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Restaurants want more money for less food

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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.

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Last updated: November 26, 2009: 01:30 PM

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