to succeed. It's not like the area is a wasteland of tech offices with private cafeterias. There are more people in downtown Palo Alto eating and drinking now than at any time in the past.