> It would be an objectively bad thing if every good pizza place in my city went out of business and got replaced with Freschetta
That would just mean that the people prefer Freschetta. It's not like it's going to replace every single good pizza place by getting little to nobody's business, in your scenario where it replaces all restaurants it's going to get all the business because everyone wants lower priced shitty frozen pizza; and that's why these thought experiments are a stretch.
As long as there's still people willing to pay more for a better pizza, there will still be kitchens providing them, and if no one's doing it, that is your cue to open or invest in one and get some of that business yourself.
This Twitter account gives you a fun look at what we don't have to deal with anymore, thank god: https://twitter.com/70s_party?ref_src=twsrc%5Egoogle%7Ctwcam...
ETA: In case this isn't clear, what I'm trying to say is that sometimes powerful economic forces can provide us with deeply suboptimal results. It would be an objectively bad thing if every good pizza place in my city went out of business and got replaced with Freschetta. But it really could happen.