BJ’s on Expansion Track – Analyst Blog

BJ’s Restaurants Inc. (BJRI), based in Orange County, California, recently announced that it has opened an 8,000 square feet restaurant, which accommodates a seating arrangement for 280 guests in Colorado Springs, Colorado. This is the fourth BJ’s restaurant in Colorado, following its other three eateries in Aurora, Westminster and Boulder.

 

Located at the intersection of I-25 and N. Nevada Avenue in the University Village shopping center, this new restaurant is sure to benefit immensely from its strategic positioning. The shopping center attracts visitors from all the nearby locations. The menu offers a plethora of variety, apart from its signature deep-dish pizzas and handcrafted beers.

 

With a chain of about 99 restaurants, BJ’s remains on track to open as many as 10 more in fiscal 2010, of which 7 have already been opened. Of the 3 remaining, one is slated to be opened in Sparks, NV before the end of third quarter of 2010 and other two in Puente Hills, CA, and Houston, TX, during the fourth quarter of 2010. BJ’s is almost on the verge of completing its expansion goal for 2010 and is now looking forward to the development pipeline for 2011.

 

We believe that with the opening of new restaurants in fiscal 2010, the leading casual dining restaurant chain is trying to gain market share, following a gradual improvement in the restaurant industry, which faced extreme challenges due to the economic turmoil that resulted in weak labor and tight credit markets and a lower discretionary spending.

 

Most of the company’s peers such as California Pizza Kitchen Inc. (CPKI), Red Robin Gourmet Burgers Inc. (RRGB) and Buffalo Wild Wings Inc. (BWLD) have been on a modest expansion mode in fiscal 2010. Going forward, this will intensify competition for BJ’s.

 

BJ’s currently retains a Zacks #2 Rank (short-term Buy rating). We are also maintaining our long-term Neutral recommendation on the stock.