Best Restaurants ETFs

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Restaurants are a fundamental component for many areas that drum up business and bring communities together. According to an ICSC survey, nearly 163 million people dine out at least once a week. This consistent habit has helped restaurants reach customers and expand their market share. Investors can profit from the growing restaurant industry by investing in restaurant ETFs.

5 Best Restaurants ETFs

Some restaurant ETFs are better than others. These are five of the best restaurant ETFs to consider.

1. Invesco Dynamic Leisure and Entertainment ETF (NYSEARCA: PEJ)

The Invesco Dynamic Leisure and Entertainment ETF is based on the Dynamic Leisure & Entertainment Intellidex and focuses on companies in the leisure and entertainment industry. The fund invests in several restaurants and businesses that benefit from the restaurant industry’s success. The fund has generated an annualized return of 13.58% over the past three years and has a 0.55% expense ratio. The fund’s top three holdings are Marriott International (5.20%), Booking Holdings (5.10%) and Fox Corp. (4.97%). Restaurant investors may be happy to see Sysco (4.91%) and Chipotle (4.72%) as the fourth and fifth largest holdings of the fund, respectively.

2. AdvisorShares Restaurant ETF (NYSEARCA: EATZ)

The AdvisorShares Restaurant ETF is the only fund exclusively invested in the restaurant and food service industry. Other ETFs also invest in other methods of entertainment that align with restaurants, but this ETF is a pure play. The fund has generated an 18.95% return year-to-date and has a 0.99% expense ratio. The fund’s top three holdings are Bloomin’ Brands (6.08%), Restaurant Brands Intern (5.73%) and Arcos Dorados Holdings (5.63%).

3. Fidelity MSCI Consumer Discretionary Index ETF (NYSEARCA: FDIS)

The Fidelity MSCI Consumer Discretionary Index ETF invests in restaurants and other companies. The fund has generated an annualized return of 12.41% over the past five years and has a 0.084% expense ratio. The fund focuses on large-cap stocks and has Amazon (22.43%), Tesla (15.33%) and The Home Depot (6.51%) as its top holdings. McDonald’s and Starbucks are also among the company’s Top 10 holdings.

4. SPDR S&P Retail ETF (NYSERACA: XRT)

The SPDR S&P Retail ETF invests across the retail industry and gives investors exposure to some restaurant stocks. The fund has over $460 million in assets under management and a 0.35% expense ratio. The fund has generated annualized returns of 16.11% over the past three years. The company’s top holdings are Carvana (3.09%), Boot Barn Holdings (1.64%), and Autonation (1.57%). Grocery Outlet Holdings and Sprouts Farmers Market are among the fund’s top 10 positions.

5. First Trust Nasdaq Food & Beverage ETF (NASDAQGM: FTXG)

Restaurants rely on food, beverages and excellent service to turn first-time customers into returning customers. This ETF gives investors exposure to food and beverage companies. The top three holdings are Mondelez International (8.75%), Pepsi (8.42%) and Coca-Cola (8.10%). You won’t find restaurants on the list, but restaurants rely on many of these companies to provide food for their customers. The fund has a 0.60% expense ratio and has generated an annualized return of 12.58% over the past three years.

What is a Restaurant ETF?

A restaurant ETF is a fund that spreads its capital across stocks in the restaurant industry. A professional oversees the fund to make sure capital is properly dispersed across opportunities. Some stocks in the fund give investors direct exposure to restaurant chains. These funds may also have exposure to businesses that service restaurants but do not have their own restaurants.

Benefits of Investing in Restaurant ETFs

Investing in restaurant ETFs gives you a diversified portfolio of stocks set to benefit from the growing restaurant industry. Millions of people eat out each week, and some people visit the same restaurant several times each month. Some restaurants produce stable cash flow and operate under reliable profit margins, but some investments are better than others. A professional fund manager will assess the restaurant industry and the investment opportunities to increase the likelihood of profiting from the industry’s success.

Where to Invest in Restaurant ETFs

Investors can choose from several brokers to invest in restaurant ETFs. You should consider the broker’s fees and features before making a decision. If you are not sure which broker to use, these are some of the top choices to consider.

Diversify Your Portfolio with Restaurant ETFs

Restaurant ETFs allow investors to diversify their funds across several investments. Instead of relying on one restaurant stock, you can have several stocks that all benefit from the industry. Restaurant ETFs trim your research and can help you achieve similar returns as buying individual restaurant stocks and monitoring them on your own.

Frequently Asked Questions 

Best Restaurants ETFs Methodology

The best restaurant ETF methodology involved finding ETFs that give investors direct or indirect exposure to restaurants. Each fund’s performance, expense ratio and holdings were considered as part of this methodology.