EATZ: 1st Quarter 2024 Portfolio Review
Portfolio
Performance
EATZ concluded the first quarter with a +8.73% increase in its net asset value (NAV). The portfolio delivered positive performance for the quarter, but lagged behind the S&P 500 with a +10.56% gain.
Winners and Losers
Top performers in the quarter included top holding Wingstop Inc. (WING) with a notable +42.89% increase, Shake Schak Inc. (SHAK) up by +40.35%, and Cava Group Inc. (CAVA) with a gain of +29.79%.
On the flip side, the significant detractors from the portfolio were Red Robin Gourmet Burgers (RRGB) experiencing a -38.57% decline for the quarter and removed from the Fund, Arcos Dorados Holdings Inc. (ARCO) down -11.89%, and Jack In the Box Inc. (JACK) with a loss of -15.61% for the quarter.
Portfolio
In 2024, consumers will be on the lookout for dining experiences, yet they’ll be deliberate in their spending, considering prices and priorities. The restaurant industry might witness a shift in spending as consumers allocate some of their budget from experiences to goods, but overall growth is expected to persist.
New Positions
New holdings were established in ARAMARK (ARMK) with the acquisition of +3,270 shares, Cava Group Inc. (CAVA) with +2,350 shares, Potbelly Corp. (PBPB) with +8,100 shares, US Food Holdings Corp. (USFD) with +2,580 shares. On the other hand, full positions removed from the portfolio included Carrols Restaurant Group (TAST) and The Wendy’s Co. (WEN). Various other trades comprised smaller tactical adjustments to the Fund.
Top Holdings
| Ticker | Security Description | Portfolio Weight % |
| WING | WINGSTOP INC | 5.56% |
| CAVA | CAVA GROUP INC | 5.33% |
| DPZ | DOMINO’S PIZZA INC | 5.13% |
| CASY | CASEY’S GENERAL STORES INC | 5.05% |
| EAT | BRINKER INTERNATIONAL INC | 5.04% |
| CMG | CHIPOTLE MEXICAN GRILL INC | 4.99% |
| ARCO | ARCOS DORADOS HOLDINGS INC-A | 4.82% |
| USFD | US FOODS HOLDING CORP | 4.51% |
| BROS | DUTCH BROS INC-CLASS A | 4.50% |
| YUM | YUM! BRANDS INC | 4.43% |
As of 3.312024. Cash is not included. Subject to change.
Please see our complete Fund holdings at advisorshares.com/etfs/eatz. The holdings details are updated each market day.
Market Update
Restaurant sales are projected to reach a record-breaking $1.1 trillion in the U.S. this year, but profitability continues to face challenges from rising food and labor costs, as per a recent forecast from the National Restaurant Association.
Restaurants are grappling with the task of attracting enough of the workforce to meet the growing demand for dining out in a country approaching full employment. A survey by the association revealed that 45% of operators are struggling with insufficient staff to handle the increased volume, while 70% have vacant positions that they find challenging to fill.
For the entire restaurant segment, a key focus is on providing value to consumers who are feeling the pressures of the broader economy. Diners are seeking “a good deal,” leading them to favor multi-item bundles and special deals. Brands must carefully balance their value offerings and assess their impact to ensure they drive profits.
Cheers,Past Commentary
Definitions:
The S&P 500 Index is a broad-based, unmanaged measurement of changes in stock market conditions based on the average of 500 widely held common stocks. One cannot invest directly in an index.
Before investing you should carefully consider the Fund’s investment objectives, risks, charges and expenses. This and other information is in the prospectus, a copy of which may be obtained by visiting www.advisorshares.com. Please read the prospectus carefully before you invest. Foreside Fund Services, LLC, distributor.
Investing involves risk including possible loss of principal. The hotels, restaurants & leisure industry is highly competitive and relies heavily on consumer spending for success. The prices of securities of companies in the industry may fluctuate widely due to general economic conditions, consumer spending and the availability of disposable income, changing consumer tastes and preferences and consumer demographics, in addition may be affected by the availability and expense of liability insurance. Legislative or regulatory changes and increased government supervision.
The success of companies owning and operating restaurants depends heavily on disposable household income and consumer spending, and changes in demographics and consumer preferences can affect the success of such companies. These companies may be subject to severe competition, which may have an adverse impact on their profitability. In addition, restaurants may be affected by nutritional and health concerns, and federal, state and local food inspection and processing controls. Changes in labor laws and other labor issues, such as increased labor costs, could adversely affect the financial performance of such companies.
Shares are bought and sold at market price (closing price) not NAV and are not individually redeemed from the Fund. Market price returns are based on the midpoint of the bid/ask spread at 4:00 pm Eastern Time (when NAV is normally determined), and do not represent the return you would receive if you traded at other times.
Holdings and allocations are subject to risks and to change.
The views in this commentary are those of the portfolio manager and may not reflect his views on the date this material is distributed or anytime thereafter. These views are intended to assist shareholders in understanding their investments and do not constitute investment advice.