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... at terrible restaurants.
You forgot that part. No real restaurant would recycle food to save 25 cents.
"Good" restaurants can become terrible at the flip of a switch.
Usually happens at small local restaurants that get passed off to new owners who think some bean counting is the only thing thay they need to do become a millionaire, fully neglecting any real management and ruin the restaurant before customers fully catch on to the quality degradation.
First a dish is off, but you shrug it off... must have been a one off. Next the steak seems like a different cut, but it still tastes all right and they are running an awesome beer promo. The wife complains the fries are overcooked and cold, they are... but she is a slow eater and maybe it was just an cold plate. Next thing you know they are serving chicken tenders as thin as an I pad, tossed in Buffalo sauce as "boneless wings"
This is known as "enshitification" and has been taught in MBA programs for at least two decades (but not under that name).
Reputation is money waiting to be cashed out. Our tax policies encourage cashing out more than reputation or longevity.
I worked in restaurants that did this, nice ones too.
Anthony Bourdain even wrote about it:
"Recently, there was a news report about the practice of recycling bread. By means of a hidden camera in a restaurant, the reporter was horrified to see returned bread being sent right back out to the floor. This, to me, wasn’t news: the reuse of bread has been an open secret—and a fairly standard practice—in the industry for years. It makes more sense to worry about what happens to the leftover table butter—many restaurants recycle it for hollandaise."
https://www.newyorker.com/magazine/1999/04/19/dont-eat-before-reading-this
He's exaggerating for effect. No one would read an article about how a kitchen is really just a boring workplace.
https://www.bonappetit.com/columns/the-foodist/article/do-restaurants-reuse-bread-and-butter