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BJ's plans growth outside West

Television advertising, menu revamps and loyalty programs among strategies

BJ’s Restaurants Inc. will begin testing television advertising and will roll out a new loyalty program in the second quarter, the company said Thursday.

After reporting a 42-percent increase in net income for the fourth quarter and a 5.1-percent same-store sales increase, BJ’s chair and chief executive Jerry Deitchle told analysts in a call that positive sales growth has continued into 2012.

For the first six weeks of the year, same-store sales are up 4 percent, lapping a 7-percent increase for the same period last year, Deitchle said.

The year ahead will bring more efforts to drive sales, but the chain also is positioning itself for growth outside its home base in the West. BJ’s 115 locations are spread across 13 states.

BJ’s has long envisioned national growth of up to 300 restaurants, and Deitchle said the company recently hired a consulting group to evaluate its domestic potential.

The chain now sees up to 425 possible BJ’s locations nationally, although growth will remain “careful and measured.”

Deitchle also indicated that the company might be open to joint ventures, although none are currently planned.

BJ’s first East Coast location is expected to open in the Washington, D.C., area at the end of this year or in early 2013.

This year, 15 new restaurants are planned and one smaller-format grill unit will be relocated a larger site.

Executives also discussed:

Television advertising test: A small test of television advertising will begin in the second quarter in two markets and likely will involve only a handful of restaurants, Deitchle said.

Although BJ’s is a relatively small chain, and it may be early to consider national advertising, “It’s important to begin our learning of what benefit, if any, TV might offer BJ’s,” Deitchle said.

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Research has indicated that BJ’s brand awareness is still relatively low, although once guests try BJ’s, they tend to quickly become “brand advocates,” he said.

Loyalty building: A new loyalty program for BJ’s, which tests have indicated will help build both repeat visits and spending, is planned for the second quarter.

Deitchle said the program will not be like other chains, which reward repeat visits with food or drink discounts. Instead, BJ’s guests will be invited to accumulate points toward experiential rewards, like a chance to win a trip, he said.

As a casual-dining brand, a loyalty program at BJ’s is not likely to work the same way it might at a restaurant that guests visit every day. “It’s not going to have the impact that a loyalty program at Panera might have on sales and margins, but it will have an impact,” Deitchle said.

Off premise: BJ’s also is looking at catering, as well as improving online ordering and to-go business, which has dipped through the recession, Deitchle said.

To capture more take-out orders, the chain plans to test this year a call center that would interface with BJ’s point-of-sale system, “like the pizza guys do,” Deitchle said.

Off-premise sales now account for about 5.5 percent to 6 percent of total sales, he said, “but we could do better.”

Menu initiatives: BJ’s has new products in the pipeline, and recently introduced Asian-inspired dishes such as kung pao chicken and orange chicken, along with miso salmon, Thai salmon and various teriyaki options.

New lunch entrées starting at $5.95 have been added, including a chicken quesadilla and a one-topping mini pizza with salad.

The new Fan Burger line, introduced in November, has been a hit, as has a more premium ribeye steak offering, said BJ’s executive vice president and chief restaurant operations officer Wayne Jones.

Next week, the chain will roll out its second annual Seafood Celebration with such additions as a new mahi mahi dish on the lower-calorie Enlightened menu.

In addition, a menu format revamp is planned later this year with the goal of better highlighting higher-margin items.

“These are long-term investments that will help BJ’s compete for market share in the long run,” Deitchle said.

Contact Lisa Jennings at [email protected].
Follow her on Twitter: @livetodineout

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