The term is historical and is not used today.
7 September 1902, Brooklyn Daily Eagle, pg. 8:
They prefer their offices to their homes, and their homes to the lobster palaces where you will find their sons wasting the patrimony and consorting with women of the street, or the 900 per cent. profit restaurants, where the sons go after marriage.
21 September 1902, Washington Post, pg. 17:
New York, Sept. 20. - When that jocund Jock with the red Romanoff corpuscles flowing in his Slavonic veins was diverting himself here in New York with the pink-haired Pansies and Patrices of the extravaganza shows, he made it his business to lose, long before the conclusion of his caloric evenings, his equerries and the various other members of his outfit. With his bunch of Circassion choristers if the kilted sex he would slip suddenly out of the view of all of the members of his suite, and, impressing the first auto in sight, make his escape down the line to another all-night lobster palace.
11 October 1903, Washington Post, pg. B2:
(Chimmie Fadden Stories by E. W. Townsend - ed.)
She was a good as a actress out on top of de stage, for you wouldn't know her voice in a tousand years if you was her own fadder. De leaders bote ask her in to supper, but she says dat she had radder have supper at de Lobster Palace, and at dat Boston jumps at his chance, and he gives her an invite to supper dere.
8 January 1905, New York Times, pg. SM2:
From 12 until 3 or 4 o'clock in the morning the huge supper restaurants are wide open. Occasionally they are spoken of as "lobster palaces." Here, again, the man who has not a plethoric purse and the woman who is not fashionably gowned is out of place.
11 February 1905, Forest and Stream, pg. 117:
The result of the matter is that those who support the "lobster palaces" of Broadway, and who would not know a game law if it met them in the street, and could not hit a duck in a year, can get all the ducks they want, while those who respect the law go duckless.
12 January 1908, Chicago Daily Tribune, pg. 8D:
Saturday Night in Chicago
HOW MILLIONAIRES AND THEIR IMITATORS AMUSE THEMSELVES
IN THE "LOBSTER PALACES" AFTER THE THEATRE.