[albertodenia]

> That would not be an externality. Which type of restaurant succeeds is internal to the economic activity of people paying for food at restaurants.

The externality is not "which type of restaurant succeeds" but the "impoverishment of the local culture". Call it a side effect if you prefer, one of the many caused by heavy tourism (rise of housing prices, replacement of local commerce by souvenir shops, etc.) that end up pushing locals out of those areas and turning them into theme parks with no soul. Of course you are free to think that's not something worth caring about as a society.

> What type of cuisine is crap and not is extremely subjective.

There's some subjectivity involved, but in the same sense there are books that are bad by any account, there's food that is crap by any account.

> If a local populace is not sufficiently motivated to make and eat a specific cuisine such that it dies out, that is sad, but just one of many compromises society makes while constantly evolving due to new parameters.

At least here in Spain and the Mediterranean Europe in general, they do. You just have to go outside of the heavily touristic areas into the ones where actual locals live. It's true that home cooking has changed a bit in a similar fashion as you describe, but it resists in family and friend gatherings during weekends and holidays.