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Restaurants stocks began the third quarter with another swing lower as investors stayed cautious ahead of the Q2 earnings reporting season. The AdvisorShares Restaurant ETF (NYSEARCA:EATZ) and the Dow Jones US Restaurants & Bars Index (DJUUSRU) were both down 1.6% in late afternoon trading.
Analysts have warned that some restaurant companies are facing margin pressure as prices have come down in many markets, while traffic remains pressured. Notably, large fast-food restaurant chains such as McDonald’s (MCD), Taco Bell (YUM), and Burger King (QSR) have been firing off aggressive value deals.
The biggest decliners for the session were Pinstripes (PNST) -17.1%, Red Robin Gourmet (RRGB) -8.1%, Denny’s (DENN) -7.8%, First Watch Restaurant Group (FWRG) -5.2%, TH International (THCH) -5.1%, Cracker Barrel Old Country Stores (CBRL) -3.7%, Shake Shack (SHAK) -3.4%, and Jack in the Box (JACK) -3.4%.
Over the last six weeks, restaurant stocks that have shed more than 10% include Kura Sushi USA (KRUS) -38.2%, The ONE Group Hospitality (STKS) -21.%, FAT Brands(FAT) -15.3%, Yum China (YUMC) -13.1%, Potbelly Corporation (PBPB) -11.5%, and Red Robin Gourmet Burgers (RRGB) -10.0%.