BJ’s 1Q profit drops on 'choppy' sales

BJ’s Restaurants Inc. reported a 4-percent decline in first-quarter net income Thursday, attributing the drop to “choppy” sales and outlining several sales-driving strategies.

For the first quarter ended April 2, BJ’s reported net income of $8.3 million, or 29 cents per share, compared with $8.6 million, or 30 cents per share, a year ago.

Revenue increased about 13 percent to $188.6 million.

Same-store sales climbed a modest 0.4 percent, reflecting a 3-percent price increase offset by a 3-percent decline in traffic, indicating that consumers remain under pressure.

BJ’s president and chief executive Greg Trojan said while sales were “not what we would like them to be in Q1, despite outperforming our peers,” he noted that the casual-dining chain did a better job of managing expenses at the restaurant level. “I am proud of how our team navigated maybe the most turbulent sales period casual dining has seen since the early days of the great recession in late 2008 and 2009,” he said.

Trojan, who became chief executive in February, outlined several strategies to drive sales.

BJ's plans to leverage its loyalty program with “surprise-and-delight” offers to drive traffic and is exploring in-store technology to speed service times, particularly at lunch.

In addition, new healthful options are coming to the menu, as well as new co-branded items that Trojan did not reveal. The chain is also working to improve food quality and uniqueness, and refining kitchen processes and recipes to reduce “unnecessary complexity,” Trojan said.

BJ’s has been testing TV advertising to boost brand awareness, as well as more digital and local marketing initiatives. The TV test ran in the last two weeks of the quarter and covered 28 restaurants in six markets, focusing on the $19.95 hand-tossed pizza Party For Two promotion.

BJ’s chief financial officer Greg Levin said the ad helped drive same-store sales in those markets, but “we need to understand the ongoing sales halo effect.”

Trojan said the chain is also working to improve operating productivity, which will help fund the anticipated increase in marketing spending.

BJ’s is also looking to develop a smaller prototype in addition to its typical 8,500-square-foot restaurants. “We believe there is an opportunity to open up smaller footprint options in markets like the Northeast, where it may be physically problematic to find as many large parcels as we would like,” Trojan said.

The chain continues to work on implementing new initiatives introduced last year, including a new hourly labor management system, new menu items like hand-tossed pizza, and a new loyalty program.

Trojan reiterated his belief that the 132-unit chain could grow to at least 425 restaurants domestically. Huntington Beach, Calif.-based BJ’s plans to open 17 restaurants in 2013, including relocating an old-format restaurant in Eugene, Ore., to a larger-format brew house.

Contact Lisa Jennings at [email protected].
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