March 25, 2007

Wall St. won't let you have RightSize portions

The NY Times today clearly states why restaurants won't serve healthy portions.

Wall Street won't allow them.

Restaurant chains that want to reduce portion sizes also face considerable skepticism from Wall Street. Investors want to see steady growth in sales from what are called comparable stores, those restaurants that have been open for at least a year. To get that growth, a company has to increase the number of people coming through the door or what they spend.

“If you shrink portion sizes, you kind of have to reduce prices,” said John Glass, an analyst at CIBC World Markets. “A lower check drags down comp-store sales. What you hope is, you offset the check with higher traffic.”

Mr. Glass added: “It’s been a difficult sell on Wall Street. It does work but it takes time, and we all know that investors are focused on the short term.”

So let's be clear. Restaurants are worse than tobacco companies. They will put profits ahead of portions. CEOs are thinking about their outrageous salaries before the health of one child in America. The companies would rather keep their investors happier than their customers.

Let's stop them. Let T.G.I. Friday's know that you appreciate their attempt at appropriate portions at appropriate prices.

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