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Starbucks’ (NASDAQ:SBUX) announcement after the close Tuesday that it walloped the Street’s earnings expectations for its fiscal third quarter (as well as strong fourth quarter and fiscal 2010 earnings guidance) sent its stock higher, as shares of SBUX jumped nearly 10% in after hours trading.

But the earnings report isn’t good news for just Starbucks: it might be an indication that the country’s restaurant business, which was stung particularly hard during the recent recession as consumers slashed discretionary spending, may be poised to continue its strong rebound.

The First Starbucks, At Pike Place Market in SeattleAs economic struggles have mounted over the past two years, consumers and businesses alike have gone to extraordinary lengths to trim some of the fat from their budgets.

For corporations, this meant cutting back on advertising, employee benefits, and expensive perks for executives and rank-and-file employees.

For consumers, it meant a big dropoff in the purchase of “big ticket” items such as automobiles, new homes, jewelry, and electronics.

But the economic downturn also dealt a harsh blow to the U.S. restaurant industry – and the ETFs that give significant weight to the sector – as consumers have cut out trips to local eateries in favor of more pocketbook-friendly meals from the grocery store.

Cornerstone Industry

The U.S. restaurant industry is a major component of the economy, expected to account for approximately 4% of GDP in 2009 and employ some 13 million people – 9% of the U.S. workforce, according to the National Restaurant Association. But the industry has fallen on hard times lately.

According to NPD Group, total restaurant traffic has declined 2.6% this spring compared to the same quarter last year, the biggest decline in 28 years. And there’s not a bright spot to be found, as fast food (down 2%), casual dining (down 4%), midscale/family restaurants (down 5%) and breakfast (down 9%) establishments have all felt the crunch.

Turning The Corner?

If Starbucks’ positive report is indeed an indication that Americans are beginning to splurge on discretionary food and drink items, there are a number of ETFs that could benefit. While there are no pure “restaurant ETFs” available in the U.S., there are a number of funds that afford significant weight to the restaurant sector, including the PowerShares Dynamic Leisure & Entertainment Portfolio (NYSEARCA:PEJ)

PEJ

PEJ has major holdings in a number of restaurant companies, including Starbucks (5.0%), McDonalds (4.8%), Yum! Brands (4.7%), Darden Restaurants (4.5%), and Ruby Tuesday 3.4%). PEJ also has interests in media companies and entertainment locations (such as Walt Disney). PEJ is up nearly 25% on the year so far, but is still down more than 8% over the last year.

While PEJ offers by far the most exposure to the restaurant industry, a number of consumer discretionary ETFs also afford this sector significant weighting, including

Disclosure: No positions at time of writing.

Source: Starbucks' Earnings Bode Well for 'Restaurant' ETFs