There are a few mom and pop places here. One in particular is so busy you can't get in at peak hours! Others have varying degrees of business, mostly because of location, service, food quality, etc.
But the big chain restaurants greatly out number the independents. The main reason is being able to afford the prime real estate, advertising, tourist business, and they do have a following of loyal customers. People are creatures of habit, they like the familiar, know what they will get when they go there.
Myself, I prefer the mom and pop locations. Mainly because I prefer my money to stay local, not pay a CEO in Hong Kong! I also like to be recognized as a loyal customer, where I can get to know the people and they know me. But they have to earn my business, if the service is bad or the attitude is "take it or leave it", I leave it!
But, I've seen many small restaurants fail. Usually it's their own fault! Poor management resulting in poor service, resulting in poor sales. Too many times I see a place get off to a great start, then get complacent. Turn the business over to incompetent employees, and it doesn't take long to get a bad reputation.
What is really strange is some survive for years in spite of doing everything wrong! Usually they were established back when property was affordable and they have low overhead. Still, some are really bad!
Even the chains have bad ones, there is a TGI Fridays here... Horrible!!! How it stays in business is unbelievable! It must depend solely on one time customers.
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