BJ’s Restaurants Inc.(BJRI), whichowns and operates a chain of high-end casual dining restaurants in the United States, announced that it has finally opened the tenth and last restaurant of fiscal 2010. The new restaurant covers an area of 8,500 square feet, which accommodates a seating arrangement for 280 guests in Shenandoah, Texas.
The company will likely be able to drive a higher traffic in this new restaurant located in the Northern Houston market, at the Portofino shopping center. This is the fifth restaurant in the Houston market. In the past, BJ’s has experienced the strongest rise in comparable store sales in this market, given that the company enjoys a strong brand awareness and guest loyalty.
The menu offers a plethora of variety, apart from its signature deep-dish pizzas, handcrafted beers and Pizookie dessert.
In response to the sluggish economy, the company slowed down its unit growth. In fiscal year 2009, BJ’s opened 10 restaurants compared with 15 in 2008. In fiscal 2010, BJ’s planned to open 10 restaurants, and at last has completed its expansion goal. However, with the expected resurgence of consumer confidence, management plans to open 12 to 13 restaurants in fiscal 2011. In the long run, there still exists room to open at least 300 outlets.
We believe with the opening of new restaurants in 2010, BJ’s has been able to gain market share. With a gradual improvement in the restaurant industry, the company remains in an expansion mode.
Moreover, the core California market, which has lagged during the recession, started to turn around and report modest same-store sales in the third quarter of 2010. Stronger performance in certain areas of California outperformed the company average in the quarter. Management sees plenty of quality growth opportunities in the California and Texas markets.
Orange Country, California-based company with a portfolio of about 102 restaurants 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 such as California Pizza Kitchen Inc. (CPKI), Red Robin Gourmet Burgers Inc. (RRGB) and Buffalo Wild Wings Inc. (BWLD) still remain areas of concern.
BJ’s has a Zacks #2 Rank (short-term Buy recommendation). We have a long-term Outperform rating on the stock.
BJ’S RESTAURANT (BJRI): Free Stock Analysis Report
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