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BJ's Restaurants Debuts in South Carolina, Expands Footprint

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BJ’s Restaurants, Inc. (BJRI - Free Report) opened its latest outlet in Columbia, SC, on Sep 4. The 7,500 square feet restaurant can accommodate nearly 230 guests.

In fact, this restaurant marks the brand’s debut in the state of South Carolina. Moreover, the company is looking forward to expand its presence in the state over the next few years.

The outlet also features BJ’s Restaurants’ extensive menu, including its signature deep-dish pizza, award-winning hand-crafted beer and the famous Pizookie dessert.

Currently, the company operates 195 casual dining restaurants across 25 states in the United States, under its brand names like BJ’s Restaurant & Brewhouse, BJ’s Restaurant & Brewery, BJ’s Pizza & Grill and BJ’s Grill.

Moreover, BJ’s Restaurants has opened eight new restaurants year to date and is slated to open two more this year, one each in Maryland and Michigan. This will mark the brand’s debut in the state of Michigan as well.

Notably, the company has reduced the number of planned restaurant openings to 10 in 2017 compared with 17 restaurant openings in 2016. This is because it continues to believe that the sales headwinds in the industry call for greater focus on traffic as well as revenue building initiatives.

However, the slowdown in company’s 2017 development plan may somewhat dent sales growth. Also, continued weakening consumer spending in the restaurants space, might hamper the company’s traffic and sales.

While several other restaurateurs including Yum! Brands, Inc. (YUM - Free Report) , Domino’s Pizza, Inc. (DPZ - Free Report) and Papa John’s International, Inc. (PZZA - Free Report) are capitalizing on the emerging market potential, BJ’s Restaurants loses out in terms of international presence.

The recent share price movement of the company – down 24.4% year to date – also compares unfavorably with its industry, which was up 6.6% in the said period.

Nevertheless, the four strategic sales-building initiatives undertaken by the company to navigate through the challenging macro environment are likely to boost sales, moving ahead. A deep pipeline of new menu items, loyalty program enhancements and other productivity as well as technology-driven initiatives are also expected to boost performance. Launch of on-demand delivery and alcohol delivery too bode well for the brand’s long-term sales growth.

Moreover, BJ’s Restaurants’ decision to slow down new openings for some time and instead focus even more of its enterprise resources on building sales may turn out to be favorable as it would provide some margin momentum and boost free cash flow. When combined with the company’s conservative balance sheet, these measures may provide more flexibility for sales building capital and share repurchases, going forward.

BJ’s Restaurants currently has a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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