Competition and rent is a big part of it. Generally in the city you don't own your space, and rent is competitive. If I'm not willing to pay for my apartment, someone else is. If a restaurant wants to be a in a popular area, they are going to have to pay for it, and their prices reflect that. High rents mean high labor costs, meaning goods and services are more expensive. This compounds on itself in other ways as well: If everyone in an area makes $100,000 a year just to live there, then the goods available are going to be goods that appeal to that income group, and lower-quality goods are going to be less available.