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BJ’s chief financial officer, principal accounting officer and executive vice president and secretary Greg Levin said the chain’s same-store sales decline was the result of a roughly 2-percent benefit from menu pricing that was offset by a decrease in guest traffic.

Cannibalization from some new BJ’s restaurants also impacted same-store sales, particularly in the core market of California, he said. New restaurants are opening strong, but sales tend to flatten in time, which is typical.

August was the softest month of the quarter, but Levin said same-store sales trends showed signs of improvement in recent weeks.

For the first three weeks of October, same-store sales decreased a modest 0.5 percent or so, with less menu pricing, said Levin. Traffic during those weeks has also improved by about 2 percent over the third quarter.

Levin said the casual-dining segment in general is expected to remain challenged through at least the end of the year, and likely into 2014.

Sales for the casual-dining segment have dropped 7 percent over the past five years, according to Knapp-Track data, but BJ’s same-store sales have grown 15 percent during that time, Trojan said. BJ’s has also grown average unit volumes from $5.2 million to $5.8 million.

BJ’s for years has stood out in the casual-dining sector as a brand that ran contrary to industry trends until late in fiscal 2012, when company officials began to warn of choppiness and consumer pull-back on dining out. Former chief executive Jerry Deitchle retired in February, and incoming CEO Greg Trojan inherited a brand that needed to refine its positioning to drive traffic.

“While we are disappointed that our comparable restaurant sales are softer than we would like, I am confident that we are not only working on the right things to restore momentum, we have made good progress on the building blocks it will take to set in motion another sustained period of larger sales premiums to the industry,” said Trojan. “We will continue to play offense, and, at the end of the day, we’re not revolutionizing anything here in this concept, but improving on the basic formula that has worked so well.”

In a report Friday, Wall Street analysts had a mixed view of improvement plans.

Christopher O’Cull of KeyBanc Capital Markets Inc. advised investors to remain cautious about BJ’s, saying, “We are not confident the issues causing BJ’s declining guest counts are well understood or that the company’s sales-building plans (e.g. television advertising) will result in sustainable improvements.”

Anton Brenner of Roth Capital Partners had a different view, saying company-specific issues, in addition to macro factors, were contributing to sluggish results, though he lowered expectations for the fourth quarter.

“We expect that strategies now being implemented will help drive sales and improve profitability, while double-digit store expansion is sustained,” Brenner wrote.

Contact Lisa Jennings at lisa.jennings@penton.com.
Follow her on Twitter: @livetodineout