A restaurant's capacity isn't limited to the amount of customers that make it viable. There can be enough population to support two restaurants, but if the first restaurant has the capacity to serve them all and the customers prefer it, only one of them will actually survive.
So once you hit the point where the foot traffic retail is all viable, there's a stretch where there's not a real need for new businesses and any new competitors would face a large disadvantage from location.
Not that there aren't ways to design around that to make very high density areas viable, but it's not a simple line graph correlation.
Businesses can always acquire new customers by diversifying away from what the competition is providing. This means that larger markets can inherently "support" a higher variety - there simply isn't a point where new business must inherently fail. This is not a new observation; it has been made repeatedly since ancient times.
But it's going to take a whole hell of a lot of special sauce to survive when you're the first random mid-level restaurant competing against places that can attract customers through line of sight.
You can't simplify away the varying value of certain land for certain uses and still pretend you're doing economics.
Clearly I overly simplified things, but the point was doubling a cities population should roughly double the number of restaurants. That doesn’t hold for towns, but you see multiple McDonalds in the same city because being the closest McDonalds is a useful difference. Similarly at scale you see more specialization such as Thai vs Chinese vs Pho etc etc.
Add cost and you can have almost unlimited density without inherently limiting the number of restaurants much like how a mall can have 100 stores all selling different kinds of clothing.
So once you hit the point where the foot traffic retail is all viable, there's a stretch where there's not a real need for new businesses and any new competitors would face a large disadvantage from location.
Not that there aren't ways to design around that to make very high density areas viable, but it's not a simple line graph correlation.