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Here's Why You Should Retain BJ's Restaurants (BJRI) Stock Now
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The past three months have been tough for the restaurant industry and BJ's Restaurants, Inc. (BJRI - Free Report) has been no exception. In the same time frame, the company’s shares have dropped 13.9% compared with the industry’s decline of 4.4%. The coronavirus pandemic and rise in meat, seafood costs have impacted the company’s performance. Nevertheless, the company is benefitting from improved dining room seating capacity in key markets, menu innovation and robust off-premise sales. Also, focus on unit expansion and Beer Club subscription services bodes well. Let’s delve deeper.
Growth Drivers
The Zacks Rank #3 (Hold) company’s extensive focus on refining and streamlining its menu is the key driver for improved traffic. During fourth-quarter 2020, the company began testing of its virtual brand — slow roast, across its 13 restaurants. The delivery-only concept features slow roast items and other protein-centric products. During second-quarter fiscal 2021, the company continued testing its virtual brand at approximately 30 restaurants across California and Texas. This was backed by impressive sales and solid customer feedback. Nonetheless, the company continues to focus on menu adjustments and pricing structure, as it intends to establish a broader rollout plan in the upcoming periods.
To boost sales from dine-in services, restaurant operators have implemented glass partitions in its dining rooms to expand their capacity. It has also initiated the construction of outside dining spaces in nearly half of its restaurants. In places like California, Texas, Florida, Arizona and Nevada, the company added heaters and breathable panels to its outdoor dining spaces to support extended seating.
Following the opening of new restaurants in Merrillville, Indiana and Lansing, MI (in second-quarter fiscal 2021), the company reported solid cash generations from the same in the fiscal third quarter. The company reopened its restaurant in Richmond, VA. With sales exceeding expectations, the company is striving to increase new restaurant openings to achieve a minimum of a 5% increase in operating weeks over the longer term. Going forward, the company plans to open at least eight restaurants in fiscal 2022, of which four of the locations are expected to open in the first half. It remains steadfast in its commitment to expand its presence to at least 425 restaurants domestically.
During the fiscal third quarter, the company reported a solid recovery in sales on a comparable-restaurant basis. Comps during the quarter increased 41.8% year over year. The upside was backed by a solid recovery in dining room sales along with a robust off-premise business. Dining room sales during the fiscal third quarter reached mid-85% of 2019 levels, while off-premise sales doubled from the pre-pandemic levels. Although comps improved on a year-over-year basis, it is still behind pre-pandemic levels.
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Key Restaurant Picks
Papa John's International, Inc. (PZZA - Free Report) currently carries a Zacks Rank #2 (Buy). The company has been benefiting from its off-premise business model. Sales at off-premise business model have exceeded pre-pandemic levels. We believe that a boost in customer count coupled with targeted off-premise marketing is likely to drive the channel’s performance in the upcoming periods.
McDonald's Corporation (MCD - Free Report) has a Zacks Rank #2. Robust digitalization will help the company in driving long-term growth and capturing market share. McDonald’s launched its first-ever loyalty program in the United States. It has been making every effort to drive growth in international markets.
McDonald's has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of the company have gained 9.4% in the past three months. The Zacks Consensus Estimate for MCD’s current financial-year sales and earnings per share (EPS) suggests improvement of 20.9% and 55.7%, respectively, from the year-ago period’s levels.
Noodles & Company (NDLS - Free Report) carries a Zacks Rank #2. The Zacks Consensus Estimate for Noodles & Company’s current financial-year sales and EPS suggests growth of 22.5% and 196.6%, respectively, from the year-ago period’s levels.
Shares of Noodles & Company have gained 21.4% in the past year. In the past 60 days, earnings estimates for NDLS have increased by 4 cents to 28 cents.
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Here's Why You Should Retain BJ's Restaurants (BJRI) Stock Now
The past three months have been tough for the restaurant industry and BJ's Restaurants, Inc. (BJRI - Free Report) has been no exception. In the same time frame, the company’s shares have dropped 13.9% compared with the industry’s decline of 4.4%. The coronavirus pandemic and rise in meat, seafood costs have impacted the company’s performance. Nevertheless, the company is benefitting from improved dining room seating capacity in key markets, menu innovation and robust off-premise sales. Also, focus on unit expansion and Beer Club subscription services bodes well. Let’s delve deeper.
Growth Drivers
The Zacks Rank #3 (Hold) company’s extensive focus on refining and streamlining its menu is the key driver for improved traffic. During fourth-quarter 2020, the company began testing of its virtual brand — slow roast, across its 13 restaurants. The delivery-only concept features slow roast items and other protein-centric products. During second-quarter fiscal 2021, the company continued testing its virtual brand at approximately 30 restaurants across California and Texas. This was backed by impressive sales and solid customer feedback. Nonetheless, the company continues to focus on menu adjustments and pricing structure, as it intends to establish a broader rollout plan in the upcoming periods.
To boost sales from dine-in services, restaurant operators have implemented glass partitions in its dining rooms to expand their capacity. It has also initiated the construction of outside dining spaces in nearly half of its restaurants. In places like California, Texas, Florida, Arizona and Nevada, the company added heaters and breathable panels to its outdoor dining spaces to support extended seating.
Following the opening of new restaurants in Merrillville, Indiana and Lansing, MI (in second-quarter fiscal 2021), the company reported solid cash generations from the same in the fiscal third quarter. The company reopened its restaurant in Richmond, VA. With sales exceeding expectations, the company is striving to increase new restaurant openings to achieve a minimum of a 5% increase in operating weeks over the longer term. Going forward, the company plans to open at least eight restaurants in fiscal 2022, of which four of the locations are expected to open in the first half. It remains steadfast in its commitment to expand its presence to at least 425 restaurants domestically.
During the fiscal third quarter, the company reported a solid recovery in sales on a comparable-restaurant basis. Comps during the quarter increased 41.8% year over year. The upside was backed by a solid recovery in dining room sales along with a robust off-premise business. Dining room sales during the fiscal third quarter reached mid-85% of 2019 levels, while off-premise sales doubled from the pre-pandemic levels. Although comps improved on a year-over-year basis, it is still behind pre-pandemic levels.
Key Restaurant Picks
Papa John's International, Inc. (PZZA - Free Report) currently carries a Zacks Rank #2 (Buy). The company has been benefiting from its off-premise business model. Sales at off-premise business model have exceeded pre-pandemic levels. We believe that a boost in customer count coupled with targeted off-premise marketing is likely to drive the channel’s performance in the upcoming periods.
Papa John's fiscal 2021 earnings is likely to witness growth of 142.1%. PZZA stock has gained 52% in the past year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
McDonald's Corporation (MCD - Free Report) has a Zacks Rank #2. Robust digitalization will help the company in driving long-term growth and capturing market share. McDonald’s launched its first-ever loyalty program in the United States. It has been making every effort to drive growth in international markets.
McDonald's has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of the company have gained 9.4% in the past three months. The Zacks Consensus Estimate for MCD’s current financial-year sales and earnings per share (EPS) suggests improvement of 20.9% and 55.7%, respectively, from the year-ago period’s levels.
Noodles & Company (NDLS - Free Report) carries a Zacks Rank #2. The Zacks Consensus Estimate for Noodles & Company’s current financial-year sales and EPS suggests growth of 22.5% and 196.6%, respectively, from the year-ago period’s levels.
Shares of Noodles & Company have gained 21.4% in the past year. In the past 60 days, earnings estimates for NDLS have increased by 4 cents to 28 cents.