Sixty-two restaurants closed dining rooms after the Golden State reversed reopening plans.

BJ’s Restaurants prefers to think of the COVID pandemic as three chapters of an ongoing story.

The opening came mid-March to mid-May when dining rooms were closed and the brand was forced to furlough 16,000 employees, cut 45 percent of its menu, and pivot to off-premises only, which—at its peak—tripled in sales to roughly $30,000 per week.

The second chapter saw the reopening of dining rooms. By the third week of June, 190 of BJ’s 208 units were taking dine-in traffic. By the end of that month, the brand peaked with 95 percent of dining rooms reopened and average weekly sales reaching $75,000—more than 70 percent of historical sales volumes. In the week including Father’s Day, average weekly sales nearly eclipsed $80,000. Even with open dining rooms, BJ’s maintained 80 percent of its growth in off-premises, equal to more than double pre-COVID. More than 10,000 employees returned to work, and center-of-the-plate offerings like the Slow-Roasted Tri Tip, Double Bone-In Pork Chop, and Atlantic Salmon reappeared on the menu.

The third chapter of BJ’s story centers around the shut down of in-restaurant dining in California, the company’s home base. Due to rising COVID cases, California Gov. Gavin Newsom first closed dining rooms in 19 counties at the beginning of July, including Los Angeles. About two weeks later, the rest of the state followed. BJ’s has 62 restaurants in California, which is about 30 percent of its systemwide footprint. Average weekly sales decreased to the low-to-mid $60,000 range, or around 60 percent of historical business.

However, outdoor dining remained an option, and BJ’s has taken advantage. The company added or expanded outdoor dining spaces in about 90 restaurants. That means 150 units can now provide outdoor dining across the system. Last week, the casual-dining chain notched roughly $26,000 per restaurant in incremental sales where dining rooms closed or outdoor seating was added or expanded.

CEO Greg Trojan said the biggest difference between California shuttering dining rooms the first time in the spring and in July is the amount of preparation.

“And I can tell you, you’ve probably seen the pictures on the news, etc., people are taking advantage of outdoor dining,” said Trojan during the brand’s Q2 earnings call. “And, you know, going back into, you know, spending their lives inside in their homes is not what people have on their mind and we will see the end of that, that being legislated or not. But people are out and about, they’re being very careful as they do that in our restaurants, but outdoor dining is a big difference.”

Comp sales were down 57.2 percent in Q2, with steady improvement each month. BJ’s went from a 74 percent drop in April, to down 63 percent in May to a decline of 40 percent in June. If the brand maintains its current sales levels, it should end Q3 at $62,000 in average weekly sales. For comparison, the restaurant earned roughly $104,000 in average weekly sales for Q3 2019. At this sales level, the brand expects cash burn rate—including manager bonuses, rent, interest expense, and capital expenditures—to be around $500,000 to $1 million per week. Q2 revenue dropped from $301 million in 2019 to $128 million this year.

In order for BJ’s to reach average weekly sales above $100,000 again, Trojan said three main things must happen. The first is a no-brainer—the return of full capacity in restaurants. The second is growth of late-night business. The daypart mixed roughly 12 percent pre-COVID, but has disappeared during the pandemic. The third necessity is the return of sports.

“I mean one of the great things about our concept is we run busy restaurants from 11 in the morning to 11 and 12 at night, right?” Trojan said. “And we totally lost that late-night aspect of our business, A. And B, the alcohol-centric element occasions of our business that rely on bar business in and of themselves have been greatly compromised along with that, right? … The return to sports in America is going to be helpful for lots of reasons, mental health among them, speaking personally, but I do think the occasions to gather and safety be able to gather in groups and go see games and other events is going to be a part of the puzzle, for sure.”

BJ’s is doing its best to tackle one of those three problems. To increase seat count inside dining rooms, the brand is adding glass dividers to the majority of its restaurants. Greg Levin, president and CFO, noted that even if a restaurant is allowed to seat up to 50 to 75 percent capacity, that doesn’t equate to the number of people a location can hold because of the additional 6-foot social distancing requirement. The glass dividers are an investment to resolve that issue.

“So, dividers in our restaurants actually should get us somewhere in the neighborhood of 12 to 17 tables on average,” Levin says. “So, it’s actually a nice increase there. And that would probably get us close to 75 percent capacity of being able to actually seat in our restaurants, where with 6 feet of social distancing, we’re limited probably closer to 50 percent to 55 percent.”

In addition to resolving dining room reconfigurations, BJ’s continues to leverage technology to bring convenience to customers both inside and outside the four walls. Trojan said most customers now use mobile devices to look at the menu, and that digital version will soon be enhanced from a PDF version to HTML, which will allow color and pictures along with dynamic promotions and guest-driven navigation. He also noted that mobile payment is used for about 25 percent of dine-in transactions. For off-premises guests, BJ’s is utilizing text and email technology to keep customers informed of their order.

To help fuel growth in the coming months, the restaurant’s plan is to bring back its prime rib for both dine-in and takeout in mid-August. The company is also building upon its family bundles with the Slow-Roasted Tri Tip that came back to the menu. BJ’s is also in the process of developing single-serve catering options.

“At the end of the day, we continue to be focused on the same objectives when the pandemic became an unwelcome reality to all of our lives in early March—maximize our sales by utilizing our unique strengths: the distinctiveness of our brand, concept, and iconic food and drinks, the flexibility of our varied menu, the size and layout of our physical spaces to accommodate safe social distancing, our technology infrastructure, and innovation that supports on- and off-premise sales growth,” Trojan said.

“ … Based on what we’ve accomplished with the challenges we face, I’m confident that BJ’s will be one of the true winners in our sector as the country and the world overcome this wicked virus,” he continued.

Casual Dining, Chain Restaurants, Feature, BJ's Restaurants