According to T.G.I. Friday's U.S. president, the restaurant industry is going through an unprecedented slump. According to The Wall Street Journal, "Across the U.S. casual-dining landscape, chains large and small are struggling to keep customers coming in and remain profitable, with cost-cutting, menu revamps, technology and other innovations ... On the one hand, their guests are increasingly demanding value. On the other, their costs -- from the price of a pound of butter to the hourly wages they pay their waitstaff -- are going up."
One way that they're doing that is by decreasing portion sizes to avoid price increases and, in a stroke of semantic brilliance that would make George Orwell proud: billing the smaller portions for the same amount of money as "health-conscious." Hey, if I wanna be healthy, I'll get a doggie bag!
I would probably stay away from restaurant stocks for now. The industry seems stuck in a quagmire with little relief in sight, and the shares of the best of breed players don't look cheap. It also seems to be an area that private equity firms haven't been diving into, which is probably indicative of something.











Reader Comments (Page 1 of 1)
7-19-2007 @ 8:10AM
Michael Schneider said...
This sort of thing has been happening for a while and is an example of hidden inflation in the economy that doesn't get measure.
7-24-2007 @ 7:16PM
OUgrad75 said...
Chain restaurants are all in trouble or going to be unless they start riding the nutritional wave hitting the American shores. Americans are shunning those 1,000-calorie appetizers and heart-attack-inducing hamburgers. Profits will continue to fall; but for the restaurants that buy local, and sell appropriately portioned and appropriately priced food profits await.
8-01-2007 @ 11:43PM
Kathy said...
People are shelling out an extra $200 or more a month for gasoline. That is eating up (no pun intended) their 'fun' money. No more going out to dinner when the Chevron bill is taking such a bite out of the budget.
8-01-2007 @ 11:43PM
Catmoves said...
I've noticed the portions become smaller and smaller. One obvious thing: the plates the original larger portions were being served on are still being used. They can't hide the fact of smaller portions unless they tell us the plates are larger.
The first time some waitress told me that, I'd leave the restaurant and let the manager know he's lost another customer -- for life.
8-02-2007 @ 1:09AM
ernest said...
I used to eat out everyday for lunch at my job, mostly ruby tuesdays or the dennys down the street what ever was closer to my job, then I thought Im paying nearly 100-150 a month in a restaurant, face it 7-10 dollars a meal a day, so I started packing my lunched and found that I could spend 40 dollars every 2 weeks and have a meal all week. and I have lost the extra wieght that I gained from eating out. with gas going up, and the price of just living in your house going up, who has the extra cash to enjoy eating out, sometimes I would hyperventilate if someone even suggested eating out, now I can do it without worrying so much. About the portion sizes, come on people we dont need a 16-20 ounce steak in one meal, thats plain glutteny, and we complain that we are the fattest nation on earth, or are we proud of it, I cant tell which anymore
8-02-2007 @ 1:16AM
Josh said...
thats why u ignorant democrats raising the minimum wage, now everything you buy will be doubled cause of there stupidity of raising the wage, typical democrats for ya
8-02-2007 @ 11:14AM
Patty Ireland said...
responce to josh do you work for minium wage? do you have a family? smaller portions for more money has been a hidden trend for quite sometime now.not forgetting all the additives that are put in the food, to bulk it up to make the portions look as big as they are.tgif comerical is a joke it's telling right up front your getting less food and paying the same, and the public is falling for it.shame on us, if you have that much money to waste why not donate it there's millions of hungry people in the USA that would really appreciate it