BJ’s Restaurants Inc. have defied expectations this year, with a 155 percent increase in stock prices. This large increase is far above the 7 percent industry average and has excited inventors.
Analysts chalk the increase up to sales-building initiatives, an enhanced loyalty program, and improved comps. In addition, operating margins have been perking up investors.
The company continues to build upon its Daily Brewhouse Specials as well as a new Slow Roast menu that has been increasing traffic and raising the average check price. In addition to the Slow Roast menu, which is for entrées, BJ’s is pushing small tasting plates as a way to upsell customers on an appetizer or get them to order multiple small plates in lieu of an entrée.
Both of these initiatives have been quite successful and are huge drivers of the impressive comparable sales numbers the company has seen this year.
The company is also investing heavily in technology-driven initiatives, like digital ordering, to boost sales. The company’s recent additions to its app and digital platforms are allowing it to more effectively drive sales and participation with its customers.
Another major factor in this growth has been the improvements in the company’s loyalty program. The company’s loyalty guest database has been continuing to grow, along with the number of transactions made my loyalty members.
Since completing the national launch of its loyalty program in Q1 of 2018, it has witnessed double-digit increases in loyalty sign up as well as similar increases in reward redemptions. On average, 15 percent of its sales are derived from loyalty guests.
So far this year, total sales are up about 8 percent to $287.6 million. This is due, in part, to the fact that the company has opened a small number of new stores, but comparable sales have been the star. For instance, Q2’s comparable sales number was 5.6 percent.
In addition, total restaurant operating weeks increased 3.5 percent. Net income increased 75.8 percent to $16.9 million from $9.6 million. Diluted net income per share increased 80.7 percent to $0.79 from $0.44.
“Our sales building and hospitality initiatives drove strong second quarter growth in guest traffic and comparable restaurant sales,” says Greg Trojan, Chief Executive Officer of BJ’s. “BJ’s sales building initiatives and our team’s success with growing off-premise sales generated a 5.6 percent and 2.5 percent year-over-year increase in comparable restaurant sales and traffic, respectively. Our strong comparable restaurant sales, coupled with our focus on efficiencies and disciplined operating practices, resulted in a 19 percent restaurant level operating margin, marking a 120 basis point increase over the comparable quarter last year, and a 54 percent increase in operating income.”
Given the momentum BJ’s has shown, there is no reason to think the rest of the year will look much different.