EATZ: 3rd Quarter 2023 Portfolio Review
EATZ ended the 3rd quarter with the net asset value (NAV) down 12.45%. The portfolio had a difficult third quarter, as did the overall market, the S&P 500 was down 3.27% for the quarter.
Winners and Losers
The leaders for the quarter were Carrols Restaurant Group INC (TAST), up 34.63%, and Domino’s Pizza Inc. (DPZ) up 12.51%. The biggest drags on the portfolio were Jack In The Box Inc. (JACK), losing 29.05%, and Red Robin Gourmet Burgers (RBGB) losing 43.42% for the quarter.
During Q3, the restaurant sector exhibited signs of resilience and progress, yet it still grappled with persistent hurdles like labor shortages and escalating expenses. The ability to adjust to shifting consumer tastes, incorporate technology, and prioritize sustainability continues to be crucial for achieving success in this dynamic landscape.
A new position was added in El Pollo Loco Holdings Inc. (LOCO) with 13,900 shares and existing positions were increased in BJ’s Restaurant Inc. (BJRI) with 1,061 shares, Carroll’s Restaurant Group Inc. (TAST) with 2,892 shares, and Red Robin Gourmet Burgers (RRGB) with 2,680 shares. Papa John’s International Inc. (PZZA) was removed from the portfolio and positions were reduced in Bloomin’ Brands Inc. (BLMN) by 1,663 shares, Dave and Buster’s Entertainment (PLAY) by 2,360 shares and Dine Brands Global Inc. (DIN) by 2,303 shares. Other trades were smaller tactical adjustments to the portfolio.
|Ticker||Security Description||Portfolio Weight %|
|TAST||CARROLS RESTAURANT GROUP INC||6.14%|
|ARCO||ARCOS DORADOS HOLDINGS INC-A||5.99%|
|QSR||RESTAURANT BRANDS INTERN||5.81%|
|DRI||DARDEN RESTAURANTS INC||5.65%|
|CHUY||CHUY’S HOLDINGS INC||5.28%|
|LOCO||EL POLLO LOCO HOLDINGS INC||5.25%|
|DPZ||DOMINO’S PIZZA INC||4.94%|
|CASY||CASEY’S GENERAL STORES INC||4.91%|
|BJRI||BJ’S RESTAURANTS INC||4.85%|
As of 09.30.2023. 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.
Despite inflation, restaurant sales have managed to maintain their levels, as consumers continue to allocate their spending towards experiences and services. Many dining establishments have embraced technology-driven solutions to enhance their online ordering, contactless payment systems, and delivery logistics. This strategic adoption of technology has enabled them to better cater to evolving consumer preferences for convenience, even in the face of labor shortages during the third quarter.
Challenges in recruiting and retaining staff persist, resulting in reduced operating hours, streamlined menus, or an increased reliance on automation to bridge the labor gap. Restaurants are still grappling with the mounting costs associated with labor, food ingredients, and supplies. These cost pressures stem from various factors, including heightened demand for specific products, disruptions in the supply chain, and inflationary forces.
In response to these challenges, some establishments have adjusted their menu prices, explored alternative sourcing options, or sought out operational efficiencies to navigate this demanding landscape.