(FORTUNE Magazine) – FOR BABY-BOOMERS, it's the moment of truth. Not only are they turning fortysomething, so are their waistlines. The upshot: Just as fast as they can get the money out of their too-tight, five-pocket jeans, they are plunking it down at weight-loss centers, a growth industry if there ever was one. Forget Diet Coke, exercycles, and aspartame-laced chewing gum, we're talking big-time dieting here, designed to help the well-upholstered lose an average of 35 pounds over three months. The typical course of treatment is a pricey amalgam of daily or weekly nutritional counseling sessions, special foods, and dietary supplements that altogether typically cost $500 to $900. The diet-help industry has become more than a collection of mom and pop slenderizing salons for aspiring skinnies. Estimates of total revenue range upwards of $3 billion a year, and the business is so big and booming that food giant H.J. Heinz, which owns Weight Watchers, calls it ''our growth engine for the 1990s.'' Says Donald McCulloch, CEO of Nutri/System Inc., a fast-growing chain based near Philadelphia: ''The demographics are on our side. As you get older, it gets harder to lose weight.'' In the past five years there has been an important shift in the psychology of losing weight that has favored the diet center business. Though a fairly consistent 60% of women consider themselves overweight, 75% of that group used to believe that they could diet successfully on their own. Now only 60% are confident they can lose weight unaided. Says Chuck Berger, president of Heinz's Weight Watchers International: ''The whole business is exploding at the expense of self-reliant weight loss.'' Though men are just as likely to be overweight as women, they are less likely to admit it. That's why 90% of the diet industry's customers are women. A handful of chains and franchises have come to dominate the business. The big mama is Weight Watchers. Last year it had revenues of $1.3 billion, and its operating income of $100 million represented 14.5% of Heinz's operating income. Close on its heels is McCulloch's Nutri/System. An anorexic operation when he and three partners bought it four years ago, Nutri/System's 1,200 centers had revenues of $232 million in 1988. Diet Center, an Idaho-based operation, swelled to 2,300 franchise stores with revenues of $45 million before it was taken private last September by Thomas H. Lee Co., a Boston LBO specialist. The privately held Jenny Craig chain has grown to 318 stores and $200 million in sales in the U.S. and abroad in just six years. Heinz clearly has the jewel of the industry. Last year an average of one million people attended Weight Watchers classes each week in 24 countries, and they spent a total of $500 million in fees to do so. Weight Watchers is considered the least expensive -- at $7 or $8 per visit -- and best of the weight-loss programs. At weekly meetings, attendees get a weigh-in; lectures on cooking, shopping, and exercise; some group psychological counseling; and instructions in an elaborate system of measuring food portions. ! All those dieters shuffling in and out of classes have proved a gargantuan opportunity for parent Heinz, which now puts the Weight Watchers name on hundreds of food items sold in supermarkets. In 1988 Weight Watchers frozen- dinner entrees knocked Stouffer's Lean Cuisine from its position as the best-seller in low-calorie frozen meals. Says John McMillin, a food industry analyst at Prudential-Bache: ''The strength of the brand is enormous. I don't know of anything like it.'' While dietitians praise Weight Watchers for not pushing its own brands too forcefully in its classes, the message gets across anyway. Handouts at lectures often include coupons, and staying on the complex diet can require such tedious calculations that many dieters just stock up on Weight Watchers food instead. As a result, Heinz sold $780 million of the Weight Watchers brand last year, 20% more than in 1987. Heinz Chairman Anthony O'Reilly expects the same dramatic growth over the next five years. By the mid- Nineties, Weight Watchers products will outsell all Heinz's other food products. Nutri/System was a money loser when McCulloch, a turnaround whiz who had worked his magic at Pizza Hut and Hathaway shirts, bought it four years ago. He improved the food, cut its price, and installed financial controls. ''There was no annual budget and no monthly review of the financials when I got here,'' he recalls. Revenues have nearly doubled every year since. Says an admiring Berger at Weight Watchers: ''Nutri/System is ripping up the track.'' Dieters in the company's program pay based on the amount they want to lose -- $612 for 50 to 60 pounds is average -- and they are required to buy most of what they will eat from a Nutri/System center for an additional $55 a week. The goal is to keep 80% of the people in the program for at least ten to 11 weeks -- so they'll keep buying the food, an array of single-portion freeze- dried entrees, spices, salad dressings, dried cheeses, and desserts. Still, some 50% of revenues come from fees and services, not food. Nutri/System managers push their nutritional counselors to help customers achieve an average weight loss of two pounds a week. Every week that a dieter fails to lose weight, a yellow paper clip is put on her file. If a center manager sees even one clip on a file, the counselor is questioned about it. To improve the sagging self-image of overweight customers, counselors who once strode imperiously down the hallway with dieter in tow have been coached to walk behind her now, offering compliments wherever possible. While his customers have lost, McCulloch and his partners have gained. They took Nutri/ System private in 1986, and last year it had operating income of $43 million. THE SUCCESSES of Weight Watchers and Nutri/System have triggered emulation by competitors. Sid and Jenny Craig offer frozen and nonfrozen foods and twice-a-week counseling sessions at the Jenny Craig centers. A year and a half ago they slashed the price of signing up from about $400 to $185 -- food is an extra $63 a week -- and started advertising the reduced rate. Business promptly got better. Says Ellen Destray, vice president of operations: ''Per store volume went from $40,000 a month to $100,000 a month, and has climbed ever since.'' McCulloch calls the Jenny Craig centers a clone of Nutri/System, but that doesn't bother Sid Craig. The company, 98% owned by him, his wife, and their family, made $30 million pretax profits last year on revenues of $200 million. By the standards of its industry, Diet Center is an underachiever. Total revenues came to just $50 million last year, and earnings were $9.9 million. CEO Thomas Shepherd plans to change that: ''I expect Diet Center will triple in size in four or five years,'' he says. Like Nutri/System, customers pay based on the weight to be shed, in this case $950 for 50 pounds, and there are the usual weigh-ins and lectures. Dieters also swallow eight capsules a day of a formula said to regulate blood sugar. Diet Center hasn't hawked its own food that much, but Shepherd thinks the company should provide up to half the sustenance its dieters consume. ''We won't change the program to make you eat our food,'' he says, ''but we will offer more food.'' Alas, for all the billions Americans spend on diet help, there is scant evidence that the pounds taken off in these programs stay off for good. Says Berger: ''Clinical researchers say if you're 20% overweight, there's a 20% chance you'll put it back on. If you're 99% overweight, you're 99% likely to regain it.'' Bad for dieters, but great for business.