A New BJ's Restaurant in California

BJ’s Restaurants Inc. (BJRI - Analyst Report) recently announced the opening of a new unit in Westfield Century City Mall, California. This is the fourth of the company’s targeted 12 to 13 new openings for fiscal 2011.

The newly opened restaurant spreads across approximately 7,300 square feet and accommodates around 245 guests. It is located in the 880,000 square feet open-air Westfield Century City Mall and is expected to benefit immensely from its strategic positioning. We also expect the great variety of menu offered at the new unit that includes BJ’s signature deep-dish pizzas, hand-crafted beers and the much coveted Pizookie dessert to attract guests.

Some other restaurants with units in Westfield Century City Mall are Subway, Ummba Grill, Houston's, Fuddruckers and Gulfstream Restaurant.

The core Californian market, which was badly hit during the housing downturn, has begun to turn around. The gradual improvement in this market, which is one of the major operational locations for the company, should be a key driver of growth.

Looking forward to 2012 and 2013, the company plans a low double-digit capacity increase per year in the approximate range of 12% to 13%. The openings will be equally distributed in the company’s home turf California, the other western states and in Florida or some new markets. Around 50% of the new stores will be conversions of old retail locations.  

Despite more business from the new units, BJ’s Restaurantswill face stiff competition in California from Red Robin Gourmet Burgers Inc. (RRGB - Analyst Report), Jack in the Box Inc. (JACK - Snapshot Report), Sizzler and Shakey's Pizza which have strong presence in that area. Among these, Red Robin is set to open a new restaurant in Vacaville, California on June 20. So far, Red Robin has more than more than 70 locations in California while BJ’s Restaurants has 53.

We maintain a Zacks #1 Rank on BJ’s, which translates into a short-term Strong Buy rating. Our long-term recommendation also remains Outperform.

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