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BJ's Restaurants Fights Challenges with Sales Initiatives
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On Jun 9, we issued an updated research report on casual dining restaurant chain operator BJ's Restaurants, Inc. (BJRI - Free Report) .
BJ's Restaurants shares have underperformed the broader Zacks categorized Retail-Restaurants industry in the last one year. While the industry grew 13.6%, the stock declined 6.1% during the same time period. Soft consumer spending environment in the U.S. restaurant space hurt BJ's Restaurants comps growth and put sales under pressure.
The company is thus implementing several major sales building initiatives in 2017, which have been tested in the last one year, in order to navigate the challenging macro environment.
Key Sales Drivers
Going forward, the four strategic sales-building initiatives undertaken by the company are expected to boost the top line.
Firstly, it has completed the installation of new slow roasting ovens in all of its restaurants. This new cooking equipment allows it to slow cook meat and poultry which will strengthen and diversify its menu offerings and quality value proposition all through 2017 and beyond. Secondly, the company has begun using new server hand-held ordering tablets at its restaurants and plans to roll them out at all its locations by mid-August. Notably, these handheld devices are expected to drive an improvement in order times as well as lead to greater incident rates and improved guest satisfaction ratings.
Thirdly, given the fact that off-premise sales represent a considerable revenue growth opportunity, BJ’s Restaurants is presently testing third-party delivery services. Also, the company is improving its takeout packaging, and large party and catering menu options. Lastly, the company has expanded its daily Brewhouse specials, which showcase several of its most popular signature menu items at attractive prices. This is, further, likely to drive traffic for the company in the future.
By implementing these sales building strategies, the company aims to further differentiate its food quality and uniqueness, improve speed of service, and refine its brand messaging and media strategies, while improving value to guests and leveraging its broad menu in the takeout and delivery channel.
Additionally, BJ's Restaurants has been refining and streamlining its menu to make it easier for guests to order and thereby improve traffic. Moving ahead, a deep pipeline of new menu items, its promotional offers along with its bundled lunch offerings should boost sales and drive guest traffic. Loyalty program enhancements and other productivity initiatives are likely to further drive performance.
BJ’s Restaurants is also investing heavily in technology-driven initiatives, like digital ordering, to boost sales. In fact, the company’s app and digital platforms are allowing it to more effectively and efficiently offer promotions.
Challenges
However, BJ's Restaurants has reduced the number of planned restaurant openings to 10 in 2017 compared with 17 in 2016. The reduction is due to the company’s continued belief that the sales headwinds in the industry call for greater focus on traffic and sales building initiatives. Still, the slowdown in company’s 2017 development plan may somewhat dent sales growth. Continued slowdown in the industry at large might also hamper its prospects.
Meanwhile, higher cost of sales and labor costs due to higher wages are expected to continue to keep profits under pressure. Also, costs incurred due to the implementation of the Affordable Care Act would dampen profits. Moreover, pre-opening costs, higher marketing expenses as well as costs related to sales-boosting initiatives might further pressurize margins. Particularly, additional training on slow roasting ovens and handheld tablets will add to the labor costs.
Darden’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 3.35%. Further, for fiscal 2017, earnings per share (EPS) is expected to grow nearly 13%.
Dave & Buster's earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 30.50%. Meanwhile, for fiscal 2017, EPS is projected to witness a rise of 23.7%.
The Zacks Consensus Estimate for Fogo de Chao’s 2017 earnings moved up 2.2%, over the past 60 days. Moreover, for 2017, EPS is expected to improve 6.4%.
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BJ's Restaurants Fights Challenges with Sales Initiatives
On Jun 9, we issued an updated research report on casual dining restaurant chain operator BJ's Restaurants, Inc. (BJRI - Free Report) .
BJ's Restaurants shares have underperformed the broader Zacks categorized Retail-Restaurants industry in the last one year. While the industry grew 13.6%, the stock declined 6.1% during the same time period. Soft consumer spending environment in the U.S. restaurant space hurt BJ's Restaurants comps growth and put sales under pressure.
The company is thus implementing several major sales building initiatives in 2017, which have been tested in the last one year, in order to navigate the challenging macro environment.
Key Sales Drivers
Going forward, the four strategic sales-building initiatives undertaken by the company are expected to boost the top line.
Firstly, it has completed the installation of new slow roasting ovens in all of its restaurants. This new cooking equipment allows it to slow cook meat and poultry which will strengthen and diversify its menu offerings and quality value proposition all through 2017 and beyond. Secondly, the company has begun using new server hand-held ordering tablets at its restaurants and plans to roll them out at all its locations by mid-August. Notably, these handheld devices are expected to drive an improvement in order times as well as lead to greater incident rates and improved guest satisfaction ratings.
Thirdly, given the fact that off-premise sales represent a considerable revenue growth opportunity, BJ’s Restaurants is presently testing third-party delivery services. Also, the company is improving its takeout packaging, and large party and catering menu options. Lastly, the company has expanded its daily Brewhouse specials, which showcase several of its most popular signature menu items at attractive prices. This is, further, likely to drive traffic for the company in the future.
By implementing these sales building strategies, the company aims to further differentiate its food quality and uniqueness, improve speed of service, and refine its brand messaging and media strategies, while improving value to guests and leveraging its broad menu in the takeout and delivery channel.
Additionally, BJ's Restaurants has been refining and streamlining its menu to make it easier for guests to order and thereby improve traffic. Moving ahead, a deep pipeline of new menu items, its promotional offers along with its bundled lunch offerings should boost sales and drive guest traffic. Loyalty program enhancements and other productivity initiatives are likely to further drive performance.
BJ’s Restaurants is also investing heavily in technology-driven initiatives, like digital ordering, to boost sales. In fact, the company’s app and digital platforms are allowing it to more effectively and efficiently offer promotions.
Challenges
However, BJ's Restaurants has reduced the number of planned restaurant openings to 10 in 2017 compared with 17 in 2016. The reduction is due to the company’s continued belief that the sales headwinds in the industry call for greater focus on traffic and sales building initiatives. Still, the slowdown in company’s 2017 development plan may somewhat dent sales growth. Continued slowdown in the industry at large might also hamper its prospects.
Meanwhile, higher cost of sales and labor costs due to higher wages are expected to continue to keep profits under pressure. Also, costs incurred due to the implementation of the Affordable Care Act would dampen profits. Moreover, pre-opening costs, higher marketing expenses as well as costs related to sales-boosting initiatives might further pressurize margins. Particularly, additional training on slow roasting ovens and handheld tablets will add to the labor costs.
Zacks Rank & Stocks to Consider
BJ’s Restaurants currently has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Darden Restaurants, Inc. (DRI - Free Report) , Dave & Buster's Entertainment, Inc. (PLAY - Free Report) and Fogo de Chao, Inc. , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Darden’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 3.35%. Further, for fiscal 2017, earnings per share (EPS) is expected to grow nearly 13%.
Dave & Buster's earnings surpassed the Zacks Consensus Estimate in the trailing four quarters, with an average beat of 30.50%. Meanwhile, for fiscal 2017, EPS is projected to witness a rise of 23.7%.
The Zacks Consensus Estimate for Fogo de Chao’s 2017 earnings moved up 2.2%, over the past 60 days. Moreover, for 2017, EPS is expected to improve 6.4%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>