BJ's Restaurants sign outside a restaurant.

flickr: David

Slow-cook menu items are making a big impact at BJ's.

BJ's Restaurants Headed in the Right Direction

First-quarter earnings were a marked improvement from last year.

Gregory Trojan, CEO and president of BJ’s Restaurants, said the 192-unit chain remains focused on “needle-moving sales building initiatives” as it continues trending in the right direction.

BJ’s reported first-quarter earnings of $9.3 million Thursday and adjusted earnings of 42 cents per share, surpassing the Zacks Consensus Estimate of 34 cents by more than 20 percent. Revenues rose nearly 6 percent year-over-year to $257.8 million.

Comparable sales were down 1.3 percent in the quarter, but that was a solid improvement from the 2.2 percent decline in the fourth quarter of 2016.

Trojan spoke about these initiatives in a conference call. BJ’s successfully tested slow-roasting ovens in select restaurants last year with a goal to roll them out to all units by May—a date it beat with a mid-April completion. These allow for slow-cooked ribs, double bone-pork chips, prime ribs, pulled pork, and turkey.

“These new slow-cook menu items are consistent with our long-held menu strategy to offer a wide variety of compelling items which features exceptional quality and uniqueness at an outstanding value,” Trojan said.

BJ’s also introduced server handheld ordering tables in around a third of restaurants, which “drove improvement time to order, greater incident rates, and improvements in overall guest satisfaction rating,” he said, adding that the system will be fully converted by midsummer.

“These installations are not only speeding up our service time, but they're also resulting in nice growth in sales incidence of beverages and other add-on item, all of which is culminating in higher-quality guest experiences, which are being reflected in material improvements in our already impressive MTS guest metric,” he said.

Next, BJ’s turned to off-premise sales growth and is currently testing temporary delivery service that leverages the brand’s existing mobile app and online ordering system. They’re also exploring off-premise takeout.

“Our focus on growing our delivery and takeout sales continue to maintain progress as we continue testing third-party delivery options while reworking our entire take-out packaging and large party menu options for our guests,” he said. “We believe it is important at this time and before a broad launch to concentrate on sharpening our technological link to our online ordering and add functionality along with our in-restaurant execution of these orders.”

Lastly, the chain began offering Daily Brewhouse Specials that showcase some of the restaurant’s signature items, including the Pizookie dessert and handcrafted beer.

“In addition to these four strategic initiatives, we also developed a deep pipeline of new menu items, including several new items focusing on our successful EnLIGHTened menu category, featuring our new super food options, our loyalty program enhancements and other productivity initiatives to be implemented in 2017,” Trojan said. “It's worth noting that our EnLIGHTened category continues to grow popularity and in Q1 was the highest level of incident level of EnLIGHTened items sold in our history.”

Trojan said BJ’s has renewed its focus on guests and the results are reflecting that. “I attribute this operators continue to take care of our guests in the face of the challenging same restaurant sales environment. Overall, our teams focused on driving even more efficiency throughout our supply chain and our restaurant expenses were helpful in partially offsetting the topline challenges during the quarter, resulting in restaurant level margins 17.9 percent,” he said.

BJ’s opened five new locations this year: Mobile, Alabama, Noblesville and Fort Wayne, Indiana, Columbia, Maryland, and Youngstown, Ohio.

“We're on-track to meet or exceed restaurant opening leagues with 10 new openings and we're well underway in laying the groundwork for our 2,000 openings as well,” he said. “Overall, I'm confident we're doing the right thing for the short and long-term health of our concept as we battle through the tough topline retail restaurant environment. It's way too early to declare any victory, but we're seeing encouraging signs and we continue to leverage our great team as well as our strong balance sheet to invest wisely in our business as well as opportunistically buying back our equity when we see the chance to drive shareholder value.”