In order to drive sales back, BJ’s must be fully staffed, Levin said.
It’s happening already. BJ’s fully staffed units drove “meaningfully” higher same-store sales at high-single and double-digit comps. BJ’s stores in Southern California, Arizona, and Ohio markets stood out with comparable sales higher than BJ’s average, while stores in Northern California and the Pacific Northwest found more difficulty.
In Q2, BJ’s increased its hourly employee count by 15 percent but many stores continue to be understaffed. Levin said BJ’s went down the path of many other restaurants with job fairs and hiring incentives, but the priority is current employees and retaining them.
“I think the best thing that we tend to look at is, really, is how do we incentivize and reward our current team members?” Levin said. “We don't think the right thing to do is to offer bonuses for somebody new joining us when we've had somebody working for us for five, six, seven years. So our general viewpoint is really to make sure we're taking care of our current team members, building on that culture within the four walls of our restaurants. And that in of itself, feeds on itself to bring other people into BJ’s.”
Ideally, Levin would like BJ’s to be fully staffed tomorrow. The timeline of when the company realistically believes that will be the case, however, takes into account that BJ’s Q3 traditionally brings lower sales as summer schedules get disrupted. The goal would be to have BJ’s at full staff before Q4, when weekly sales historically rise with the advent of the holiday season, but Levin admits it’s going to be a challenge. Still, with federal unemployment benefits ending in September and the back-to-school season commencing, he forecasts a better hiring scenario in the future.
If BJ’s can achieve full staffing levels Levin predicts a decrease in overtime and training, impacting labor margins. In Q2, restaurant-level operating margins improved by 330 basis points from Q1 to 14.8 percent.
BJ’s current improvement in sales was driven by capacity and demand, incoming CFO Tom Houdek said. In April, more than 70 percent of dining rooms still operated with capacity limitations, but by June, stores were fully reopened. With declining COVID-19 cases and household balance sheets stronger than ever, guests have more to spend on experiential dining like BJ’s, he said.
BJ’s added it’s not seen any recent changes in business despite increased COVID-19 cases of the Delta variant, even in Southern California where mask mandates are back in place. In the scenario more virus restrictions occur, BJ’s has the flexibility of reintroducing pull-down patios it implemented in the past restriction period. Of the dayparts, afternoon and dinnertime sales continue to outpace 2019, but late night still lags behind with slight improvement stemming from the NBA playoff calendar and the end of social distancing policies.
“While we continue to monitor the COVID landscape including the Delta variant, we remain optimistic in our ability to continue to grow sales into Q3 and the rest of this year,” Houdek said.