In addition, type of food matters a lot. A place that sells 'cheap slop on a plate' has lot less price flexibility than a boutique that sells fancy sushi.
I could get a "burek" (pastry with cheese) for 2eur, it's cheap, it fills you up, and you continue with your day.
Or I could order a pizza delivery... pizza used to be in the 6-8eur range if you lived near the restaurant, so for 12, 13 eur I could get two pizzas delivered to my home.
Then "the plague" came, the local pizzeria was closed, delivery was taken over by "app companies" (wolt here), they charge percentages of the food price + delivery cost, so the price of the pizza has gone up to 9-10eur (to cover the wolt fee), and with the delivery fee, we're talking 20-22eur for two pizzas. After the reopenings, the prices in the restaurant are the same as on wolt + with drinks, we're talking close to 30eur for two pizzas and drink.
If bureks cost 2.5eur or even 3eur (50% higher), they're still "cheap", and people will buy them. With pizza going from 12, 14eur to 20-25eur, I can make a huge amount of very good food at home, and saving 15eur to eat healthier makes it worth it.
TLDR: at some price point (that I currently feel we're at now, with some foods atleast here), it isn't worth it anymore to eat out. Everybody might rise their prices, but less people will eat outside, lowering the overall profits of everyone.
You might look at this and say charging $4 for X item is already at the edge of reasonable, but when your neighboring restaurants are already at $6 to $8 there is little reason to offer screaming deals. Its just a sign that its time to reprice to $7 to $8 for your own offerings, providing more profit to interest the dual owners moving forward. Reducing hours would also be a good idea for a owner operated business like this!