BJ’s Restaurants Scaling Back Growth to 'Improve Future Returns'
BJ’s Restaurants, Inc. reported financial results for its fiscal 2016 third quarter ended September 27.
Third Quarter 2016 Highlights Compared to Third Quarter 2015
Total revenues grew 1.9 percent to $233.7 million.
Total restaurant operating weeks increased approximately 7 percent.
Comparable restaurant sales declined 3.4 percent.
“Industry-wide third quarter comparable restaurant sales were soft as businesses dependent on consumer discretionary spending were challenged by a variety of macro factors including the timing of the Summer Olympics as well as the current economic uncertainty arising from the political elections,” says Greg Trojan, president and chief executive officer. “During the quarter, BJ’s also faced challenging comparable restaurant sales as we lapped our very strong prior year ‘Loaded Burger’ menu introduction. To combat the soft operating environment, we recently implemented a new menu format and introduced several new menu items focusing on our successful ‘Enlightened Menu’ category featuring new ‘super food’ options. Additionally, we will be introducing new center-of-the-plate holiday menu combinations during November and December. Our menu innovation coupled with our new ‘making moments count’ marketing campaign complement our organization-wide commitment to driving sales by providing a higher quality, more differentiated casual dining experience for our guests.”
“In light of the uncertain macro environment we are also taking other near-term measures intended to manage risk, improve future returns and maintain BJ’s strong brand while driving shareholder value. As such, we are reducing the number of planned fiscal 2017 restaurant openings to 10 to 15 compared to the 17 restaurant openings this year. We believe the sales headwinds in the industry call for greater resource allocation toward traffic and sales building initiatives. We anticipate that the expanded free cash flow related to the revised 2017 new restaurant opening schedule will provide added flexibility to our already solid financial foundation and will allow for margin leverage, strategic growth investments in our platform, and the continued return of capital to shareholders. We also believe the temporary reduction in new openings positions BJ’s to take advantage of potential real estate opportunities in the form of reduced rent and/or better locations over the next 12 to 18 months as a result of several announced restaurant bankruptcies and closures by other concepts. iven our current robust real estate pipeline and the opportunities we expect to be presented over the next 12 to 18 months, we believe we can quickly increase unit growth once we see improvements in the macro environment. More importantly, with the continued success of our new restaurants over the last several years, and with only 185 restaurants opened today, we remain confident in the estimated national capacity for 425 BJ’s restaurants, providing a long-term runway for the growth of our concept and the company.”
In the third quarter of fiscal 2016, BJ’s opened five new restaurants in Pittsburgh, Pennsylvania; Allentown, Pennsylvania; Cleveland, Ohio; Cary, North Carolina; and, Valley Stream, New York. In the fourth quarter to-date, the company opened three additional restaurants in La Jolla, California; Wesley Chapel, Florida, and Teterboro, New Jersey, and expects to open its last two restaurant of the year in Charlottesville, Virginia (next week) followed by Cleveland during the first week of December. Trojan adds, “Due to heavy rains in the Ohio Valley region, we are moving the opening of our two Indiana restaurants to the first quarter of fiscal 2017 which will allow all of our team members to be in their home restaurants focusing on taking care of our guests during the busy holiday season. As a result we expect to open a total of 17 new restaurants this year.”