The restaurant malaise that began around two years ago has begun to intensify as the financial turmoil has affected the number of sit-down diners, leaving entertainment and leisure exchange traded funds (ETFs) to starve.

Janet Adamy for The Wall Street Journal reports that beginning this month, chains have been launching more aggressive value promotions typically reserved for the slow post-holiday period. Chains such as Applebee’s and IHOP are not only offering aggressive discounts, they have shut the doors on certain locations.

Restaurant executives predict that smaller consumer wallets, coupled with high ingredient costs, are likely to hasten a shakeout among smaller restaurant chains and independents. Already this year, the Bennigan’s and Steak & Ale chains, both owned by Metromedia Restaurant Group, shut the doors of all company-owned restaurants.

People are responding to value and the bare necessities right now, so they have boiled it down to brown-bagging their lunches and if it is a decision between a laundry detergent or a meal out, guess which one gets ousted?

• PowerShares Dynamic Leisure & Entertainment (PEJ), down 38.3% year-to-date (black line)
• PowerShares Dynamic Food And Beverage (PBJ), down 18.8% year-to-date (green line)

Tags: Green ETFs, Leisure & Entertainment, PBJ, PEJ, Retail