3 ETFS To Watch With Increased Restaurant Spending

One of the biggest trends to watch in 2021 continues to be the reopening of the economy as it relates to the increased rate of COVID-19 vaccinations and the lifting of restrictions in areas across the U.S. and globally.

Outdoor Dining, Restaurant, Bar, Waiter

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Restaurants Could Benefit: One industry that saw pressure during the pandemic and could benefit from the reopening trend are restaurants.

Several industry leaders have pointed out restaurant spending has surpassed grocery spending for the first time in a while.

Restaurant spending has also passed pre-pandemic levels in May, suggesting that consumers are opting to dine out once again.

Some are even calling for additional stimulus checks that could boost restaurant spending even further in the latter half of 2021.

Here are several ETFs offering exposure to restaurant stocks investors could consider.

AdvisorShares Restaurant ETF (EATZ): This newly launched ETF focuses 100% on restaurants. Launched April 20, it has a tagline of “Put Your Money Where Your Mouth Is.” 

The ETF is split fairly evenly with 35% of assets in large-cap stocks, 34% in mid-cap stocks and 31% in small-cap stocks. Top holdings in the fund include Chuy’s Holdings Inc (CHUY) at 5.6%, Ruth’s Hospitality Group, Inc. (RUTH) at 5.3%, Jack in the Box Inc (JACK) at 5.0%, RCI Hospitality Holdings Inc (RICK) at 4.9% and Texas Roadhouse Inc (TXRH) at 4.9%. The ETF is the only pure-play for the sector currently on the market.

Related Link: Is Wendy's The Next Reddit Rally Stock?

Invesco Dynamic Leisure and Entertainment ETF (PEJ): This ETF is another option for investors looking for restaurant exposure.

The ETF counts some of the largest restaurant stocks as top holdings with Yum China Holdings (YUMC), McDonald’s Corp (MCD), Starbucks Corporation (SBUX) and Yum! Brands Inc (YUM) all represented around 5% each.

Other restaurants held in the ETF include Texas Roadhouse, Cheesecake Factory Inc (CAKE), Cracker Barrel Old Country Store (CBRL) and Bloomin’ Brands Inc (BLMN).

The ETF also has around 10% of its holdings split across Sysco Corporation (SYY), US Foods Holdings Corp (USFD) and Performance Food Group Co (PFGC), which are among the largest suppliers to restaurants.

Invesco S&P SmallCap Consumer Discretionary ETF (PSCD): A smaller way for investors to get exposure to the restaurant sector is the Invesco S&P SmallCap Consumer Discretionary ETF.

The ETF holds small positions in many small-cap restaurants. Holdings include Shake Shack Inc (SHAK), Brinker International, Inc. (EAT), Cheesecake Factory, Bloomin’ Brands, Dave & Buster’s Entertainment Inc. (PLAY), Dine Brands Global Inc (DIN), BJ's Restaurants, Inc. (BJRI), Red Robin Gourmet Burgers, Inc. (RRGB), El Pollo LoCo Holdings Inc (LOCO) and Fiesta Restaurant Group Inc (FRGI).

The top holding in the ETF is GameStop Corp. (GME) at 7.9% of assets and the restaurants are all 2.2% of assets or below.

The ETF does offer nice exposure to smaller restaurant companies that could benefit from the reopening of the economy.

© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.

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