Restaurant Short Interest or Ozempic, Hold The Fries
Author:
Ihor Dusaniwsky
Managing Director of Predictive Analytics, S3 Partners
Matthew Unterman
Director of Predictive Analytics, S3 Partners
The growth of GLP-1 drug usage, like Ozempic, has thrown a scare into several sectors that could be affected by a change in user buying or eating patterns. Junk and sugary food producers and fast-food dining establishments may see a decline in revenues if buying behavior is permanently changed by the GLP-1 effect on consumers appetites.
But this cause-and-effect relationship may be a bit premature with Morgan Stanley reporting that only 7% of the U.S. population, twenty-four million people, will be on GLP-1 drugs by 2035. GLP-1 drugs, like Ozempic, are just starting to get traction with Type-2 diabetics and the affluent that can afford the more than $20k annual price tag – present usage is not large enough to materially affect food retailers and restaurants, yet.
Restaurant Short Interest
Ticker
SI % Float
Short Interest
MCDONALDS CORP
MCD
1.01%
$1,857,101,723
STARBUCKS CORP
SBUX
1.33%
$1,365,930,520
CHIPOTLE MEXICAN GRILL
CMG
2.65%
$1,349,448,173
DOORDASH INC
DASH
5.66%
$1,091,706,955
DARDEN RESTAURANTS
DRI
5.35%
$904,016,265
DOMINOS PIZZA
DPZ
4.79%
$606,462,248
RESTAURANT BRANDS INTL
QSR
2.46%
$499,386,813
YUM! BRANDS INC
YUM
1.46%
$499,035,409
WINGSTOP INC
WING
7.68%
$410,800,261
YUM CHINA HLDGS INC
YUMC
1.69%
$362,911,006
ARAMARK HLDGS CORP
ARMK
5.00%
$321,137,061
TEXAS ROADHOUSE
TXRH
4.16%
$268,858,965
BLOOMIN' BRANDS
BLMN
12.77%
$258,804,201
CAVA GROUP INC
CAVA
9.67%
$242,690,618
CHEESECAKE FACTORY
CAKE
15.39%
$217,785,036
PAPA JOHNS INTL
PZZA
8.98%
$186,310,525
DUTCH BROS INC
BROS
18.98%
$184,971,587
DAVE & BUSTER'S ENTERTAINMENT
PLAY
11.76%
$175,923,054
SHAKE SHACK INC
SHAK
8.23%
$173,199,181
CRACKER BARREL
CBRL
10.88%
$158,818,175
Restaurant Short Interest
4.86%
$12,183,955,643
But that does not mean that we are not seeing its affect in the market. While GLP-1 usage, continued high interest rates and inflation may negatively affect restaurant usage in the future but short selling in restaurant stocks has been increasing over the last thirty days. Total short interest in the restaurant sector is $12.18 billion. Led by MCD, SBUX, CMG and DASH.
We have seen $815 million of increase short selling over the last thirty days as the Restaurant sector saw price weakness led by short selling in MCD, CMG, DRI and SBUX.
Restaurant Largest 30D Increase in Short Selling
Ticker
SI % Float
Short Interest
30D Shs Shorted
MCDONALDS CORP
MCD
1.01%
$1,857,101,723
$253,636,661
CHIPOTLE MEXICAN GRILL
CMG
2.65%
$1,349,448,173
$235,765,570
DARDEN RESTAURANTS
DRI
5.35%
$904,016,265
$133,538,842
STARBUCKS CORP
SBUX
1.33%
$1,365,930,520
$126,593,852
ARAMARK HLDGS CORP
ARMK
5.00%
$321,137,061
$66,312,440
DOORDASH INC
DASH
5.66%
$1,091,706,955
$64,736,839
DOMINOS PIZZA
DPZ
4.79%
$606,462,248
$53,859,563
PAPA JOHNS INTL
PZZA
8.98%
$186,310,525
$47,522,689
CRACKER BARREL
CBRL
10.88%
$158,818,175
$43,628,425
YUM! BRANDS INC
YUM
1.46%
$499,035,409
$34,086,787
Only QSR had significant short covering over the last thirty days.
Restaurant Largest 30D Increase in Short Covering
Ticker
SI % Float
Short Interest
30D Shs Shorted
RESTAURANT BRANDS INTL
QSR
2.46%
$499,386,813
($269,499,986)
CAVA GROUP INC
CAVA
9.67%
$242,690,618
($24,801,050)
TEXAS ROADHOUSE
TXRH
4.16%
$268,858,965
($14,325,571)
DAVE & BUSTER'S ENTERTAINMENT
PLAY
11.76%
$175,923,054
($11,623,137)
DUTCH BROS INC
BROS
18.98%
$184,971,587
($6,467,294)
DINE BRANDS GLOBAL INC
DIN
4.77%
$34,119,732
($5,897,985)
BLOOMIN' BRANDS
BLMN
12.77%
$258,804,201
($5,526,953)
LUCKIN COFFEE INC ADR
LKNCY
0.20%
$16,671,098
($2,641,310)
POTBELLY CORP
PBPB
3.30%
$5,696,933
($1,161,166)
ONE GROUP HOSPITALITY INC
STKS
5.94%
$7,613,497
($708,127)
Restaurant Short Selling\Covering
4.86%
$12,183,955,643
$814,632,373
Shorting the Restaurant sector had not been a profitable trade for most of the year, as restaurant patrons enjoyed post-covid travel and entertainment. Restaurant shorts are still down -$733 million in year-to-ate mark-to-market losses, down -5.67% on an average short interest of $12.92 billion. Picking a winner or loser in the sector was a coin toss with 49% of every dollar shorted in the sector profitable and 51% unprofitable, Unfortunately the unprofitable shorts lost and average of -21.6% for the year but profitable trades only returned +10.4%. ARMK and CAZVA were the best performing shorts in the sector.
Restaurant YTD MTM P\L
Ticker
Avg Short Interest
YTD MTM P\L
P\L %
ARAMARK HLDGS CORP
ARMK
$430,146,084
$171,068,642
39.77%
CAVA GROUP INC
CAVA
$246,309,365
$128,930,784
52.35%
STARBUCKS CORP
SBUX
$1,382,576,261
$87,194,605
6.31%
MCDONALDS CORP
MCD
$1,725,731,635
$84,089,811
4.87%
CRACKER BARREL
CBRL
$214,205,129
$57,427,598
26.81%
PAPA JOHNS INTL
PZZA
$148,047,943
$44,254,250
29.89%
YUM! BRANDS INC
YUM
$525,548,200
$20,960,658
3.99%
WENDY'S CO
WEN
$139,461,214
$20,653,028
14.81%
BRINKER INTL INC
EAT
$185,305,640
$15,722,605
8.48%
DINE BRANDS GLOBAL INC
DIN
$74,286,902
$14,008,198
18.86%
DASH, CMG, and WING are the worst performing shorts for the year.
Restaurant YTD MTM P\L
Ticker
Avg Short Interest
YTD MTM P\L
P\L %
DOORDASH INC
DASH
$1,187,064,864
($523,017,020)
-44.06%
CHIPOTLE MEXICAN GRILL
CMG
$1,387,553,983
($416,498,771)
-30.02%
WINGSTOP INC
WING
$430,585,217
($172,915,446)
-40.16%
TEXAS ROADHOUSE
TXRH
$480,624,850
($52,532,888)
-10.93%
SHAKE SHACK INC
SHAK
$186,133,683
($47,908,051)
-25.74%
BLOOMIN' BRANDS
BLMN
$271,502,142
($32,792,925)
-12.08%
SWEETGREEN INC
SG
$116,963,244
($25,645,711)
-21.93%
KRISPY KREME INC
DNUT
$131,751,006
($22,441,908)
-17.03%
DOMINOS PIZZA
DPZ
$493,527,369
($21,258,228)
-4.31%
KURA SUSHI USA INC
KRUS
$88,115,700
($20,806,029)
-23.61%
Restaurant YTD MTM P\L
$12,915,564,397
($732,572,697)
-5.67%
The last thirty days saw a reversal of fortune for Restaurant short sellers with 97% of every dollar shorted in the sector being profitable. MCD, ARMK, DASH and CAVA led the short-side resurgence in the sector.
Restaurant 30D MTM P\L
Ticker
Avg Short Interest
30D MTM P\L
P\L %
MCDONALDS CORP
MCD
$1,845,189,554
$184,903,359
10.02%
ARAMARK HLDGS CORP
ARMK
$415,264,147
$152,562,396
36.74%
DOORDASH INC
DASH
$1,142,141,005
$141,112,482
12.36%
CAVA GROUP INC
CAVA
$312,294,052
$102,642,053
32.87%
STARBUCKS CORP
SBUX
$1,328,927,519
$63,538,244
4.78%
DARDEN RESTAURANTS
DRI
$911,493,783
$60,875,398
6.68%
CHIPOTLE MEXICAN GRILL
CMG
$1,246,928,749
$57,112,764
4.58%
DOMINOS PIZZA
DPZ
$617,935,136
$44,099,180
7.14%
RESTAURANT BRANDS INTL
QSR
$608,518,550
$37,477,372
6.16%
PAPA JOHNS INTL
PZZA
$198,041,971
$34,997,073
17.67%
WING was the only short in the sector that was down more than $1 million.
Restaurant 30D MTM P\L
Ticker
Avg Short Interest
30D MTM P\L
P\L %
WINGSTOP INC
WING
$378,092,080
($68,506,669)
-18.12%
LUCKIN COFFEE INC ADR
LKNCY
$18,535,890
($538,348)
-2.90%
COMPASS GROUP PLC ADR
CMPGY
$691,112
($11,131)
-1.61%
FIESTA REST GRP
FRGI
$1,375,567
($6,722)
-0.49%
RAVE RESTAURANT GRP
RAVE
$84,412
($6,382)
-7.56%
YOSHIHARU GLOBAL CO
YOSH
$17,961
($3,860)
-21.49%
GOOD TIMES RESTAURANTS
GTIM
$120,758
($2,526)
-2.09%
FLANIGANS ENTERPRISES INC
BDL
$43,651
($2,182)
-5.00%
BT BRANDS INC
BTBD
$4,990
($548)
-10.99%
KISSES FROM ITALY INC
KITL
$1,547
($140)
-9.06%
Restaurant 30D MTM P\L
$12,431,791,515
$1,113,849,331
8.96%
If high interest rates continue, we should see discretionary consumer spending take a hit and the restaurant sector to continue its downward price trend. If GLP-1 drugs, like Ozempic, increases in usage, consumers a lack or appetite along with a lack of money in their wallets will be a two-fisted blow to the Restaurant sector’s bottom line.
For now, market momentum is favoring the short side of the market. But as interest rates decline and the GLP-1 affect on discretionary consumer spending proves to be minimal for the short term we should see a strengthening in the sector. As consumers see the less inflation, and lower interest rates we should see an upward price move in the restaurant sector as revenues continue their recent upward trend.
Keeping an eye on total short interest in the sector, and particularly the change in short selling and covering will provide ample lead time to reposition both long and short restaurant sector portfolio holdings. Shorts will want to exit positions ahead of the stampede out of the sector while longs should be ready to use their dry powder in the sector and increase exposure as short covering provides a tailwind to upward stock price moves.
Our Blacklight SaaS platform and Black App provides an up-to-date view of short selling and short covering on an equity, sector, index, or country-wide basis allowing investors\traders to better manage their existing long and short positions.
The Black MaP and Black App products provide a total view of long and short positioning in the market with a breakdown between Active\Passive long investors, 24 Fund type entities, over 50k securities globally across 108 countries and data from 58 regulatory exchanges.
