How does compliance help them more? I'd think it's just the opposite. E.g., I live in a city that posts health department scores in every restaurant. This makes me more likely to eat at a small place because I can know that they're not cutting corners on safety. Whereas, having worked in high school at a large chain restaurant, I would expect those places to do well just through corporate persnicketiness.

I agree they pose a barrier to entry, but I think that's good. People not ready to run a clean kitchen should are not ready to serve food. Now it's possible that the bar is unnecessarily high in places. But I live in a city with lots of restaurants and a relatively low number of chains, so I'm sure it's not always the case.

Regulatory capture. Make complying with rules burdensome enough, and only the bigger players can stay in compliance.

For a long time, Wisconsin was a perfect example. Home canned goods were allowed to be sold, but home baked goods were not, even though canning involves many more safety risks. The Wisconin Bakers Association successfully lobbied against legislation, but home baked goods were eventually allowed after a two year lawsuit. Even after the lawsuit, the Wisconsin agricultural department insisted that "baked goods" were limited to those items that contained wheat flour. It took another lawsuit concluding in 2021 to expand baked goods to include all non-perishable baked goods (gluten-free products, etc).

Most states don't even allow this "cottage food" industry.

Granted, I'm not arguing that some grandma selling kolaches down at the farmer's market is going to build the next Hostess brand, but everyone starts somewhere.

So in your example, "big ag" is... people who do canning? The industrial bakeries supposedly threatened by home bakers selling at farmers' markets?

I'm willing to believe there are actual examples out there, but this is not it. Starting a bakery is not hard. I've traveled extensively in Wisconsin and there are plenty of small bakeries. And at least here in CA, a common way to get started building a food business is to rent time in a shared industrial kitchen. That suggests there are plenty of ways for people to get started, and that food safety laws are not a big burden.