It depends on the restaurant and type of food being sold, but generally the returns are pretty poor. The local pizza shop usually is more profitable than the local fine dining place. Protein is expensive and you can't mark it up like you can carbs. A burrito at $10 (flour, beans, rice and a bit of protein) probably has a higher gross profit than a steak at $60. The fine dining place basically runs the food as a loss leader in the hope you'll drink up big. Why do people bother? There's lot of industries with poor economics that seem to attract a lot of people. I guess owning a restaurant for a chef is a big milestone and for a lot of wealthy people it's seen as a sort of trophy.

I have a friend who is pretty successful in the food industry. He used to be in fine dining, but got out for the reasons above. Now he owns a chain of pizza places. He claims one pizza store, attached to a service station no less, generates about 2x the profit of his old restaurant.