A soft industry backdrop has been hampering the performance of most restaurant chains and BJ's Restaurants, Inc.BJRI is no exception.
In fact, the company, the company continues to believe that the sales headwinds in the industry call for greater focus on traffic and sales building initiatives. Consequently, though BJ's Restaurants' has slowed down on its unit growth plan for 2017 and 2018, it has not completely refrained from it.
Recently, the company announced the opening of its latest restaurant in Bowie, MD, on Nov 20. This 7,500 square feet restaurant is located on a free standing pad in front of Bowie Town Center and can accommodate nearly 230 guests.
The outlet features BJ's Restaurants' extensive menu including its signature deep-dish pizza, award-winning hand-crafted beer and the famous Pizookie dessert. In addition, BJ's unique contemporary décor creates an ideal environment for dining.
In fact, this new outlet marks the brand's fifth restaurant in the state of Maryland. Currently, the company operates 196 casual dining restaurants across 25 states in the United States, under its brand names - BJ's Restaurant & Brewhouse, BJ's Restaurant & Brewery, BJ's Pizza & Grill and BJ's Grill.
The company has opened nine new restaurants year to date and is slated to open one more outlet this year, in line with its plans. The next opening in Taylor, MI, in mid-December, will mark the brand's entry in the state. Also, it plans to open just four to six restaurants in fiscal 2018.
Thus, the slowdown in company's development plan may somewhat dent sales growth. Also, continued weakening consumer spending in the restaurant space, might hamper the company's traffic and sales.
Furthermore, we note that while several other restaurant chains including Yum! Brands, Inc. YUM , McDonalds Corporation MCD and Papa John's International, Inc. PZZA are capitalizing on the emerging market potential, BJ's Restaurants loses out in terms of international presence.
Additionally, BJ's Restaurants shares have declined 26.2% over the last six months, as against the industry 's growth of 0.6%.
Nevertheless, the four strategic sales-building initiatives undertaken by the company are expected to boost the top line. Also, a deep pipeline of new menu items, loyalty program enhancements and other productivity and digital initiatives are likely to improve performance.
Additionally, BJ's Restaurants' decision to slow down new openings for some time and instead focus even more of its enterprise resources on building sales might turn out to be favorable as it would provide some margin momentum and boost free cash flow. When combined with the company's conservative balance sheet, these measures are likely to provide more flexibility for sales building capital and share repurchases, going forward.
BJ's Restaurants carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
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