BJ’s Restaurants Inc. continues to roll out an enhanced service model to its casual-dining outlets, with further training for hourly workers slated for the current upcoming fourth quarters, executives said during the company’s second-quarter earnings call.
The Huntington Beach, Calif.-based brand, which reported earnings Thursday for the second quarter ended July 2, has been working on improving throughput in its restaurants as it laid out the second phase of its “Gracious Hospitality” program, said Greg Levin, BJ’s CEO and president.
“In April, we initiated our enhanced service model, which balances the number of tables per server, food runners and quality fast expediter positions in our restaurants,” Levin said. “These changes allow servers to get to our guests sooner, so we can get orders into the kitchen and the bar faster.”
The goal is to increase top-line sales, Levin said.
“It also frees up our managers so they have more time to be in the dining room to ensure we are delivering the gold standard level of operational excellence for our guests,” Levin said. “And it elevates table turnover, which in essence expands the capacity of our existing platform.”
Levin said that in addition to working on the service model, BJ’s is also evaluating and testing technology that will help the brand further improve throughput.
“These include changes to the way our kitchen display system informs our teams when to fire or begin cooking items to changes to our server tablets,” he said.
“Our next 'Gracious Hospitality' phase will be new hourly training for all restaurants and that is expected to roll out later in Q3 and Q4,” Levin said. “This will include additional side-by-side training for all new hourly team members.”
The training initiatives are expected to continue through the end of the year, he said, and “have a slight impact on training labor for these quarters.”
These investments in training “are critical elements to driving top-line sales since every additional sales dollar leverages the fixed elements of our restaurants cost structure,” Levin said.
BJ’s also plans to continue its remodel program to drive sales and traffic, he said.
“We’ve now completed 19 remodels year-to-date, and we expect to do approximately five more this year,” Levin told analysts. “By the end of this year, we will have remodeled approximately 70 restaurants since we began this initiative. We will finish fiscal 2024 with approximately half of our restaurants either recently remodeled or one of our newer prototypes.”
The company opened one new restaurant in Brookfield, Wis., this year, he said, and the company expects to open two restaurants in August and September.
“Both new restaurants will feature our new prototype that will cost approximately $1 million less to build, bringing the investment cost down to around $6 million on average and that's net of landlord allowances,” Levin said. “This new prototype also provides greater operating efficiencies and higher and faster returns, while incorporating our learnings from our remodel initiative, which includes lighter colors and a more contemporary bar featuring the 130-inch television as the focal point.”
Tom Houdek, BJ’s chief financial officer, said the company has “been scaling back” the degree of menu pricing compared to last year.
“In May, we only took a small pricing round of approximately 40 basis points, which was more than 200 basis points lower than our Q2 2023 pricing round, leading to a comp headwind in the quarter as we lap last year's elevated pricing round,” Houdek said.
Promotions such as the Pizookie Pass, which features the brand’s signature pan cookie, have generated incremental sales, Houdek added.
Levin said sales trends improved throughout the quarter into June.
“I would tend to say that around the holidays specifically there was definitely demand within our restaurants, driving traffic and average check, as consumers came out to celebrate it,” Levin said, citing Mother's Day, Father's Day, and graduation weekends.
“When there is a reason to dine out for celebratory events, consumers come out, they wanted to go out and celebrate. There's emotional attachment to coming to sit-down restaurants,” Levin said.
For the second quarter ended July 2, BJ’s net income was $17.2 million, or 72 cents a share, compared with $11.9 million, or 50 cent a share, in the prior year period. Revenues were up slightly to $349.9 million, up 0.1% from $349.7 million in the same period a year ago.
BJ's same-store sales in the second quarter were down 0.6%.
BJ’s Restaurants, founded in 1978, has more than 200 casual-dining restaurants in 31 states.
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