BJ’s Restaurants, Inc. (BJRI), which currently owns and operates 96 restaurants, remains on track to open as many as 10 to 11 new restaurants in fiscal 2010, of which 2 restaurants have already opened in San Antonio, Texas.
 
The company opened its first restaurant in San Antonio two years ago, which has performed very well and has increased its market share in the city. BJ’s opened its second restaurant in April and the third in May. We expect BJ’s sales to increase in the San Antonio market.
 
BJ’s is one of the few casual dining chains, which has been expanding and in the long run plans to open at least 300 outlets.
 
We believe that with the opening of new restaurants in fiscal 2010, the company will continue to gain market share as we see a gradual improvement in the restaurant industry, which has faced extremely tough challenges due to the economic turmoil that resulted in weak labor and tight credit markets, and lower discretionary spending.
 
BJ’s comparable-restaurant sales in first-quarter 2010 grew substantially by 4.4%, on a drop of 0.2% registered in fourth-quarter 2009 and a decline of 0.1% witnessed in the prior-year quarter. The company also hinted that traffic has remained in the positive zone for the first time since third-quarter 2007. Management also expects the traffic to remains positive in the second quarter.
 
BJ’s is well-positioned to sustain its growth momentum while generating improved earnings spurred by operating efficiencies and innovative offerings. However, unfavorable consumer spending pattern and increased competition from other casual dining operators still remain concerns.
 
We maintain a Zacks Rank #3 on BJ’s, which translates into a short-term Neutral recommendation. However, our recommendation on its closest competitor California Pizza Kitchen, Inc. (CPKI) is Zacks Rank #2, which translates into a short-term Buy rating as the company has implemented several sales-building programs to revive its top-line growth and to plug its falling comparable-store sales.
 
Founded in 1978 in Orange County, California, BJ’s owns and operates a chain of 96 high-end casual dining restaurants in the United States that serve its signature deep-dish pizzas, salads, sandwiches, burgers, pastas, steaks, and its own hand-crafted beers.
Read the full analyst report on “BJRI”
Read the full analyst report on “CPKI”
Zacks Investment Research