For every person who might give up on the franchise by the time of The Kissing Booth 3, there’s likely to be another who doesn’t even start the series until the third one comes out, and that person is going to use, and therefore keep, their Netflix subscription thanks to the original content.
Besides, this is Netflix where box office receipts aren’t the ultimate goal.
Even if the popularity of the series began to dwindle, it still makes sense to go ahead and make the third movie when you can piggyback on the second one.