Choice
The problem is one, as is common in rural areas, of the lack of choice.
There are many levels of restaurants in the area and people make their choices as to the type of experience they want and what they are willing to pay for it. You can choose to chow down in the Mug or the Coe house. Both places have their happy clientèle.
There is probably not enough business in the area to support two large markets in Meredith throughout the year. Jackson Star has had an exclusive for a while and people had no choice unless they went further out of their way to Heaths. So they put up with the higher prices but weren't happy about it. My guess is that most don't feel that they were getting more value to go along with the additional cost. Would you pay the price of the Coe House if the experience was essentially the same as the Mug?
So now people have a choice and Jackson Star doesn't have enough business to keep afloat. This is the way capitalism works. Choice, competition. and consequences.
Hannaford's could now raise their prices to Jackson Star's level and they might get away with it for awhile. But they would run the risk of someone coming along someday, just like they just have, and offering everyone a better choice.
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