BJ's First Unit Opening in 2012 - Analyst Blog
March 02 2012 - 5:15AM
Zacks
The Orange County, California-based
BJ’s Restaurants Inc. (BJRI)
recently announced the opening of a new unit in Clearwater,
Florida. The new unit marks the first of the company’s targeted 16
new openings for fiscal 2012 and ninth in Florida.
The new restaurant spreads across
approximately 9,000 square feet and accommodates around 280 guests.
It is located in the spanking new 1.2 million square foot Westfield
Countryside Mall and is expected to benefit immensely from its
strategic location. The new unit is set to offer a great variety in
its menu including BJ’s signature deep-dish pizzas, hand-crafted
beers and the coveted Pizookie dessert to attract guests.
The company is strengthening its
footprint in Florida emboldened by strong same-store sales growth
in the region. The casual dining chain operator plans to open two
additional units in Florida in 2012, particularly in the southern
part of the state where the company lacks a presence.
BJ’s currently operates 116
restaurants and almost half of those restaurants are located in
California. The company remains committed to its expansion strategy
and in 2013,the company estimates low double-digit capacity
increases per year in the approximate range of 10% to 12%. One
third of these openings will be in BJ’s Restaurants’ market home
court of California, another third will come up in the Western
states outside California and the remaining third in the Florida
market or a few new markets. Additionally, 50% of the new stores
will be conversions of old retail locations. In the long run,
there still exists the possibility of opening at least 300 outlets.
Management also plans to expand in relatively new markets like New
Mexico and Kansas.
Despite more business from the new
units, BJ’s will face stiff competition in Florida from Red
Robin Gourmet Burgers Inc. (RRGB) and The
Cheesecake Factory Inc.
(CAKE), which have
strong presence in the area.
We believe that BJ’s remains well
positioned to sustain its growth momentum while generating improved
earnings on the heels of efficient operations and innovative
offerings. Moreover, as the economy revives and expansion
reaccelerates, we expect the company to witness further improvement
in earnings along with profit margins in the coming quarters,
buoyed by positive sales leverage efficiencies and price
increases.
However, cost inflation, increased
level of pre-opening costs and stiff competition make us cautious.
We maintain a Zacks #3 Rank on BJ’s, which translates into a
short-term Hold rating.
BJ'S RESTAURANT (BJRI): Free Stock Analysis Report
CHEESECAKE FACT (CAKE): Free Stock Analysis Report
RED ROBIN GOURM (RRGB): Free Stock Analysis Report
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