I voted YABU, even though I would eat in a restaurant that doesn't allow any alcohol, because I be very unlikely to eat in one as frequently as other places. Restaurants usually need a variety of customer types to do well, potentially including, but not limited to, several of the following:
Passing trade/tourists
Regulars/locals who go frequently for informal meals
Regulars/locals who go semi-frequently for special occasions
Groups celebrating birthdays/other special occasions
Business lunches/dinners
Something connected with another activity, like pre-theatre dinner etc.
If you don't have alcohol, or allow people to bring their own, then you are likely very much limiting the special occasion type diners, and definitely the groups. You may well also be limiting the passing/tourist type diners as well as some of the regulars.
It's not that people can't ever eat without alcohol, it's that by removing their choice, you are likely to reduce the number of times they will choose to dine there. If you can make money doing that then great, but some would struggle. It's a bit like a vegan restaurant for a meat-eater, I'll eat there and enjoy it, but I won't pick it every time. The key is that there are not many restaurants serving good vegan food so the demand is still high enough to fill the ones that do. With this, you are removing a choice but not saying what it is that would be the draw. It would depend if the offer is niche enough, and the demand for it high enough, to attract enough people.