On Jul 5, Zacks Investment Research upgraded
BJ's Restaurants, Inc.
) to a Zacks Rank #1 (Strong Buy). BJ's Restaurants' new mobile app
- launched last month - and improving guest traffic at its
restaurants due to FIFA World Cup are the main drivers of our
decision. Further, shares of BJ's Restaurants rose nearly 10% in
the past 30 days.
Why the Upgrade?
On June 10, the company launched its mobile app to combat declining
comps, which declined 2.9% in the last quarter. The app is designed
to save customers' time and money while making BJ's Restaurants'
operations easier and more efficient.
The app allows guests to order, move up in queue for a table and
pay without waiting for the check. There is also a preferred
wait-list for customers to see how long they have to wait. Further,
app users will automatically receive BJ's Premier Awards, which can
be redeemed at the restaurants for free food and additional savings
Additionally, the summer months are typically a weak period in
terms of sports action for bars and restaurants. However, with the
FIFA World Cup, BJ's Restaurants has managed to counter the weak
summer period by drawing larger crowds to its outlets.
In fact, the restaurateur has been able to better manage the
traffic, especially during peak hours, with the help of it's newly
launched app. We believe this is good news for the California-based
restaurateur as same-store sales grew in the usually slow summer
months which should subsequently boost earnings in the upcoming
Further, we are also encouraged by the company's decision to launch
its smaller prototype restaurants (which requires lower
investments) in various markets. In 2014, BJ's Restaurants plans to
open 11 new restaurants and all of them will be based on the new
In our view, with commodity costs staying at an all time high,
lower investment by the company will be beneficial to its margins.
And the fact that the company is focusing on its expansion plans
without sacrificing margins is laudable. In fact, we believe the
smaller prototype restaurant will be the primary driver for the
company's long-term goal of a restaurant-level margin of 19%.
Other Stocks to Consider
The following companies with a favorable Zacks Rank that are worth
Red Robin Gourmet Burgers Inc.
Citi Trends, Inc.
Christopher & Banks Corp.
). All these stocks sport the same Zacks Rank as BJ's
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BJ'S RESTAURANT (BJRI): Free Stock Analysis
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