With middle-income consumers back to spending at rates expected during an economic recovery and BJ’s Restaurants 2018 initiatives off to a good start, the company’s first-quarter earnings were favorable. Positive trends have been in force since September of 2017, said Greg Trojan, CEO, and, actually, they accelerated as 2018’s Q1 progressed into April.
“For our fiscal 2018 first quarter, comparable restaurant sales and traffic increased 4.2 percent and 0.4 percent respectively, reflecting our progress in driving sales through a combination of positive traffic and healthy check growth,” Trojan said during the call.
“Our total revenues increased 8 percent to $278.5 million, driven by our 4.2 percent increase in comparable restaurant sales and a 5 percent rise in operating weeks,” added Greg Levin, president and CFO.
What can be attributed to these positive numbers? Accounting changes and tax benefits, Levin said, but, also, Trojan noted the slowing down of BJ’s unit growth, allowing for major implementation projects to settle, as well as a focus on positive goodwill promotions, take-out and delivery initiatives, and the brand’s new loyalty program. “Overall, the first quarter results highlight how positive sales leverage together with our ongoing cost efficiency efforts enabled us to offset ongoing labor and other cost pressures,” Trojan said.
To drive sales and also generate positive goodwill and awareness for the BJ’s brand, the company turned to promotions such as the Daily Brewhouse Specials—a different deal (half of pizza on Mondays, $10 loaded burgers on Wednesdays, etc.) per day of the week—and special occasion deals like $3.14 for mini pizzas on this year’s Pi Day (March 14), when 39,427 guests visited the restaurant.
“Our Daily Brewhouse and Happy Hour Specials are building sales in their respective dayparts, and importantly have added another reason for some of our more value-conscious guests to visit BJ's,” Trojan said. “Our marketing team has done a great job of timing offers with certain calendar occasions and making them PR, social, and word-of-mouth worthy.”
“We took our Buy a Hero a Beer program in November and unleashed the power of our generous guests to buy tens of thousands of our veterans a free beer on Veteran's Day and through the entire rest of the month,” Trojan said, listing more successful promotions.
Regular deals like the Daily Brewhouse tend to gain traction over time, said Levin, as guests become more familiar with the offerings. “They have really helped drive mid-week traffic in our business,” he said.
“We're really liking the impact that those kind of promotions are having for us. And our goal is to do more,” Trojan said.
The off-premise frontier
BJ’s is still feeling out its relationship with third-party delivery services, but the brand sees a lot of promise in the take-out and delivery category.
“Our off-premise business grew over 30 percent in the first quarter, and finished Q1 at 7.5 percent of sales, which is about 150 basis points higher than a year ago,” Trojan said. “We continue to view large party take-out as another significant opportunity for us and we're working on growing this part of our business.”
Promotions via delivery have been successful for BJ’s, too, including a collaboration with DoorDash that offered free mini pizzas for choosing delivery. With this, Trojan said the company drove awareness of its delivery capabilities.
But the delivery business is not primarily pizza. “We deliver just about the entire menu,” Trojan said. “We do think it gives us a real advantage in that when you're delivering for a larger group or even if it's a family size or an office, there's something for everybody on our menu.”
The average delivery check is about equal to an on-premise check, Trojan noted.
Only a few weeks into the national launch of the brand’s new loyalty program, Premier Rewards, the team was seeing positive activity. “We continue to see double-digit increases in loyalty sign-ups, as well as similar increases in reward redemptions,” Trojan said.
The best promotions, however, are reserved for rewards members. “These everyday value initiatives, along with our improved loyalty activity, have allowed us to pull back on both the frequency and depth of what I would describe as some of our programmatic dollar-off discount offers. This has also allowed us to fund some bigger idea promotions, or what I think of as promotions with a purpose,” Trojan said.
All-in-all, the BJ’s team is hopeful for the future. “We will continue improving our strong value proposition as a brand, creating more unique and innovative menu offerings, driving productivity and restaurant efficiency, while ensuring our gold standard levels at guest service and hospitality,” Levin said.