BJ's Restaurants (BJRI) Expands In Virginia With New Outlet

BJ’s Restaurants, Inc. (NASDAQ:BJRI) opened its latest outlet in Fredericksburg, VA, on Jun 26. The 7,500 square feet restaurant can accommodate nearly 230 guests.

The outlet features BJ’s Restaurants’ extensive menu, including its signature deep-dish pizza, award-winning hand-crafted beer and the famous Pizookie dessert. Additionally, its unique contemporary décor creates an ideal environment for dining.

In fact, this new outlet marks the brand’s sixth restaurant in the state of Virginia. Currently, the company operates 194 casual dining restaurants across 24 states in the U.S., under its brand names – BJ’s Restaurant & Brewhouse, BJ’s Restaurant & Brewery, BJ’s Pizza & Grill and BJ’s Grill.

The company has opened seven new restaurants year to date and is slated to open three more this year. The next opening is scheduled to be in September and will mark the company’s debut in South Carolina.

It is to be noted that BJ’s Restaurants 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 and sales building initiatives.

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

Furthermore, we note that while several other restaurateurs including Yum! Brands, Inc. (NYSE:YUM) , Domino’s Pizza, Inc. (NYSE:DPZ) and Papa John’s International, Inc. (NASDAQ:PZZA) 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 also compares unfavorably with the Zacks categorized Retail-Restaurants industry. While the industry added 11% year to date, the stock was down nearly 4%.

Nevertheless, going forward, the four strategic sales-building initiatives undertaken by the company to navigate through the challenging macro environment are likely to boost sales. 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.

Moreover, the company’s 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 should provide more flexibility for sales building capital and share repurchases, moving ahead.

BJ’s Restaurants currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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