Restaurant ETFs: Starting to Look Tasty Again

by: Tom Lydon

After a brutal two years, the restaurant industry may finally be turning a corner. If the uptick gains momentum and Americans continue to order out, it would spell good news for restaurant exchange traded funds.

Robert James Tursi of Latin King restaurant in Des Moines is a living testament to the recent upswing in food joint businesses. On many occasions last year, Tursi had to close one of his three dining rooms and pare his kitchen to a skeleton crew. This year, he’s been able to reopen his dining room and hire a fully staffed crew, reports William Neuman of The New York Times.

According to Tursi, food sales were 10% higher in February and March than they were during the same span last year.

A report by the NPD group, which tracks sales at 47 restaurant chains, showed that after 10 consecutive months of year-over-year sales declines, March sales at restaurants open for at least one year were up 1% compared with March of last year. [5 ETFs to Play the New Retail Climate.]

Still, sales for the year are forecast to drop 0.1%. That would make three consecutive years of sales decline.

Despite the lukewarm forecast, restaurants are hiring. Through March of this year, the industry added 42,500 jobs, adjusted for seasonal hiring cycles. That’s still 251,000 jobs fewer than in 2007, but it shows that owners are becoming more optimistic. [Opportunity in the Gaming ETF?]

But not everyone is looking at the glass half full. Buddy McClain, owner of 71 Sonic restaurants in the South, said that his year over year sales have fallen for 17 consecutive months.

“Everybody’s working harder and making less money,” he says.

The fact that individual businesses may be suffering despite a broader upswing gives good reason to look into restaurant ETFs as a diversified and effective way to invest on bullish sentiment.

For more stories on the food industry, visit our food & beverage category.

  • PowerShares Dynamic Food & Beverage (NYSEARCA:PBJ): 4.8% Yum! Brands Inc. (NYSE:YUM), 4.8% McDonald’s Corp. (NYSE:MCD), 2.8% Panera Bread Co. (NASDAQ:PNRA), 2.8% Papa John’s International Inc. (NASDAQ:PZZA), 2.7% CKE Restaurants Inc. (CKR)

  • PowerShares Dynamic Leisure & Entertainment (NYSEARCA:PEJ): 4.7% Yum! Brands Inc., 4.7% McDonald’s Corp., 3% Cheesecake Factory Inc. (NASDAQ:CAKE), 2.9% Darden Restaurants Inc. (NYSE:DRI), 2.9% Ruby Tuesday Inc. (NYSE:RT), 2.9% Texas Roadhouse Inc. (NASDAQ:TXRH), 2.8% California Pizza Kitchen Inc. (NASDAQ:CPKI), 2.7% Panera Bread Inc., 2.7% Papa John’s International Inc., 2.6% CKE Restaurants Inc.

Sumin Kim contributed to this article.