The bitcoin system is too slow to use on less than 5 minute transactions.
The current client is probably adequate for retailers like Meze Grill to use. For retail use involving larger amounts or for other reasons, additional monitoring could detect within seconds if there was a double spend attempt of the form referred to as a "race attack" See:
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http://bitcointalk.org/index.php?topic=27417.msg350531#msg350531So meze grill is an exchange, why is that bad? It is bad because the transaction is small 0.5 BTC. It is just going to load up the system with small transactions.
The miners seem to have no problem with providing transaction processing for 0.0005 BTC. That means the fee is under a penny. Not bad for a $10 transaction. You as the customer then pay about $0.01 worth to be able to pay using bitcoin, Meze Grill doesn't lose a bit to fees for that sale when accepting bitcoin -- versus getting only $9.70 had you paid $10 using visa/mc.
What you are overlooking is that even if Meze Grill were to convert 100% of their bitcoin sales to USDs, ... the customer is served better when providing bitcoin as a payment option. If I have bitcoins already, for me to convert them to USD so I can buy lunch is a hassle I might like to avoid.