BJ's Restaurants Inc
which currently owns and operates 120 restaurants, remains on track
to open as many as 16 new restaurants in fiscal 2012, of which 5
restaurants have already been opened.
In the first quarter of 2012, 2 new units were opened, one in
Clearwater, Florida and the other in Salinas, in northern
California. In the second quarter, the casual dining restaurant
operator plans to open five restaurants, of which three has already
been opened at Dublin, New Braunfels and Santa Rosa, respectively.
The remaining two units will come up in Waco and the other one in
Round Rock, Texas. Both the units will be opened by the end of
June. Additionally, six new units are slated to open in the third
quarter while the fourth quarter will see three new openings.
BJ's Restaurants is one of the few casual dining chains that has
been expanding even amid an uncertain economy. With the resurgence
of consumer confidence, management has speeded up its unit
openings. Besides its plans of opening 16 new restaurants in 2012,
the company hopes to relocate an older, smaller-format 'pizza and
grill' restaurant to an appropriate site for housing a larger BJ's
restaurant. The expected new openings in 2012 compares favorably
with 13 restaurants opened in fiscal 2011 and 10 units in 2010.
Looking forward to 2013, the company plans low double-digit
capacity increases per year in the approximate range of 10% to 12%.
One third of these openings will be in BJ's Restaurants' home court
of California, another third will come up in Western states outside
California and the remaining third in the Florida market or in a
few new markets. Additionally, 50% of new stores will be
conversions of old retail locations. In the long run, there still
exists the possibility of opening at least 300 outlets.
Furthermore, to ensure positive restaurant comparable sales in
the upcoming quarters, the company continues to take several sales
building initiatives like a new guest loyalty program, which has
been successfully tested and will be rolled out by the end of the
first half of 2012; along with a new catering program, efficiencies
and price increases.
We believe that BJ's remains well positioned to sustain its
growth momentum while generating improved earnings on the heels of
efficient operations and innovative offerings. However, higher cost
structure mainly related to payroll taxes, increased level of
pre-opening costs and stiff competition from other casual dining
operators such as
Red Robin Gourmet Burgers Inc.
Buffalo Wild Wings Inc.
) make us cautious. Additionally, commodity inflation is also
expected to be higher in the upcoming second quarter.
BJ's currently has a Zacks #3 Rank, which implies a Hold rating
over the short term. We reiterate our long-term Neutral
recommendation on the stock.
BJ'S RESTAURANT (BJRI): Free Stock Analysis
BUFFALO WLD WNG (BWLD): Free Stock Analysis
RED ROBIN GOURM (RRGB): Free Stock Analysis
To read this article on Zacks.com click here.