What does it mean when a restaurant is called an institution?

Question

Is it meant to be a form of praise? Like x restaurant is an institution in New York.

I rarely hear about a restaurant called an institution.

I looked up the definition on Merriam-Webster, but still I could not understand.

Answer 1

If you say, for example,

Brooklyn Museum is an institution in New York.

this is a statement of fact. But if you say

Russ & Daughters is an institution in New York.

with the emphasis on the word institution, it is a declaration about this particular bagel outlet. The page: The 14 Most Iconic New York City Bars and Restaurants says

Eating a Russ & Daughters bagel isn't just a good idea — it's a bonafide New York City tradition.

Please see Merriam-Webster

institution
c something or someone firmly associated with a place or thing
she has become an institution in the theater

Answer 2

The meaning of institution is usually something like:

Cambridge
institution:
a large and important organization, such as a university or bank
a custom or tradition that has existed for a long time and is accepted as an important part of a particular society:

• the venerable institution of marriage
• figurative Mrs Daly is an institution - she's been with the company for 40 years and knows absolutely everyone.

By extension of meaning of custom and tradition, a restaurant that has existed in New York for a long time and whose use has become part of the customs and traditions of society or a particular sub-section of society may be described as one of its institutions. Hence, places like Delmonico's (established 1830) and Fraunces Tavern (1719) might be regarded as New York institutions, whereas a newly opened diner in the suburbs is not.

Answer 3

I'd contend that this use of institution is indeed, as the Cambridge dictionary says, a figurative use. (Merriam-Webster refrains from labeling it as such, perhaps because of a more modern view that the distinction between literal and figurative language modes is artificial and invalid.)

But independent of a hierarchy of meanings: Most often (to use a neutral criterion), an institution is something that has been formally established. This is true for organizations and traditions alike: Marriage is an institution because it is officially established, as opposed to mere friendship.

Now we can understand what the "figurative" use is expressing: This restaurant has a status as if it were officially established as part of the city or neighborhood, next to the city hall, the theater and the hospital. The place cannot be imagined without it.